In my recent paper for the National Preparedness Commission, I wrote:
We have been driven by the pursuit of economic growth and efficiency above all, especially in the use of financial capital, both nationally and internationally, for 40 years or more. We have never really pursued the more complex ideal of effectiveness: defined as the achievement of desired outcomes or the realisation of the purposes of the organisation or nation, not least its own survival.
A few people have asked me to explain, so here goes!
Efficiency is commonly regarded as:
a measure of the proportion of the energy put into a system (capital, labour, materials, land) that is converted into the desired output (products and services).
Energy not converted into goods or services is waste (unproductive work) so efficiency can also be thought of as a measure of productivity.
If the ‘output’ is what we wanted and waste is low, efficiency is good. However, if the product or service does not meet the needs or aspirations of the client then the efficiency is nugatory, i.e. futile or invalid.
An example of that could be a call handler in a call centre, who, working in a process designed to maximise throughput (volume of calls handled over time) seeks to get the client off the phone and move on to the next one rather than actually solve the problem. More calls are handled per staff member, an excellent result surely? Efficiency has improved.
The effect of the efficiency improvement will be to drive up the number of calls, so we will need ever more staff to handle ever more unresolved and repeated complaints.
And, yes, I know every one of you readers has had this experience!
Each call is handled more quickly but the improvement makes things worse. The call handling time per unresolved complaint increases with each subsequent attempt by the caller……..
“I called you last week and you said…”
“This is the third time I have called you……”
“Can I speak to somebody senior enough and paid enough to be shouted at by somebody as angry as I am” (Thanks to Peter Dudley for that one!)
And, every time we hit a queue we are told “your call is important to us” – but clearly not as important as increasing their apparent efficiency.
What am I saying?
What organisations OUGHT to pursue is effectiveness, the fulfilment of customer expectations, the delivery of the desired outcome. If we are NOT effective then the efficiency is illusory.
In the example above the outputs are:
Claimed efficiency gain;
The outcome is not satisfied customers it is loss of reputation, loss of customers. The increase in efficiency drives the destruction of the business! Doing the wrong thing better is not an improvement.
Now, as we lurch towards a recession, particularly towards challenges to public expenditure, I urge all those in positions of leadership to consider carefully:
Purpose: what outcome does your organisation exist to fulfil?
Process: how are your processes designed to deliver them?
Efficiency: what proportion of your resources are devoted directly to service delivery?
One of the commonest ‘uses’ of time in our modern, bureaucratically arranged, organisations is the ‘meeting’ – a device for bringing people together for various reasons and not always productive, so here is a thought. A common response to reduced budgets is to show determination by cancelling biscuits at meetings. However, the true cost of the meeting is NOT the biscuits, it is the salaries for all the people attending AND the customer facing work that doesn’t get done. Perhaps a better response would be to send everybody a biscuit and cancel the meeting!