“Management is a multi-purpose organ that manages business and manages managers and manages workers and work.” This management definition was given by Peter F. Drucker in his book, The Practice of Management.
Who is Peter F. Drucker?
Peter Ferdinand Drucker (1090-2005) was an Austrian-born, American management thinker, professor, and author.
He also spent part of his life in England and attended a lecture by John Maynard Keynes. Afterwards he said, “I suddenly realized that Keynes and all the brilliant economic students in the room were interested in the behaviour of commodities while I was interested in the behaviour of people.”
In 1954, he launched one of his most illustrious books till date: The Practice of Management. While he was working on this book, he realised he was laying down the foundations of a new discipline. This book led to people hailing him as the ‘father of management’.
Drucker had a decorated career and was awarded with numerous awards and honours. Some of these are mentioned below:
Godkin Lecturer at Harvard University Presidential Medal of Freedom
Honorary Member of the National Academy of Public Administration
Drucker’s contributions to management:
Nature of management:
Drucker opposed bureaucratic management and was in favour of creative management. According to him, the aim of management should be to innovate. This could be done in the form of combining old and new ideas, developing new ideas, or encouraging others to innovate.
According to Drucker, management is the key organ of any organisation. In his opinion, management is performed through a series of tasks. A manager has to perform several functions such as setting of objectives, increasing productivity, organising and managing social impacts and responsibilities, and motivating employees. Drucker gave importance to the objective function and specified the divisions where clear objective is necessary. These are innovation, productivity, market standing, financial resources, profitability, managerial performance and development, employee performance, and social responsibility.
According to Drucker, there are three characteristics of an effective organisation structure as explained below:
The institution must be structured to achieve maximum performance; It should contain least possible number of managerial levels; It must be responsible for the testing and training of future managers.
There are three aspects in organising that are undermentioned:
Activity analysis explains the work that has to be done, what kind of work needs to be done, and what importance needs to be given to the work. Decision analysis determines or decides at which level a decision can be made.
Relation analysis assists in defining the organisational structure.
Drucker is in favour of the concept of federalism. It refers to centralised control in a decentralised structure. A decentralised structure creates a new organisational standard. It is similar to the relationship between a central and state government. Federalism trumps other methods of organising in the following ways:
It allows the top management to focus on the important functions; It defines the roles and responsibilities of the employees;
It sets a benchmark to calculate the success and efficiency of the employees.
Management by objectives (MBO):
This is considered to be one of the most important contributions made by Drucker to the field of management. Management by objectives (MBO) is a management approach where equilibrium is required to be achieved between the objectives of employees and the objectives of an organisation. There are certain conditions that must be met to make MBO management a success. Take a look at these conditions here:
The objectives are set after discussions between the managers and employees; The set objectives are quantitative and qualitative in nature; Daily feedback must be given to the employees with regards to their performance; Employees with high performance must be rewarded; The guiding principle should be growth and development.
According to Peter Drucker, management by objectives can be employed by following five steps as explained below:
Define organizational objectives: Setting organisational objectives is the first step in initiating management by objectives. These objectives should be in line with the organisation’s vision and mission statement.
Inform the employees about the organizational objectives: According to MBO, the objectives must be informed to the employees at all levels. This enables the employees to understand their roles and responsibilities. Communication is another important aspect in this step. High performing employees should be given positive feedback, which is reinforced in the form of rewards.
Involve the employees in determining the objectives: Involving the employees in the decision-making process helps them in understanding why certain things are expected of them. This increases the commitment and the motivation of employees.
Monitoring the objectives: The objectives need to be measured on a regular basis to ensure that the work is being done keeping the objectives in mind. The detection of problems must be done in advance so that the problem could be prevented or easily sorted. In MBO management, each objectives has sub-objectives and so on. The managers must motivate and encourage the employees to complete the sub-objectives.
Evaluation and Feedback: This is an important aspect of management by objectives. A comprehensive evaluation system must be in place. Employees must be given honest feedback, and high performance needs to be rewarded.
According to Peter F. Drucker, swift technological development will result in speedy changes in the society. He expresses concern about the effect of these rapid changes on human life. He says that these changes can be counteracted by developing dynamic organisations that are adept at absorbing change.
The aforementioned contributions are also considered to be the principles of management as described by Drucker.
Peter Drucker’s management principles are extremely important in today’s time. Hence, his teachings are a part of the curriculum at Toronto School of Management (TSoM).
Drucker, the man who invented management theory, put great currency in listening, asking questions and letting natural patterns emerge from the answers.
The author of 39 books during his long career, and counselor to titans of business and rulers of nations, Drucker championed the powers of observation, often formulating simple ideas that triggered startling results. The Practice of Management (1954) and The Effective Executive (1966) are considered his landmark works. Part of Drucker’s genius lay in his ability to find patterns among seemingly unconnected disciplines. “The most important thing in communication is to hear what isn’t being said,” he once said.
“Whether it’s recognized or not, the organization and practice of management today is derived largely from the thinking of Peter Drucker,” BusinessWeek reported shortly after his death at 95 in 2005. “What John Maynard Keynes is to economics or W. Edwards Deming to quality, Drucker is to management.”
The magazine called Drucker’s teachings “a blueprint for every thinking leader,” noting that Drucker taught generations of managers the importance of picking the best people, of focusing on opportunities and not problems, of getting on the same side of the desk as their customer, of the need to understand their competitive advantages and to continue to refine them.
