Criticisms of the efficiency criterion

Criticisms of “efficiency” as a guide to administration have been frequent and vociferous.8 One group of criticisms need not concern us here, for they refer to definitions of the term different from the one proposed here. In this category must be placed attacks on efficiency which equate the term with “economy” or “expenditure reduction.” As we have used “efficiency,” there is no implication whatsoever that a small expenditure—or, for that matter, a large expenditure—is per se desirable. It has been asserted only that if two results can be obtained with the same expenditure the greater result is to be preferred. Two expenditures of different magnitude can, in general, be compared only if they are translated into opportunity costs, that is, if they are expressed in terms of alternative results.

1. “Mechanical” Efficiency

Others have objected to “efficiency” on the ground that it leads to a “mechanical” conception of administration. This objection, too, must result from the use of the term in quite a different sense from that proposed here. For a mere criterion of preference among possibilities does not in any manner limit the administrative techniques which may be employed in attaining the possibilities, nor, as we shall see in the next section, does it in any way reduce the role of the administrator’s judgment in reaching decisions. Furthermore, the efficiency criterion is in the most complete accord with a viewpoint that places the social consequences of administration in the forefront of its determining influences.

2. “The Ends Justify the Means”

Two other lines of criticism assert that the criterion of efficiency leads to an incorrect relationship between “means” and “ends.” On the one hand it is alleged that, in the interests of efficiency, ends are taken to justify any appropriate means. As we have noted in Chapter IV, the terms “means” and “ends” must be employed carefully in order to avoid contradictions; and for this reason we have preferred to talk of the value and factual aspects of alternatives. Suffice it to say that if the evaluation of the results of administrative activity takes into account all the significant value elements of the administrative alternatives, no undue subordination of “means” to “ends” can result.

3. “Ruthless” Efficiency

On the other hand, it is charged that efficiency directs all attention to the means, and neglects the ends. This charge has already been answered in pointing out the integral role which valuation plays in the employment of a criterion of efficiency. It may be freely admitted that efficiency, as a scientific problem, is concerned chiefly with “means,” and that “efficient” service may be efficient with respect to any of a wide variety of ends. But merely to recognize that the process of valuation lies outside the scope of science, and that the adaptation of means to ends is the only element of the decisional problem that has a factual solution, is not to admit any indifference to the ends which efficiency serves. Efficiency, whether it be in the democratic state or in the totalitarian, is the proper criterion to be applied to the factual element in the decisional problem. Other, ethical, criteria must be applied to the problem of valuation.

Common to all these criticisms is an implication that an “efficiency” approach involves a complete separation of “means” and “ends.” We have already seen that, strictly speaking, this is not the case—that the only valid distinction is one between ethical and factual elements in decision. Yet, in the actual application of the efficiency criterion to administrative situations, there is often a tendency to substitute the former distinction for the latter, and such a substitution inevitably results in the narrower, “mechanical” efficiency which has been the subject of criticism.

How this substitution comes about may be briefly explained. The ethical element in decision consists in a recognition and appraisal of all the value elements inhering in the alternative possibilities. The principal values involved are usually expressed as “results” of the administrative activity, and, as we have seen, the activity itself is usually considered as valuationally neutral. This leads to the isolation of two values: (1) the positive values expressed as “results,” and (2) the negative values, or opportunity costs, expressed in terms of time or money cost.

In fact, to consider the administrative activity itself as valuationally neutral is an abstraction from reality which is permissible within broad limits but which, if carried to extremes, ignores very important human values.

We may enumerate some of these value elements more explicitly:

  1. If cost is measured in money terms, then the wages of employees cannot be considered as a valuationally neutral element, but must be included among the values to be appraised in the decision.
  2. The work pace of workers cannot be considered as a valuationally neutral element—else we would be led to the conclusion that a “speed- up” would always be eminently
  3. The social aspects of the work situation cannot be considered as a val- uationally neutral The decision must weigh the social and psychological consequences of substituting one type of work-situation for another.
  4. Wage policies, promotional policies, and the like need to be considered not only from the viewpoint of incentives and result-efficiency, but also from that of distributive justice to the members of the group.

It must be emphasized, then, that when a choice between alternatives involves any valuationally significant difference in the work activity this difference must be included among the values to be weighed in reaching a decision.

4. Valuational Bias

A closely related fallacy in the application of the efficiency criterion is to include in the evaluation of alternatives only those values which have been previously selected as the objective of the particular administrative activity under consideration. The effects of some administrative activities are confined to a rather limited area, and indirect results do not then cause much difficulty. The activities of the fire department usually have an effect on fire losses, but very little relation to the recreation problem in the community (unless ardent fire fans form a large part of the community). Hence the fire chief does not have to take recreation values into consideration in reaching his decisions. It is very fortunate that the consequences of human activities are so strictly segregated; if they’were not, the problem of reaching rational decisions would be impossible.9 But the mere fact that activities do not usually have valuationally significant indirect effects does not justify us in ignoring such effects if they are, in fact, present. That is, the fire chief cannot, merely because he is a fire chief, ignore the possibility of accidents in determining the speed at which his equipment should respond to alarms.

This all seems commonplace, yet we shall devote a large portion of the next chapter to showing that, in actuality, administrators in reaching decisions commonly disclaim responsibility for the indirect results of administrative activities.10 To this point of view we oppose the contrary opinion that the administrator, serving a public agency in a democratic state, must give a proper weight to all community values that are relevant to his activity, and that are reasonably ascertainable in relation thereto, and cannot restrict himself to values that happen to be his particular responsibility. Only under these conditions can a criterion of efficiency be validly postulated as a determinant of action.76

Of course, the extent to which administrators can, in practice, give consideration to “indirect” effects is severely limited by the psychological considerations analyzed at length in Chapter V. Many effects not directly related to the objective of the organization will perforce be ignored because the administrator’s span of attention is limited, and because there are often severe limits on the time available for making decisions.

Source: Simon Herbert A. (1997), Administrative Behavior, Free Press; Subsequent edition.

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