What Is Organizational Efficiency?

Organizational efficiency is an organization’s degree of success in utilizing the least possible inputs in order to produce the greatest possible outputs. Organizational efficiency is too broad to be encapsulated in a single figure. As such, organizations gauge it using various quantitative figures, such as production costs and production times.

For an organization to succeed at accomplishing its goals, it must be able to create the right plans, acquire the resources necessary to implement its plans and use its resources in the implementation of its plans. Efficient organizations implement their plans using the smallest possible expenditure of resources to generate high margins of profit.

Businesses gauge organizational efficiency by analyzing resources, time and costs. Various factors that contribute to an organization’s level of efficiency can be both internal and external to the organization. Management is one of the most influential factors of organizational efficiency because it focuses on strategic plan implementation. Management must be able to deal with diversity in the workforce and coordinate employee efforts for better efficiency. Management must also look for methods to improve operations, eliminate inefficient and redundant processes, be open to change, and evolve if their products and services do not meet changing market conditions.