During the inaugural Peter Drucker Forum in Vienna celebrating Drucker’s 100th birthday in 2009, Rick Warren, author of The Purpose Driven Life and founding pastor of the Saddleback Church in Lake Forest, Calif., talked about his mentor’s breadth of influence.
“I’m often embarrassed at how often I quote Peter Drucker,” Warren said. “He had a way of saying things simply. Peter was far more than the founder of modern management, far more than a brilliant man, one of the greatest minds of the 20th century. He was a great soul. If I summed up Peter’s life in three words, it would be integrity, humility and generosity…. Peter was the only truly Renaissance man I’ve ever known. He had a way of looking at the world in a systems view that said it all matters.”
“He was the creator and inventor of modern management,” management expert Tom Peters told Newsweek in 2005. “In the early 1950s, nobody had a tool kit to manage these incredibly complex organizations that had gone out of control. Drucker was the first person to give us a handbook for that.”
Drucker, born in Austria in 1909, gained his first experience in this listening-and-learning approach from his parents, Adolph and Caroline, highly educated professionals who reveled in inviting cadres of intellectually stimulating characters into their Vienna home for broad discourses on medicine, politics and music.
Drucker earned a doctorate in public and international law from Frankfurt University in Frankfurt, Germany. He toiled as an economist and journalist in London before moving in 1937 to the United States as a correspondent for the Financial Times, along with his new wife, the former Doris Schmitz, whom he had met in Frankfurt and married in London.
Making His Mark
He moved to California in 1971 as the Clarke Professor of Social Science and Management at the Claremont Graduate University in Claremont, Calif., where he taught for 30 years. During that time, the Druckers received corporate and social-sector leaders from around the world in their modest home in Claremont, where they also raised four children and lived for nearly four decades. In 1987, the university named its management school after him.
Drucker called himself a “social ecologist,” a close observer of the way humans are organized across all sectors—in business, but also in government and in the nonprofit world.
“None of my books or ideas means anything to me in the long run,” he said. “What are theories? Nothing. The only thing that matters is how you touch people. Have I given anyone insight? That’s what I want to have done. Insight lasts; theories don’t. And even insight decays into small details, which is how it should be. A few details that have meaning in one’s life are important.”
Although many MBA programs ignored his texts because administrators felt his work was short on pure research, he had great impact on the business world through his books and consulting work with dozens of organizations—including the world’s largest corporations, entrepreneurial startups, and various government and nonprofit agencies. He was a Wall Street Journal columnist from 1975 to 1995, and contributed to such publications as the Harvard Business Review, The Atlantic Monthly and The Economist.
Ahead of His Time
–He introduced the idea of decentralization—in the 1940s—which became a bedrock principle for virtually every large organization in the world.
–He was the first to assert—in the 1950s—that workers should be treated as assets, not as liabilities to be eliminated.
–He originated the view of the corporation as a human community—again, in the 1950s—built on trust and respect for the worker and not just a profit-making machine, a perspective that won Drucker an almost godlike reverence among the Japanese.
–He first made clear—still the ’50s—that there is “no business without a customer,” a simple notion that ushered in a new marketing mindset.
–He argued in the 1960s—long before others—for the importance of substance over style, for institutionalized practices over charismatic, cult leaders.
–He wrote about the contribution of knowledge workers—in the 1970s—long before anyone knew or understood how knowledge would trump raw material as the essential capital of the New Economy.
Beyond Words on a Page
In The Definitive Drucker: Challenges for Tomorrow’s Executives—Final Advice from the Father of Modern Management (2007), author Elizabeth Haas Edersheim wrote, “Peter’s ideas were the catalyst that freed people to pursue opportunities they had never expected to have. He liberated people by asking them questions and eliciting a vision that just felt right. He liberated people by getting them to challenge their own assumptions. He liberated people by raising their awareness of, and their faith in, things they knew intuitively. He liberated people by forcing them to think. He liberated people by talking to them. He liberated people by getting them to ask the right questions.”
For his many contributions, President George W. Bush awarded Drucker the Presidential Medal of Freedom on July 9, 2002.
A Lifelong Student
“He had kind of a stern, formidable image, but he also had a funny, warm side,” writer Bruce Rosenstein tells SUCCESS. “He wanted to be relevant and productive deep into old age, and he certainly didn’t take his readers for granted.”
Rosenstein interviewed Drucker several times for USA Today and his book, Living In More Than One World: How Peter Drucker's Wisdom Can Inspire and Transform Your Life, published in 2009 by Berrett-Koehler Publishers Inc.
One of the fruits of his work is that it remains relevant, Rosenstein notes. “During the GM bankruptcy, for example, his Concept of a Corporation book, which was published in 1946, was referenced a number of times,” he says. “I think a whole-new generation of students can really learn a lot from Drucker’s work.”
One notable disciple summed up the Drucker persona in the following way shortly after his death:
“For me, Drucker’s most important lessons cannot be found in any text or lecture but in the example of his life,” wrote Jim Collins, best-selling author of Good to Great and Built to Last. “I made a personal pilgrimage to Claremont, Calif., in 1994 seeking wisdom from the greatest management thinker of our age, and I came away feeling that I’d met a compassionate and generous human being who—almost as a side benefit—was a prolific genius.… Peter F. Drucker was driven not by the desire to say something, but by the desire to learn something from every student he met—and that is why he became one of the most influential teachers most of us have ever known.”