Peter Drucker (1909-2005)
Management by Objectives
The management guru’s management guru. Born in Vienna during the heyday of that city’s pre-1914 culture, Drucker has invented or prefigured most of the leading management theories of the last half-century.
The son of an Austrian government official who helped found the Salzburg Festival, Drucker came to Britain in the late 1920s, and his first job was as an apprentice clerk in a Bradford wool exporting firm, working with a quill pen in 80-pound brassbound ledgers chained to the desk. Between 1933 and 1936 he worked as an economist in a London merchant bank and then decided to throw in his lot with the United States. He emigrated to the US in 1937, produced his first book two years later and in 1942 took a consultant’s job with General Motors, then the world’s largest company.
Out of this experience came his influential 1946 book Concept of the Corporation, still one of the best and most perceptive analyses of the successful large organization. As well as General Motors, other companies studied in the book were General Electric, IBM and Sears Roebuck, and Drucker identified their success with certain managerial characteristics, notably delegation and goal setting (Management by Objectives) and certain structural characteristics, such as decentralization.
Peter Ducker's reputation as a management guru was established with The Practice of Management (1954), a work still regarded by later theorists as one of the best and clearest in the field.
His five basic principles of management remain as valid as ever:
- setting objectives
- motivating and communicating,
- establishing measurements of performance and
- developing people.
‘A manager, in the first place, sets objectives. He determines what the objectives should be. He determines what the goals in each area of objectives should be. He decides what has to be done to reach these objectives. He makes the objectives effective by communicating them to the people whose performance is needed to attain them.
‘Second, a manager organises. He analyses the activities, decisions and relations needed. He classifies the work. He divides it into manageable activities and further divides the activities into manageable jobs. He groups these units and jobs into an organisation structure. He selects people for the management of these units and for the jobs to be done.
motivating and communicating,
‘Next, a manager motivates and communicates. He makes a team out of the people that are responsible for various jobs. He does that through the practices with which he works. He does it in his own relations to the men with whom he works. He does it through his "people decisions" on pay, placement and promotion. And he does it through constant communication, to and from his subordinates, and to and from his superior, and to and from his colleagues.
establishing measurements of performance
‘The fourth basic element in the work of the manager is measurement. The manager establishes yardsticks —and few factors are as important to the performance of the organisation and of every man in it. He sees to it that each man has measurements available to him which are focused on the performance of the whole organisation and which, at the same time, focus on the work of the individual and help him do it. He analyses, appraises and interprets performance. As in all other areas of his work, he communicates the meaning of the measurements and their findings to his subordinates, to his superiors, and to colleagues.
Finally, a manager develops people, including himself.