For instance, Neely et al (1995) argue that "the level of performance a business attains is a function of the efficiency and effectiveness of the actions it undertakes".

But, no formula exists, in my knowledge, relating performance (level) to both efficiency and effectiveness, among others, in a comprehensive view of a business.

Dear Klenar,

Such a formula cannot exist, as effectiveness cannot be expressed by a single number, but by the level of reaching the aspirations of different (sometimes too different) company's stakeholders, so effectiveness is always a multidimensional vector.

bests,

Igor Gurkov

Dear @Igor, don't you think that the same may be said for efficiency: the level of reaching a unique or different output/s upon surely so different inputs, also more different in nature - including from human to material resources, otherwise not still including customers or others in - than stakeholders interests?

However, a number is found for efficiency, which is the well known ratio output(s)/inputs, each of which members - be they inputs or outputs - expressed in physical values for technical or engineering efficiency and in monetary values for economic efficiency.

Possibly via throughput analysis using Goldratt's Theory of Constraints

There are many measures common to high performing organizations that provide feedback on efficiency and effectiveness. When we complete an assessment of an organization, a final number is reached that provides an overall measure of excellence.

Attached is a high level version of the assessment methodology.

On the following website, there is an opportunity to use an automated version of the assessment tool and to download a copy of the Organizational Excellence Framework publication that provides the foundation for such http://organizationalexcellencespecialists.ca/.

Dear @Dawn, I am sorry, but I did not see any way of assessing the performance by a single number in your high level version...

Here is about research, not publicity for selling marketing products.

Krenar,

I thought this was an interesting question and had hoped the overall score on the current state of excellence could be used as a measure of efficiency and effectiveness. The additional information was provided as background and for the benefit of readers. Perhaps the more detailed publication will provide additional insights for you.

My intention was not to sell products. Organizational Excellence Specialists is in the business of selling services (consulting, training) and very generous with other activities (e.g. sharing the publication and teaser assessment for free, conducting a global research project on a volunteer basis) that are intended to benefit others.

Efficient- maximizing the effort by minimizing the amount ,of resources used, time, steps etc. (source;bing)

Effectiveness- the degree to which something is successful in producing a desired result; success (source; bing):

- excellent output with less input

Lets say I used a full 96 well PCR plate (not reusable) to analyze a sample. After experimentation, I decided to use a 96 well base(reusable base) with a single well insert.

I was able to produce the desired result and the amount of wells used went from 96 to 1. The key is to minimize variations in your process. A good place to start is by assessing the 8 elements of waste:

-Defects

-Overproduction - Waiting - Non Value Added Processing - Transportation - Inventory - Motion - Unused Employee Creativity

Hi Krenar,

your question is absolutely timely. As the notion of "performance" is essentially multi-dimensional, performance measures must take into account the diversity of performance in an organization. As I believe " one size does not fit all". Therefore, an organization , private or public sector, has to incorporate adequate number of performance measures including financial (usually), customer and operational measures in order to gain a competitive edge in today's highly competitive global world.

Just a suggestion to all participants: when one finds the question (very) "interesting" or "absolutely timely" or something like that, the first thing to do may be to recommend it, then to add whatever they find useful for research, be it between researchers or whatever else - and as I know, everything is free and voluntary here at RG. Also, I have to remember that the most of time, if not forever, the excellence, as the highest degree of achieving results efficiently and effectively, begins with asking the right question, which here at RG is still for free and voluntarily.

Concerning the opinion of @Mapitiya, I may add that searching for a unique number, comprehensively understood, does absolutely not mean that this is of one size, but a multi-dimensional one, which may integer, for as much as possible that may be, all the knowable dimensions of knowledge. I still remember that the efficiency is one kind of this comprehensive numbers, but which is not absolutely comprehensive, as there are still many dimensions of the business or whatever organizational activity that remain outside it.

The question of this thread is asking precisely how to incorporate all the possible dimensions of an activity's performance, first including efficiency and effectiveness, in one and unique and comprehensive number.

