A Note on that Dirty Word
"Efficiency"
HENRY MINTZBERG
Faculty of Management
McGill University
1001 Sherbrooke Street, West
Montreal, PQ,
Canada H3A 1G5
Efficiency gets a bad name because it inevitably means
measurable efficiency, with three unfortunate consequences.
Because costs are typically more easily measured than benefits, efficiency all too often reduces to economy. Because
economic costs can usually be more easily measured than social costs, efficiency often produces an escalation in social
costs, which are treated as "externalities." Because economic
benefits are typically more easily measured than social benefits, efficiency often drives the organization toward an economic morality which can amount to a social immorality.
T A Thy should "efficiency" be considV Vered a dirty word by so many different people? It is one thing when assembly line workers or student radicals
rail against it, but quite another when a
Harvard Business School teaching note refers to the label "efficiency expert"
applied to a manager in one of its cases as
"most uncomplimentary in connotation"
[Note to Learned & Christensen 1981].
Copyright © 1982, The Institute of Management Sciences
0092-2102/82/1205/0101$01.25
Efficiency, Herbert Simon argued in
Administrative Behavior, is a value-free
concept, in his words, "completely neutral" [1957, p. 14]. He defined the "criterion of efficiency" as dictating "that
choice of alternative which produces the
largest result for the given application of
resources" [p. 179]. In other words, to be
efficient means to get the most of whatever goal an organization wishes to purPROFESSIONAL — COMMENTS ON
INTERFACES 12: 5 October 1982 (pp. 101-105)
MINTZBERG
will help you to achieve them. We offer
you tools. Into the foundation of your
choices we shall not inquire, for that
would make us moralists rather than scientists" [Selznick 1957, p. 80]. But when
the goals are considered anti-social, efficiency acquires a negative connotation.
Singer and Wooton [1976], using a management perspective, describe the case of
Albert Speer, the highly efficient manager
of the Third Reich's armaments production, a man who "stressed functional efThe negative attitudes might be consid- fectiveness and amoral judgment" [p. 88].
Yet even this example doesn't explain
ered a reaction to an obsession with effithe negative attitudes toward efficiency;
ciency, what is called the "cult of effifor every Speer there are surely many
ciency" — its pursuit as an end in itself.
managers concerned with the efficiency of
"Years of Taylorism, scientific manageorganizations that pursue perfectly acment, and now operations research and
ceptable goals — hospitals and post ofmanagement science have led to the
fices, for example. As Simon defined the
maximization of efficiency as a value"
[Pfeffer and Salancik 1978, p. 35]. But the term, efficiency should be a force for good
as well as evil. But even in hospitals and
post offices, let alone Harvard Business
"If I heard that a restaurant
was efficient, I would wonder School cases, the efficiency experts are
often the bad guys. Why?
sue — for example the most growth, the
happiest employees, or the highest quality products. Efficiency means the greatest
benefit for the cost, in the words of
McNamara's whiz kids at the Pentagon
back in the 1960s, "the biggest bang for
the buck." And since resources are always
constrained in a competitive world, efficiency is a logical goal of every organization, indeed every human endeavor. It is
a "motherhood" goal. How could anyone
possibly be against efficiency?
about the food.''
way Simon defined the term, efficiency
cannot be an end in itself. An obsession
with efficiency would have to mean an
obsession with whatever goal efficiency is
helping an organization to pursue. We
have to look further for an explanation.
The obvious place to look is at the goals
which are being pursued efficiently. It is
the "professional" manager who makes
his function the efficient attainment of
whatever goals the organization is supposed to pursue. He is the hired gun, so
to speak, in the business of efficiency.
" . . . they say given your ends, whatever
they may be, the study of administration
I believe the root of the problem lies not
in the definition of the term, but in how
that definition is inevitably put into operation. In practice, efficiency does not mean
the greatest benefit for the cost; it means
the greatest measurable benefit for the
measurable cost. In other words, efficiency
means demonstrated efficiency, proven efficiency, above all, calculated efficiency. A
management obsessed with efficiency is a
management obsessed with measurement. The cult of efficiency is the cult of
calculation. And therein lies the problem.
