Business Psychology Assignment

November 29, 2012

BS ACCOUNTANCY

BUSINESS PSYCHOLOGY ASSIGNMENT

In our society, individuals are encouraged to be more intentional in the way they solve problems. One may choose to see the problem or the solution. The chosen path may be due to a default on the way of thinking or a learned behaviour. One may choose to improve his productivity or performance by becoming more proactive as per the outcome he wants. Therefore, he can be efficient, effective or both.

Both the terms efficient and effective refer to the ability of a person, enterprise, or process to perform a function well. An efficient person has high efficiency while an effective person has high effectiveness. However there is a small but very significant difference between these two measure of performance. Efficiency refers to the economy in use of resources for performing a task, and effectiveness refers to the total output generated.

Efficiency is measured in terms of ratio of "output generated" divided by inputs used in the process - for example, widgets produced per kilogram of raw material used.

Effectiveness measures the total output produced - for example, total widgets produced in a day.

An example will help us to understand this concept better. Two different lathe operators, say A and B, are assigned the task of making bushes on a lathe. Let us say A produces 100 bushes in a shift, and in the process uses up 5 kilogram of steel rod in the process. In comparison, B produces 120 bushes using 7.5 kilogram of steel rod.

The effectiveness and efficiency of these two lathe operators based on their performance is compared in table below:

Operator Effectiveness Efficiency

A 100 Bushes per shift 20 Bush per Kg of Steel

B 120 Bushes per shift 16 Bush per Kg of Steel

Thus we see that operator A has higher efficiency but lower effectiveness.

In management, it is important to achieve high efficiency as well as effectiveness. The relative emphasis to be given to efficiency and effectiveness will depend from situation to situation. For example, we must be careful to control the quantity and cost of water used in a factory during routine operations. However, if the same factory is on fire, we will not think twice about using whatever water can be made available for putting out the fire.