A POWERPOINT PRESENTATION ON DRUCKER’S CONTRIBUTION TO MANAGEMENT

PRESENTED BY:

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PETER F. DRUCKERPeter Ferdinand Drucker (November 19, 1909–November 11, 2005) was a writer, management consultant, and self-described “social ecologist.”

His books and scholarly and popular articles explored how humans are organized across the

business, government and the nonprofit sectors of society .

CAREER

• His career as a business thinker took off in 1942, when his initial writings on politics and society won him access to the internal workings of General Motors (GM), one of the largest companies in the world at that time. His experiences in Europe had left him fascinated with the problem of authority .

ABOUT DRUCKER

• Drucker served as a consultant for various government agencies in the United States, Canada and Japan. He worked with various nonprofit organizations to help them become successful, often consulting pro bono. Among the many social-sector groups he advised were the Salvation Army, the Girl Scouts of the USA, C.A.R.E., the American Red Cross, and the Navajo Indian Tribal Council .

• Drucker's 39 books have been translated into more than thirty languages. Two are novels, one an autobiography. He is the co-author of a book on Japanese painting, and made eight series of educational films on management topics

• He also penned a regular column in the Wall Street Journal for 20 years and contributed frequently to the Harvard Business Review, The Atlantic Monthly, and The Economist. He continued to act as a consultant to businesses and non-profit organizations well into his nineties. Drucker died November 11, 2005 in Claremont, California of natural causes at 95

• His writings have predicted many of the major developments of the late twentieth century, including privatization and decentralization; the rise of Japan to economic world power; the decisive importance of marketing; and the emergence of the information society with its necessity of lifelong learning.In 1959, Drucker coined the term “knowledge worker" and later in his life considered knowledge work productivity to be the next frontier of management .

Seven basic Management themes

• The systematic study of work• The systematic study of organization• The systematic study of efforts and results• Managerial and entrepreneurial economics• Managerial analysis, i.e. managerial accounting• The social position and responsibility of

Management• The human relations of an industrial society and

the place of the individual in it

• Drucker taught that management is “a liberal art,” and he infused his management advice with interdisciplinary lessons from history, sociology, psychology, philosophy, culture and religion.He also believed strongly that all institutions, including those in the private sector, have a responsibility to the whole of society .

According to Him

NATURE AND ROLE OF MANAGEMENT

The manager is a dynamic life giving element in every business. Without his leadership’ the resource of production remain resources and never become production. In a competitive economy above all the quality and the performance of the managers determine the success of a business, indeed they determine its survival.

Importance of management – Management its competence , its

integrity and its performance will be decisive both to the united states and to the free worlds in the decades ahead. At the same time the demands on management will be rising steadily and steeply.

The jobs of management

--THE FIRST FUNCTION: ECONOMIC PERFORMANCE Management must always , in every decision and

action, put economic performance first. It can only justify its existence and its authority by the economic results it produces. Every act, every decision, every deliberation of management has as its first dimension an economic dimension.

And yet the ultimate test of management is business performance

• PHYSICAL AND FINANCIAL RESOURCES:

What resources objectives are needed and how progress toward them is to be measured differs for each individual business. Also objectives in this area do not concern managers throughout the enterprise as do the objectives in all other areas: the planning for an adequate supply of physical and financial resources is primarily top management’s job; the carrying out of these plans is primarily the job of functional specialists.

THE SECOND FUNCTION : MANAGING MANAGER

To obtain economic performance there must be an enterprise . Management second function is therefore to make a productive enterprise out of human and material resources . Concretely this is the function of managing managers.

THE FINAL FUNCTION:MANAGING WORKER AND WORK

Work has to be performed and the resource to perform it with is workers . This implies organisation of the work so as to make it most suitable for human beings and organisation of people so as to make the work most productively and efficiently

Drucker believed that employees are assets and not liabilities. He taught that knowledgable workers are the essential ingredients of the modern economy. Central to this philosophy is the view that people are an organization's most valuable resource and that a manager's job is to prepare and free people to perform.