A simple experiment demonstrates the
point. I asked fifty-nine MBA students,
cold, at the start of a class on another sub-
INTEREACES 12:5
102
THAT DIRTY WORD
ject, to write down the first thing that
came into their heads when I said that a
restaurant was efficient. (Readers are invited to stop and record their own answers.) According to Simon's definition,
the answers should have varied widely.
According to my contention, however,
easily quantified goals would predominate. In fact, forty-three of the students
named that most operational of goals,
speed of service, in one form or another
(for instance, "fast service," "no delays").
The quality of the food — surely at least
as important a goal for restaurants, although less easily measured — did evoke
thirteen positive comments (such as
"serves good meals," "tasty food"), but
also five specifically negative comments
(for example, "terrible food," "serves
what should be thrown out," "bland, boring, and dehumanizing"). Another person to whom I put the same question remarked, I don't see what efficiency has to
do with food," but then, on further reflection, added, "If I heard that a restaurant
was efficient, I would wonder about the
food." (A few students made remarks on
price, cleanliness, and profitability; note
that some made more than one comment.) I polled twenty-two more students
a year later, and this time all but two
mentioned speed of service (fourteen exclusively). I also polled both groups of
students on the statement that my house
was efficient, and forty of the fifty-nine as
well as ten of the twenty-two referred to
something related to getting around in it
or cleaning it up quickly. Seven of the
first group, and ten of the second commented on its fuel consumption. Issues
University administrators know with
some precision how much it costs to train
an MBA student; but no one really has a
clue how much is learned in such programs, or what effect that learning has on
the practice of management. The all-toofrequent result of an obsession with efficiency, therefore, is the cutting of tangible
costs at the expense of intangible benefits.
What university administrator cannot cut
10% from the cost of training an MBA
with no measurable effect on the benefits?
Even in a business firm, it is a simple matter for a chief executive to cut the budget
— he just reduces expenditures for activi-
October 1982
103
of comfort, beauty, and warmth (in
the psychological sense) were hardly
mentioned.
Thus, in practice, efficiency is associated with criteria that are measurable.
An efficient restaurant is one that gets its
food on the table in thirteen minutes, independent of (or perhaps in spite of) the
quality of that food; an efficient home is
one that warms the bodies of its occupants with only 3000 liters of oil during a
frigid Canadian winter, not one that
warms their hearts with its charm. This
orientation has three major consequences.
(1) Because costs are typically more easily
measured than benefits, efficiency all too often
reduces to economy. Compared with ben-
efits, costs more easily lend themselves to
expression in quantitative terms — in dollars, man-hours, materials, or whatever.
The label "efficiency expert"
. .. "most uncomplimentary
in connotation."
MINTZBERC
ties with intangible benefits, such as research or advertising. The effect on profits
may not show up for years, long after he
has left. All too often, therefore, efficiency
just means economy, with benefits suffering at the expense of costs, so to speak.
And efficiency gets a bad name.
(2) Because economic costs can usually be
more easily measured than social costs, efficiency often produces an escalation in social
costs, which are treated as "externalities."
Business firms in particular like to measure things. Peter Drucker makes this
It means the greatest measurable benefit for the measurable
cost.
clear: "(The) task can be identified. It can
be defined. Goals can be set. And performance can be measured. And then
business can perform" [1974, p. 347]. The
problem is that some things are more easily measured than others. The dollars
spent, the hours worked, the materials
consumed are easily quantified. The air
polluted, the minds dulled, the scenery
destroyed are costs too, but they are not
so easily measured.
In all kinds of organizations, the economic costs — the tangible resources deployed — are generally easier to measure
than the social costs — the consequences
for people's lives. Often an emphasis on
efficiency means that only the tangible
costs are attributed to the organization,
while the intangible, usually social costs
get dismissed as "externalities," for which
society is considered responsible. The implicit assumption is that if a cost cannot be
measured, it has not been incurred. And
INTERFACES 12:5
so it is not the concern of a management
responsible for "efficiency." As a result,
the economic costs tend to be closely controlled by "efficient" management, while
the social costs escalate. And efficiency
gets a bad name.
