Efficiency

There is always a way to do it better....find it. Thomas Edison

Efficiency is measured by comparing the results of an activity with the effort involved. The greater the results or the smaller the effort - the better the efficiency. Both terms are often expressed in monetary values such as where costs are expressed as a proportion of income. However, the most useful ratios are where at least one term is not shown in terms of money - cash collected per volunteer or faults fixed per engineer.

Different ways of measuring efficiency: Car manufacturers measure their efficiency in terms of the cars produced per year per employee (Nissan, produces over 100 cars per employee with an industry average of around 60). Charities take the ratio of money spent on their cause to the amount of money collected, with the difference being taken up with the cost of collection and administration (this ratio can vary from 100% to as low as 0%). Retailers use the value of sales per unit area of floor space.

Ease of doing things: Efficiency is also about speed and minimization of energy. Supermarkets such as Safeway and Tesco are concerned with the ease of replenishing shelves and the speed of processing customers through the checkouts.   Retailers such as Marks & Spencer and GAP are concerned with getting new fashions to the sales-floor fast enough to meet rapidly changing consumer tastes, or even a change in the weather.  One can consider profit as a measure of the efficiency of producing goods or services (the difference between their value and the cost of producing them).

The results: Efficiency inevitably means producing more products and services for the same effort. This should lead to an organization being more price-competitive, but to gain real competitive advantage, the gains in efficiency should translate instead into better or different products and services.

Non-profit organizations: Efficiency is also important for non-profit organizations. There are many league tables for making comparisons with peer organizations, for example, the efficiency of schools can be judged against various standards, such as the examination pass rate per student or the amount of money spent per student. >>>