Peter Drucker Review

“The one contribution [the manager] is uniquely expected to make is to give others vision and ability to perform. It is vision and moral responsibility that, in the last analysis, define the manager.”

In this chapter, Drucker defined the qualities and functions of a successful manager.

• The most important qualities of a manager are vision, character, and responsibility.
• His primary duties are setting objectives, organizing the work, communicating, measuring, and developing people.
• His tools are reading, writing, speaking, listening, and planning.
• Decisions make or break the manager and those around him or her.
• Getting results, and sustaining them, are the manager’s primary responsibilities.

(The Practice of Management, chapter 27)

“It is [the book’s] thesis that management of worker and work has as its ultimate goal the realization of the managerial vision for all members of the enterprise, and as its major means the assumption of significant responsibility and decision-making power by every worker.”

A professional such as an electrical engineer, lawyer, or software developer is governed by two sets of requirements. That of the profession and that of the organization. These requirements must be integrated and ordered for business results.

Professionals ought to be allowed to fulfill the requirements of their profession, but they must have a vision of the organization’s mission and goals. Professional requirements are not an end in themselves. They are a means to an end. Their purpose is to further the mission of the organization and its goals for the public good.

To increase the ability of professionals to integrate and order their efforts, two things can be done. First, Drucker recommended giving professionals oversight opportunities in areas of the business that their work affects. He gave an example of a chemist who was put on a financial committee. The chemist’s professional requirements remained but he gained new knowledge of what the business required.

Second, professionals should have promotion tracks that encourage professional advancement, and they should be managed by people who have experience in the profession. This will increase the likelihood all requirements are fulfilled.

(The Practice of Management, chapter 26)

“If the supervisor has a genuine manager’s job; if he is adequately supported by his staff; if he has real authority; and if his unit is big enough–then his job will have become manageable again.”

Supervisors are the first level of management and they are often wasted. Not only are they required to manage, but they are also expected to function as super employees.

Drucker believed that supervisors should focus less on activities and more on objectives. They should plan, train, and guide teams toward management goals and delegate everything they do not have to do.

To make this happen executives should increase team size. This will force supervisors to set objectives and delegate work. Executives should also give supervisors more authority and status. This will force executives to pay attention to their needs.

If team size and supervisor authority increase, supervisor and employee focus will shift toward management goals and business results.

(The Practice of Management, chapter 25)

“…the real job is to convince workers that there is an ever-present danger of loss, that therefore profit is necessary to build their own future job and their livelihood.”

Many employees, in large organizations, do not believe profit or results are their responsibility. They believe profit is the CEO’s responsibility or a function of the sales or the business development team. This has caused problems. First, employees are not as motivated to perform as they would otherwise be. Second, they do not think about how their work could contribute to profit in a more effective way, or conversely, how quietly quitting affects the enterprise. Third, employees do not look for and take opportunities to contribute.

For employees to accept the fact that they are responsible for profit and results, they must realize that profits come from outside of the business, via markets and customers. They must realize that customers decide what is valuable and worth paying for and that the customer determines the economic future of the employee. An employee who understands this will be more motivated to contribute to what the customer considers to be of value and to the business’s profit.

Executives should find examples of people who accepted responsibility. They should showcase how they contributed to what customers consider value, and how this led to company profit and personal success.

(The Practice of Management, chapter 24)

“…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)