# Efficiency

**Efficiency** in narrow, technical sense is relation of output energy to input energy and is always lower than 1 (apart from *perpetuum mobile*, which doesn't exists as we know). It is more difficult to define efficiency in organization. Therefore in English this term is rarely used with respect to companies. It is more convenient to use term organizational effectiveness, which has much wider sense.

Criteria for performance evaluation and its effects can be seen on the following planes: teleological, praxeological, economic, ethical, aesthetic, hedonistic. Assessment of the operation. Efficient or inefficient activities shall be analyzed it the universal sense or in synthetic sense. Assessment must always be positive (positive) or negative (negative). It can not be indifferent (neutral), because if it does not meet its basic functions.

Praxeologist is interested in fitness evaluation, belonging to the utilitarian evaluations related to the practical usefulness of the measures implemented. Praxeological ratings are relativized to the action. These assessments are issued before the operation (ex ante) or after the operation (ex post) Efficiency is a measure of compatibility between the model (planning, set) and the actual (real). This measure indicates the extent to which the objective is meet.

## Forms of efficiency

Efficacy is a measure of performance evaluation is the difference between a useful effect and effort incurred on the implementation of the action. Action is good, if the difference between the result of a useful and effort incurred for the implementation of this measure is greater than zero (W - K> 0). Operation is inert if the difference is equal to zero (W - K = 0), and the effect is adverse, if the difference is less than zero (W - K <0).

Operation is economical, if the ratio of useful due to the costs incurred for the implementation of this measure is greater than one W / K > 1. Operation is inert if the ratio is equal to one W / K = 1, the operation is not economical if the ratio is less than one W / K < 1. The measure of cost-effectiveness in this method is the relationship between effort and outcome, rather than the absolute value of the result

## References

- Charnes, A., Cooper, W. W., & Rhodes, E. (1978).
*Measuring the efficiency of decision making units*. European journal of operational research, 2(6), 429-444.