After almost three years of graduating from college, I still remember a question from my final exam of the class “Introduction to Business Administration”: What is the difference between efficiency and efficacy?

Efficacy is the ability to produce results

Efficacy is critical for achieving any goal. Without this ability no business administrator would complete anything. Everything would be left unfinished, like the goals we set every new-year and never stick to complete them.

We can think of efficacy as checking a task list. Either a task has been completed or is still pending, there is no state in between. Efficacy has to be measured out of the targeted deliverables, value creation, and other tangible objectives.

I remember one of my colleges in Financial Group Javeriana was having a hard time delivering projects in time. We were working on a presentation for a personal finance seminar we were arranging, and every time we sat to review the progress there was something missing. Goals were clear, but his efficacy in delivering a finished product was not present.

Being effective when delivering project’s advances is crucial to the quality of the final deliverable. This is especially important when we are asking for feedback, and there is enough information to make an accurate diagnostic and prescribe solutions to barriers or problems.

Efficiency is the ability to produce work using the least amount of resources

Efficiency is about spending the least amount of time, money, or any other resources to produce a result. Without efficiency, certain tasks are no worth performing.

Imagine you were assigned to decrypt a memory disk manually. It would certainly take you all your life (and more) to decipher the code of the encryption. Instead, one can increase efficiency by using a specialized software, which would reduce the time of decryption to the second.

Back in college I loved taking a coffee break before lunch, when I didn’t have class after twelve. One day, a friend of mine from a finance class approached me in my break. We started talking about our experiences working as interns.

He began by talking about an accounting process he was in charged, which was taking him a lot of time. He felt proud of his work, he was only considering his effectiveness.  Afterwards, I shared my experience working for a consulting firm; I was expected to deliver as soon as possible. The priority was using the least amount of time.

He thanked me for giving him perspective on how to improve his productivity by incorporating efficiency in his work review.

Why it is so important for business administrator to know these words?

The Most Important Thing Every Business Administrator Should Know is efficacy and efficiency. These skill give the business administrator a framework for evaluating productivity. When employees are efficient and not effective, they do things as fast as they can or with the least number of resources but don’t deliver a final product.

On the contrary, employees can be effective, delivering result every time, but this can take them a lot of time or money to deliver.

It is our task as business administrators to maximize efficiency and efficacy, two skills that positively improve the bottom line.