BUSINESS OBJECTIVES AND SOCIAL RESPONSIBILITIES

According to Drucker, “there is only one valid definition of business purpose, to create a customer”. To manage a business is to balance a variety of needs and goals and a business enterprise by its very nature requires multiple objectives.

Profit is essential for growth and survival of the business but Drucker believes that its not the goal of business.

According to Drucker, objectives are needed in every area where performance and results directly affect the survival and prosperity of business. These are eight such areas in which objectives of performance and results have to be set;

market standing, innovation, productivity, physical and financial resources, profitability, manager performance and development, worker performance and development, worker performance and attitude and public responsibility.

ENTERPRENEURIAL FUNCTIONS

In Drucker’s opinion, marketing and innovation are the most important functions of an entrepreneur. He stresses entrepreneurial management in both existing business and new ventures. Drucker suggests entrepreneurial strategies, policies and practices for both. Hr also provides principles and sources of innovation.

MANAGEMENT BY OBJECTIVES AND SELF-CONTROL• The forces of misdirection-workmanship: a

necessity and a danger• Management by objectives requires major

effort and special instruments business, by its very nature, contains three powerful factors of misdirection: in the hierarchical structure of management ;and in the differences in vision and work and the insulation of various levels of management.

• The number of functional managers should always be kept at a minimum , and there should be largest possible number of general managers who manage an integrated business and are directly responsible for its performance and results.

• A structure of management should focus both the managers and his boss’s eyes on what the job – rather than the boss – demands.

The two structural principles:

• Federal decentralisation• Functional decentralisation Drucker has criticised functional organisation and

suggested federal organisation. Federal decentralisation ,organises activities

into autonomous product business each with its own market and product and with its own profit and loss responsibilty.

Functional decentralisation, sets up integrated units with maximum responsibilty for a major and distinct space in business process.

Reasons for federal decentralisation emerging as a dominant structural principle :---

It focuses the vision and efforts of managers directly on business performance

The facts do not stay hidden under the rug of ‘overhead’ or total sales figure

The manager of the unit knows better than anyone else how he is doing and needs no one to tell him

A sears experiment showed dramatically the impact of federal decentralisation on the development of tomorrow’s manager

Finally federal decentralisation tests in independent command early and at a reasonably low level.

BASIC IDEAS

Decentralization and simplification. Drucker discounted the command and control model and asserted that companies work best when they are decentralized. According to Drucker, corporations tend to produce too many products, hire employees they don't need (when a better solution would be outsourcing), and expand into economic sectors that they should avoid.

The structure of management

Organisation structure

According to drucker, organisation are the backbone of modern society. The 3 major structural requirements of

the enterprise are:--

It must be organisation for business performance---it should make for the willingness and ability to work for the future rather than rest on the achievements of the past

It should contain the least number of management levels-----every additional level makes the attainment of common direction and mutual understanding more difficult.

It must make possible the training and testing of tomorrow’s top managers-----it must give people actual management responsibilty in an autonomous position while they are still young enough tom acquire new experience

Drucker suggested 3 ways to find out the structural requirements:--

1. The activity analysis:---to find out what activities are needed to attain the objectives of business.

2. The decision analysis:----what decisions are needed to obtain the performance necessary to obtain the objectives.

3. The relations analysis:----with whom will a manager inchagre of an activity have to work, what contributions does he have to make to managers in charge of other activities and what contributions do these managers have to make to him.

DECISION MAKING

ACCORDING TO DRUCKER” Whatever a manager does , he does through making decisions.

There are two types of decision:• Tactical decisions are both more

complicated and more important. But they are always one dimensional.

• Strategic decisions involve either finding out what the situation is or changing it ,either finding out what the resources are or what they should be.

Decision making has 5 distinct phases:

Defining the problem— To find the real problem and define it . Analysing the problem-- To classify the problem in order to know who must make

the decisions, who must be consulted in making it and who must be informed.