Hello Krenar. In my opinion , arriving at a unique number may be difficult because effectiveness is mostly qualitative in nature while efficiency is in quantitative terms . Combining both measurements may lead to issues connected with validity and reliability of the measurement indicators.

Yes for the first part of your opinion, but if one says that "effectiveness is the level of achieving results, objectives or purposes", it is quantified by a number expressed as a percentage, that is, without unit, doesn't it @A.H. Sequiera?

My question back to you, Krenar, is what would you do with that unique number if you had it? For instance, if its value were outside the lower and upper values you mention, what action would be taken? I contend that to decide what action to take, you'd have to examine each of the factors contibuting to the single, unique number. In fact, to manage any enterprise successfully over time, the key factors that measure effectivenerss and efficiency should be tracked over time...and the single, unique number would be useless. Furthermore, the single number, being composed of its contibutingr measures, would "hide" the variation in the contributing measures - and *that* variation is precidely the information (with understanding) you need to make good decisions (so as not to make Type 1 and Type 2 Errors in your decisions).

Dear @Wayne, your suggestion pushes me to accept my yet poor level of English, as I used the comparative “the lower and upper level” instead of the superlative “the lowest and the uppest (or uppermost) level”, which I already corrected.

However, your principal question still remains valid. For I have this answer: if we are speaking or thinking about the performance in singular, it is better to attach a unique number to it, which makes the comparison between similar businesses more easy and still tells us if we are in the right or wrong way; otherwise, if we are thinking about the performance in plural, that is, as a multi-dimensional characteristic of a business activity, as it in fact still is, then it may be more useful several indicators, one for each of those dimensions. And then, we have still the possibility to nearly evaluate and correct each one, if the presence of poor indicators is observed. Your concern is very similar to that of a team trainer or coach, let say in football: if the team is winning against another or successively all the others, the coach, players and other stakeholders (team stockholders, managers, supporters, sponsors, etc.) have all the reasons to be glad of the situation, even though some performance indicators - according to the evaluation of each one of the team stakeholders - are not at the top class level and there they will continue to work harder than before in those difficult directions.

Another problem using a single number (to combine measures of effectiveness and efficiency, or any other measures) is that there are infinite combinations of each of the contributing measures that will result in the same value of the single number. How can you justify saying that businesses with the same single number are performing equally, or fo rthat matter, if they have different values of the sngle number that they are performing differently? In my experience, the desire for single numbers ("indexes") is leadership's attempt to (overly) simplify complex situations, rather than learn the sciences of systems and variation.i,

Why a single comprehensive number, which does combine, as you correctly say @Wayne, in a certain way several other measures, be they only two if no other than efficiency and effectiveness, which also are a combination of other single measures, may not be able for comparison of wholes as any other of its components for the single parts of these wholes? The main issue, in my opinion, which agrees with yours, is not the resulting unique number, but the way of combination of several other ones. This is in fact the main concern of this question’s thread.

Why a single number is not useful for comparing entities I already answered in my previous post, that is, the same single number value may be reached with an infinite number of combinations of the contributing measures. Given that, use any combination you want (weighting factors, too) - just be consistent across those entities. :-)

Sorry @Wayne, I am not sure you grasped the meaning of my why question - perhaps I am not well exprimed with my rhetoric question. The problem is as simple as that: never a marginal measure or dimension, that is, one added to a multitude of other ones, from whom it has derived, may complicate a given state of things (which are already measured and for whom it will serve as a unique representative); in any case, nothing more than those measures themselves, whatever be the way used for their combination.

I have coined a term a performance indicator in the following book chapter.

A list of eight indicators are considered for this exercise that determine the cumulative (or net) performance of the entire enterprise.

In your case, those indicators may be different but concept of how to find a cumulative index remains pretty much the same.

Chapter Volume I; Chapter 1: MANUFACTURING COMPETITIVENESS