A practical organizational efficiency measure /

In any organization, there is often a call to make the system “more efficient.” This document describes a novel framework for measuring efficiency at the microeconomic level, and discusses pitfalls in trying to make the organization more efficient. We show how this framework can be used to monitor an organization; if available data is limited, we demonstrate how the framework can still be used in Monte Carlo simulations to help an organization explore salient features in exercises to make itself more efficient. Unlike efficiency measures found in the literature which focus on comparing a group’s productivity to the values found in its industry, this framework should allow an organization to assess how to improve efficiency using data that ought to be available in any performance management framework (page i).