Performance versus Efficiency

Performance and efficiency are often used interchangeably, but performance involves understanding the result being achieved, while efficiency does not, and instead emphasizes the resources used to produce that result. When the two meanings are combined, it mixes the two notions of producing according to expectations, while getting maximum output with minimum expense. When a car’s engine performs, this means it delivers the power, speed, or other metrics expected from it. It may perform more or less than other engines, but performance is only defined in connection with what’s expected from it. The engine’s efficiency refers to its capacity to deliver performance by minimizing the energy and friction needed to produce the expected power and speed.

Performance

Performance measures how well a task is completed. It's an outward-facing metric concerned with the end result, often measured by accuracy or throughput. A high-performing person or system consistently achieves its goals in a certain way.

In a factory, a machine's performance is measured by how many products it produces per hour. For a computer, performance is how quickly it can execute a program. In client service, it’s how well the service is delivered to clients, the attention given, and the solving of problems.

With organizations, stakeholders may have different opinions on the performance and what’s expected of them, others, and the whole. Thus, the discussions about their preferences, who may influence, and the power in the decision-making process.

With GRI, performance consists of behaving in congruence with outside expectations, while being capable of adapting when needed, and minimizing disengagement.

Efficiency

Efficiency, on the other hand, measures the ratio of output to input, focusing on how resources are used. It's about minimizing waste of time, money, efforts, energy, materials, and other resources to achieve a desired outcome.

An efficient organization gets the most out of what it can deliver to produce performance.

A factory machine is efficient if it uses the least amount of electricity and raw material to produce each product. A computer program is efficient if it uses the least amount of memory and CPU cycles to complete its task. In client service, it’s how employees solve numerous problems and create customer satisfaction in the minimum time.

Delivering a result in less time with fewer resources than expected combines the idea of both performance and efficiency.

From Drucker’s View

Peter Drucker is often quoted for having made the distinction between efficiency and performance. Performance is equated to effectiveness.

Efficiency is doing things right; effectiveness is doing the right things.

In Drucker’s view: Efficiency is about minimizing wasted resources to get a task done. As for the above analogy with an engine, it's an internal focus on the process. An efficient person or system completes tasks with minimal input. Effectiveness or performance is about achieving the desired outcome or result. It's an external focus on the objective or goal.

A performing person or organization that performs is one that accomplishes its objectives, regardless of how the resources are used.

We can only agree on Drucker's view that performance is more important than efficiency. Someone can be highly efficient at a task that doesn't need to be done at all, making the effort useless. As Drucker continued, the most successful organizations and individuals first determine what the "right things" are (in terms of performance and effectiveness) and then focus on doing them "right" (efficiency).

The above statement, in GRI terms, translates into: “Successful organizations should first consider how they can perform their tasks and define reasonable goals accordingly”.