“…to perform one has to take responsibility for one’s own actions and their impact. To perform, one has, in fact, to be dissatisfied, to want to do better.”

Drucker believed that the greatest motivator of performance is an inner desire to take responsibility. Money can motivate up to a point, but over the long haul, it is no match for responsibility.

Drucker shares ways that managers can encourage responsibility. First, employees need jobs that suit their strengths and abilities. If a job does not align with an employee’s strengths it will demoralize the employee and performance will be low. Second, managers need to set high standards. The jobs need to challenge employees or they will not become top performers. Third, employees need information. Information needs to be accessible and integrated. Information that lacks context or that is spread across too many sources makes top performance unlikely. Fourth, employees need opportunities to become managerial in their contribution. If a role requires the entrepreneurial tasks of discourse, planning, and goal setting it is managerial. These tasks improve vision and desire to perform.

One idea provided by Drucker is that company functions and events should be managed by those who are not officially managers. Individual contributors need opportunities to take responsibility, grow, lead, and perform.

(The Practice of Management, chapter 23)

“…a man needs more than a job he can perform. He needs the job that will provide the greatest opportunity for growth and for superior performance.”

Executives and managers should make certain that employees have opportunities to develop judgment and skills. If there are jobs that do not require judgment and skill they should be eliminated or automated. There are routine elements to most jobs, but these should not characterize the entire job. There should be something about the job that requires high-level performance in matters of judgment and skill.

Moreover, to support high-level performance, employee strengths, skills, values, and desires should align with the requirements of the job. Continual assessment is necessary to properly place employees. If done well, proper placement will increase business results and employee motivation.

(The Practice of Management, chapter 22)

“…work must always be organized in such a manner that whatever strength, initiative, responsibility and competence there is in individuals becomes a source of strength and performance for the entire group.”

The purpose of the chapter is to help managers increase the effectiveness of their team members. Drucker makes three arguments. First, in a post-industrial society people are not motivated to greater effectiveness by fear. They must be challenged. Second, the business requires profit and change while the employee requires income, status, equal opportunity, and meaning. Management needs a strategy to fulfill these requirements. Third, enterprise-employee friction can be diminished when the benefits of profit are understood.

Executives should evaluate the structure and plan of management to determine if it is fulfilling business and employee needs. They should read the chapter section titled “The Worker’s Demands on the Enterprise.”

An important idea is that employees need work that is meaningful and serious.

(The Practice of Management, chapter 20)

As the US economy stalled in the 1930s IBM advanced into new markets. This was critical to IBM’s success and prosperity. It comports with the old adage: an offense is the best defense. It is also reminiscent of General Patton’s famous epigram: “when in doubt, attack.” The best way to beat a recession is to increase marketing and sales.

(The Practice of Management, chapter 19)

“…the problem of growth is largely one of management attitude, the requirement for successful growth is primarily the ability of management drastically to change its basic attitudes and behavior.”

Business size is the focus of this chapter. Drucker describes the problems and requirements of “four stages of business size.” His main argument is that attitudes, behavior, and organizational structure determine size.

Drucker explains the primary problems of small and large businesses and what is required for growth. He provides case studies and solutions from America’s most successful companies.

An executive should ask: What is our management structure? What should it be? What attitudes and behaviors are stopping growth? What behavior and structure are needed to grow the business?

(The Practice of Management, chapter 18)

“Organization structure must make possible the training and testing of tomorrow’s top managers.”

Great organizations not only produce business results they also develop the managers of tomorrow. This chapter explains the requirements for forming the right management structure. Two principles are preeminent: federal decentralization and functional decentralization. The former is the decoupling of a large business into autonomous units responsible for their own performance and results. The key idea is that the business units need their own markets and products. Also, their profits should contribute to the main business.

Decentralized business units have several profound benefits. They are more agile, they produce greater results, and they provide general management opportunities for more people. Drucker lists major companies that adopted federal decentralization in the early 20th century such as DuPont.

This chapter will give executives an understanding of when to use federal decentralization versus functional decentralization. They will learn the critical aspects of both approaches.

(The Practice of Management, chapter 17)

“The first question in discussing organization structure must be: What is our business and what should it be?”

Organizational structure is the theme of this chapter. Drucker argues that organizational structure should not be the focus. The focus should be on the needs of the business. To determine business needs, executives should analyze the business activities, decisions, and relationships. Business activities include marketing and engineering. Top managers need to define the priority of business activities. The priority determines the distribution of time and resources. Second, decisions need to be thought through in a strategic way. Who will make them? when? and under what circumstances? Some decisions have a great effect and thus need to be carefully managed. Lastly, managerial relationships need to be given proper focus. What are the duties and opportunities that managers have to support their superiors in the achievement of business goals? Regarding subordinates, managing to get the job done should be replaced with managing to fulfill the objectives of the boss.

Executives can use this chapter to determine the viability of their management structures through an analysis of their business activities, decisions, and relationships. The section on the kinds of decisions that are made and how they should be made is the most useful part.

One idea to remember is that a decision does not merely affect one thing, it affects many things. Decisions have unintended and long-term consequences and thus should be made at the right organizational level. Top management must take this into account when considering how to optimize or reorganize a company’s structure.

(The Practice of Management, chapter 16)

“Increasingly it is to business that our citizen looks for the fulfillment of the basic beliefs and promises of society, especially the promise of “equal opportunity.” Manager development from this point of view is little but a technical name for the means through which we carry out a central and basic part of our social beliefs and political heritage.”

Drucker explained what manager development is not, then what is necessary to have it. His main argument is that managers should be trained in accordance with the company’s future needs. They should also be given opportunities to understand the business in its entirety. Manager training that does not provide an understanding of the whole is not what it is cracked up to be.

To understand future needs, top management must assess present business realities, past and present events (e.g. population growth), innovations, and trends. Drucker believed this analysis enables companies to define requirements 5-10 years into the future.

Manager training is mostly done on the job. Management on every level needs to be encouraged to accept responsibility for the development of subordinate managers. This behavior contributes to the achievement of business goals. It also elevates company spirit.

(The Practice of Management, chapter 15)

“The problem is one of systematic conception and organization of the job. Without it even the ablest, most intelligent and best intentioned of chief executives will not succeed in doing his job, and will be forced to manage according to pressures and emergencies.”

Drucker believed that the chief executive job was too big for one person to do. A single executive is not able to think and plan sufficiently to make the company successful. There are too many demands and urgencies. The role of the executive should be done by an executive team. Massive results are achieved by executive teams that divide and conquer. Each member plays a role and takes responsibility for a result area. Drucker said that General Electric and General Motors were run by two or three men.

One idea in the chapter is a metric of effectiveness for executive teams. Executive team members’ responsibilities, salaries, and prestige should be comparable. They should discuss issues regularly. If these things are not happening, they are not a team. And if the executives are not a team it is likely that the most important work is not getting done.

(The Practice of Management, chapter 14)

“Management by objectives tells a manager what he ought to do. The proper organization of his job enables him to do it. But it is the spirit of the organization that determines whether he will do it.”

Drucker argued that practices or behaviors lead to top-performing organizations. The practices develop a culture that motivates and rewards performance and results. Employees and customers are proud of their relationship with these companies.

Top-performing organizations are exciting places. They motivate performance and results. They have high standards, tolerate mistakes, and judge and reward performance.

(The Practice of Management, chapter 13)