(3) Because economic benefits are typically
more easily measured than social benefits, efficiency often drives the organization toward an
economic morality which can amount to a so-
cial immorality. Human activities create
many benefits, ranging from tangible to
highly ambiguous. The manager concerned with efficiency naturally favors the
former; he can measure them. The dean
who must base his promotion decisions
on "hard facts" will be encouraged to
count the publications of professors rather
than make subjective assessments of their
quality. An obsession with efficiency
therefore means that tangible, demonstrable> measurable benefits (such as
speed of service) are allowed to obscure
vague and ill-defined ones (such as the
quality of food), sometimes even when
the former miss the point. Again, it is
those things economic — associated with
tangible resources — that best lend themselves to measurement. The social values
get. left behind.
Pirsig, in his popular book, Zen and the
Art of Motorcycle Maintenance, takes this
point one step further, suggesting that
such social values may be beyond our
skills of logic and analysis (and, therefore,
measurement): "I think there is such a
thing as Quality, but as soon as you try to
define it, something goes haywire. You
can't do it .... Because definitions are a
product of rigid, formal thinking. Quality
cannot be defined" [1974, p. 200]. And
104
THAT DIRTY WORD
yet, "even though Quality cannot be
limit, efficiency emerges as one pillar of
defined, you know what Quality is"
an ideology that worships economic
[p. 201]. But do the efficiency experts? Or goals, sometimes with immoral conseat least, do they allow themselves to
quences. Thus efficiency, that "com"know" that which is beyond the power
pletely neutral" concept, as well as the
of their tools?
managers and management schools obThus efficiency emerges, in practice if
sessed with it, gets a bad name.
not in theory, not as a neutral concept at
References
Ackerman, R. W. 1975, The Social Challenge to
all, but one associated with a particular
Business, Harvard University Press, Camsystem of values — economic values. In
bridge, Mass.
fact, an obsession with efficiency can
Bower, J. L. 1970, "Planning within the firm"
mean the subordination of social goals by The American Economic Review: Papers and Proceedings of the 82nd Annual Meeting (May) pp.
economic ones which can drive the or186-194.
ganization beyond an economic morality
Bower, J. L. 1974, "On the amoral organizato a social immorality. Ackerman [1975]
tion: an inquiry into the social and political
shows how the systems of objectives used consequences of efficiency" in The Corporate
in large corporations "may actually inhibit Society ed. Robin Marris, John Wiley & Sons,
Inc., New York.
social responsiveness" [p. 56] by driving
Drucker, P. F. 1974, Management: Tasks, Responout the less operational social goals.
sibilites. Practices, Harper and Row, New York.
Learned, E. P. and Hower, R. M. 1953, revised
Bower [1970] notes that it was the turning
1972, copyright renewed 1981, Rose Company,
of the financial screws in one such sysTeaching Note 9-453-002, Division of Research,
tem, at General Electric, that contributed
Harvard Business School, Cambridge, Mass.
to the famous price fixing scandal of 1961.
Pfeffer, J. and Salancik, G. R. 1978, The External Control of Organizations: A Resource DepenIn the giant corporation.
dence Perspective, Harper and Row, New York.
Men are rewarded for performance, but perPirsig, R. M. 1974, Zen and the Art of Motorajcle
formance is almost always defined as shortMaintenance: An Inquiry into Values, Bantam,
run economic or technical results. The more
New York.
objective the system, the more an attempt is
Selznick, P. 1957, Leadership in Administration:
made to quantify results, the harder it is to
A
Sociological Interpretation, Harper and Row,
broaden the rules of the game to take into acNew
York.
count the social role of the executive. [Bower
Simon, H. A. 1957, Administrative Behavior,
1974, pp. 202-203]
Thus pro-economic behavior becomes
anti-social behavior. And efficiency gets a
bad name.
In practice if not in theory, efficiency is
associated with economic values. The call
to "be efficient" is the call to calculate,
where calculation means economizing,
means treating social costs as externalities, and means allowing economic
benefits to push out social ones. At the
October 1982
Second Edition, Macmillan, New York.
Singer, E. A. and Wooton, L. M. 1976, The
triumph and failure of Albert Speer's administrative genius: implications for current management theory and practice. Journal of Applied
Behavioral Science, pp. 79-103.
105