Efficiency is completing a specific task in the best way possible to achieve a result. While, effectiveness, is completing the correct tasks in order to achieve a higher outcome. Business can be efficient and yet not effective, which means fairly certain failure. A business that is effective but not efficient can be easily turned around. When selecting KPI’s make sure that you focus on effectiveness first and then look at efficiency.
It is very important that business owners be cautious with KPI’s. Far too many business owners make the same mistakes with KPI’s, realizing they have not been achieving the results that they wanted to. They decide to go overboard and implement too many. This generally creates conflicting KPI’s and overwhelms the staff. The best results can be seen by starting out with a few very well-thought-out KPI’s.
In Jeff Borschowa’s book, 8 Pillars for Exponential Business Growth, Mr. Borschowa lists the key stages to creating KPI’s.