An understanding of the well-known 3Es Effectiveness, Efficiency and Economy management idea can help managers to evaluate performance and then to improve it.
Management Effectiveness
Effectiveness can be explained in terms of what is achieved. It is about whether targets are met or not. Performing effectively means that the right work is being completed. Managers are responsible for making sure that this happens. If a team is working really hard but not delivering what is needed, then they are not effective. Effectiveness is measured by setting out clear objectives before work starts and then evaluating whether the objectives have been met or not.
Management Efficiency
Efficiency can be measured in terms of the inputs required to generate the outputs. It is about the way in which work is completed. It is part of a manager’s job to help improve efficiency. For example, if the same work can be completed using less inputs or resources then efficiency has improved.
Measuring efficiency means that the process followed to complete the work must be defined and then each part of the process studied to see what resources are required. This becomes the starting point or benchmark for measurement.
Future work is then measured against the benchmark to see if it has taken more or less resource. Process changes are also measured to see if they are more or less efficient. It is also useful to measure one team’s efficiency against another and then adopt the most efficient methods as best practice– always assuming that effectiveness is maintained.
Management Economy
Economy is the third element of the three Es model, covering the financial aspects of work being done. It could be argued that economy or finance is just one of the factors to consider when improving efficiency, but because finance is so important in today’s organisations, economy has become the third element. Economy is measured by looking at the cost of the resources consumed and the value of the output delivered.
The Best Effectiveness, Efficiency and Economy Mix
It can be very difficult to find the best mix of effectiveness, efficiency and economy as there are so many ways to obtain value. For example:
- It may be that the focus is on providing a specific output (effectiveness) for the least cost – this may be at the expense of efficiency.
- It may be that the focus is on maintaining a particular cost (economy) and producing the best output for that cost.
It is important that the priorities of senior management are established as this will then drive the most appropriate measures to be used and lead to the best effectiveness, efficiency and economy mix. This mix will change over time depending on the focus of the organisation and external factors too.
Every manager can be a better manager and understanding the 3Es Effectiveness, Efficiency and Economy can help improve business performance.
Dawn Brewer - I have a portfolio career - as a writer, management consultant, instructor and coach - after twenty years in the corporate world. My ...
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