Developing alternative solutions— Alternative solutions are the only means of bringing on

basic assumptions up to the conscious level, forcing ourselves to examine them and listing their validity

Finding the best solution:-- There are four criteria for picking the best from among the

possible solutions:1. The Risk2. Economy Of Efforts3. Timing4. Limitation of resources

Making the decision effective :-- For a solution to become a decision, action is needed. And

that a decision making manager cannot supply.He can only communicate to others what they ought to e doing and motivate them to do it .And only as they take the right action is the decision actually made.

MANAGEMENT DEVELOPMENT

Drucker stressed the need for developing management .The prosperity of any business depends on the performance of its managers. Manager development is also necessary to discharge the elementary responsibilities, the enterprise owes to the society and if the business does not discharge these obligations by its own actions society will impose them’

The principles of manager development:

1. The first principle must therefore be the development of entire management group.

2. The second principle is that manager development must be dynamic.It must always focus on the needs of tomorrow.

Overall, manager development must embrace all managers in the enterprise.It must aim at challenging all to growth and self development. Manager development must be dynamic and qualitative rather than static replacement based on mechanical rotation.

FUTURITY

Drucker has highlighted the challenges which managers will have to face in future. He stresses the rapid pace of technological change and its impact on society. Drucker was the first to advocate mentoring, career planning, executive development, vision, delayering, customer orientation, knowledge worker and several other concepts and techniques of management.

KEY RESULT AREAS

Drucker identified the following eight area in which objectives should be set and performance be evaluated:

• Market standing• Innovation• Productivity• Physical and financial resources

• Market standing:

To be able to set market-standing objectives, a business must first find out what the market is- who the customer is, where he is, what he buys, what he considers value, what his unsatisfied wants are. On the basis of this study the enterprise must analyse its product or services according to ‘lines’ , that is, according to the wants of the customers they satisfy.

• Innovation: There are two types of innovation in every

business: innovation in product or service, and innovation in the various skills and activities needed to supply them.

The problem in setting innovation objectives is the difficulty of measuring the relative impact and importance of various innovations.

• PRODUCTIVITY: A productivity is the only yardstick that can

actually gauge the competence of management and allow comparison between managements of different units within the enterprise, and of different enterprises. For productivity includes all the efforts the enterprise contributes, it excludes everything it does not control.

• PROFITABILITY: Profit serves three purposes. It measures the net

effectiveness and soundness of business’s efforts. It is indeed the ultimate test of business performance. profit ensures the supply of future capital for innovation and expansion, either directly, by providing the means of self-financing out of retained earnings, or indirectly, through providing sufficient inducement for new outside capital in the form in which it is best suited to the enterprise’s objectives.

Social responsibilities of management

• The first responsibility to society is to operate at a profit & only less is the necessity for growth .The business is the wealth creating & wealth producing organ of our society .this responsibility is absolute and cannot be abdicated.

• Management is responsible for conducting the enterprise so as not to undermine our social beliefs and cohesion. This implies a negative responsibility : not to usurp illegitimate authority over citizens by demanding their absolute and total allegiance.

• It is a responsibility of the management of a large company to develop a capital expenditure policy which tends to counteract the extremes of the business cycle

• Management should realise that it must consider the impact of every business policy & business action upon society.It has to consider whether the action is likely to promote the public good.

• Quotes:

"The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself."

"Decision making is the specific executive task."

"When a subject becomes totally obsolete we make it a required course."

"Education can no longer be the sole property of the state."

"Efficiency is doing better what is already being done."

"The best way to predict the future is to create it."

AWARDS AND HONORS

• Drucker was awarded the Presidential Medal of Freedom by U.S. President George W. Bush on July 9, 2002[1]. He also received honors from the governments of Japan and Austria. He was the Honorary Chairman of the Peter F. Drucker Foundation for Nonprofit Management, now the Leader to Leader Institute, from 1990 through 2002

CONCLUSION

Thus, Drucker has made substantial contributions in different areas of management. He is respected all over the globe for his deep insights into management and practicability of views. His ability to see management with a long historical perspective and in a broad social and political context is very rare in management writers. Drucker died in 2005.