Abstract Purpose This study aims to examine performance assessment of organizational units through psychological empowerment (PE) and employee engagement (EE) approach and whether this relationship differs among efficient and inefficient organization units. Design/methodology/approach This study drew on merging the principal component analysis (PCA), data envelopment analysis (DEA) and partial least square-multigroup analysis (PLS-MGA) to benchmark the performance of organizational units affiliated with Zagazig University in Egypt using PE dimensions as inputs and EE as output. Besides investigating whether PE inputs have the same effect among efficient and inefficient units. Findings Performance assessment based on independent data showed that all the investigated organizational units are not at the same efficiency level. The results revealed that there are eight efficient units versus seven inefficient ones. Moreover, PLS-MGA results demonstrated that no significant differences concerning the impact of PE inputs on EE between efficient and inefficient units groups. Nevertheless, the effect of these inputs was slightly higher in the former. Originality/value Studies on EE performance in the service sector are scarce in the literature, this study is a novel contribution of exploring EE efficiency in Egypt as a developing economy. Specifically, using the PCA-DEA-structural equation modeling approach.