Chapter 3 Flashcards
What is efficiency?
Ability to use resources e.g productivity
The way an organisation uses its available resources to achieve its objectives
Productivity is the relationship between the input and output
Examples of the measurement of efficiency?
Number of visitors to a museum
Number of barrels of wine produced per harvest of grapes
Number of bikes produced per year by Holden
What is effectiveness?
Ability of an organisation to reach its objectives
Developed at the strategic level and is often aligned with mission and vision statement
How do you measure efficiency and effectiveness?
Through performance indicators
They are either quantitative (numbers) or qualitative ( customer feedback or satisfaction)
Use PI’s together
What is a performance indicator?
A set of measurements, that help a company determine if it reaches its performance and operational objectives
What must PI’s be?? (Characteristics)
Relevant: does it provide the info u need
Valid: is the Info correct
Reliable: what is the source? Is the info attained measured it anecdotal
Benchmark:point of comparison against competitors and own objectives
Profitability examples for PI’s (effectiveness)
Number of sales: level of sales over a given period which will be compared with the sales forecast
Net profit: difference between revenue expenses
Operational examples of PI’s (efficiency)
Rate of productivity: the efficiency in which resource inputs can be turned into outputs
Level of waste: level of residue waste often completion of output. Ability to reduce level of waste can reduce costs and prove beneficial to the community
Examples of customer PI’s
Customer satisfaction: form of a survey; level of product or service satisfactions, often compared with level of expectation (effectiveness)
Customer complaints: often compared with competitors and can often be the catylst for change
Employee examples of PI’s
Both effectiveness and efficiency
Staff turnover: number of people leaving the organisation result in training costs and lost of organisational knowledge history
Job satisfaction: qualitative and quantitate can be directly correlated with productivity and staff turnover
Workplace accidents: provides and inside into the focused placed on OHS
Examples of other PI’s
Staff absenteeism
Customer retention: being able to keep a hold of your customers
Why measure efficiency and effectiveness?
Opportunity to measure performance against key objectives e.g production process, service delivery, safety, employee satisfaction, customer satisfaction
