The Practice of Management
Practice of Management (by Peter Drucker)
Introduction: The Nature of Management
The Role of Management
* The dynamic element in every business
* A distinct and a leading group
* The free world's stake in management
The Jobs of Management
* Management the least known of our basic institutions
* The specific organ of the enterprise
* The first function: economic performance
* Supply of goods and services desired by the consumer at the price the consumer is willing to pay
* Maintain or improvement of wealth producing resources
* The first job: managing a business
* The ultimate test of management is business performance
* It enable the successful business performer to do his work — whether he be otherwise a good manager or a poor one.
* Managing as creative action
* Means taking action to make the desired results come to pass
* It is a creator
* Management by objectives
* Masters the economic circumstances, and alters them by conscious, directed action
* Managing managers
* The second function to make productive enterprise out of human and material resources
* A transmutation resources
* The enterprise as a genuine whole
* Managers must manage
* "It's the abilities, not the disabilities, that count"
* Managing worker and work
* The two time dimensions of management
* The integrated nature of management
The Challenge to Management
* The new industrial revolution
* Automation: science fiction and reality
* What is automation
* Conceptual principles, not techniques or gadgets
* Automation and the worker
* Automation, planning and monopoly
* The demands on the manager
Managing a Business
* What is a business and how it is managed—Unexplored territory
* Sears, Roebuck as an illustration
* How Sears became a business
* Rosenwald’s innovations
* Inventing the mail-order plant
* General Wood and Sear's second phase
* Merchandise planning and manager development
* T.V. Houser and the challenges ahead
What is a Business?
* Business created and managed by people, not by forces.
* The fallacy of “profit maximization”
* Profit the objective condition of economic activity, not its rationale
* The purpose of a business: to create a customer
* The two entrepreneurial functions: marketing and innovation
* Marketing not a specialized activity: the entire business as seen from the point of view of the customer
* The General Electric solution
* The enterprise as the organ of economic growth
* The productive utilization of all wealth-producing resources
* What is productive labor?
* Time, product mix, process mix, and organization structured as factors in productivity
* The function of profit
* How much profit is required?
* Business management a rational activity.
What is Our Business—and What Should it be?
* What is our business, neither easy or obvious
* The telephone company example
* Failure to answer the question a major source of business failure
* Success in answering it a major reason for business growth and results
* Question most important when business is successful
* Who is the customer?
* What does the customer buy?
* Cadillac and Packard
* What is value to the customer
* What will our business be?
* What should our business be?
* Profitability as an objective
The Objectives of a Business
* The fallacy of the single objective
* The eight key areas of business enterprise
* “Tangible” and “intangible” objectives
* How to set objectives
* The low state of the art and science of measurement
* Market standing
* Innovation
* Productivity and “contributed value”
* The physical and financial resources
* How much profitability
* A rational capital-investment policy
* The remaining key areas
Today’s Decisions for Tomorrow’s Results
* Management must always anticipate the future
* Getting around the business cycle
* Finding the range of fluctuations
* Finding economic bedrock
* Trend analysis
* Tomorrow's managers the only real safeguard
The Principles of Production
* Ability to produce always a determining and a limiting factor
* Production is not the application of tools to materials but
* Production is the application of logic to work
* Each system of production has its own logic
* Each system of production makes it own demands on business and management
* The systems of production
* Is mass production “new style” a forth?
* Unique-product production
* Mass production, “old style” and “new style”
* Process production
* What management should demand of its production people
* What production systems demand of management
* “Automation”; revolution or gradual change?
* Understanding the principle of production required of every manager in the decades ahead.
Managing Managers
The Ford Story
* Managers the basic resources of a business, the scarcest, the most expensive and most perishable
* Henry Ford’s attempt to do without managers
* The near-collapse of the Ford Motor Company
* Rebuilding Ford management
* What it means to manage managers
* Management not by delegation but by the task
* The six requirements of managing managers
* Management by objectives and self-control
* Vision of the individual managers must be directed toward the goals of the business
* Their wills and efforts be bent toward reaching those efforts
* Proper structure of the manager's job
* Must allow maximum performance
* The right spirit in the organization
* An organ of overall leadership and final decision—a chief executive
* An organ of overall review and appraisal—a board of directors
* Must make provision for its own survival and growth—provision for tomorrow’s managers
* A sound structural principles of management organization
Management by Objectives and Self-Control
* The forces of misdirection
* Workmanship: a necessity and a danger
* Misdirection by the boss
* What should the objectives be?
* Management by “drives”
* How should managers’ objectives be set and by whom?
* Self-control through measurements
* The proper use of reports and procedures
* A philosophy of management
Managers must manage
* What is a manager’s job
* Individual tasks and team tasks
* The span of managerial responsibility
* The manager’s authority
* The manager and his superior
The spirit of an organization
* To make common men do uncommon things: the test of performance
* Focus on strengths
* Practices, not preachments
* The danger of safe mediocrity
* “You can’t get rich but you won’t get fired”
* “We can’t promote him but he has been here too long to get fired”
* The need for appraisal
* Appraisal by performance and for strengths
* Compensation as reward and incentive
* Does delayed compensation pay?
* Overemphasizing promotion
* A rational promotion system
* The “life and death” decisions
* Manager’s self-examination of the spirit of their organization
* Whom not to appoint to management jobs
* What about leadership?
Chief Executive and Board
* The bottleneck is at the head of the bottle
* How many jobs does the chief executive have?
* How disorganized is the job?
* Need for work simplification of the chief executive’s job
* The fallacy of the one-man chief executive
* The chief executive job a team job
* The isolation of the top man
* The problem of his succession
* The demands of tomorrow’s top-management job
* The crisis of the one-man chief-executive concept
* Its abandonment in practice
* How to organize the chief-executive team
* Team, not committee
* No appeal from one member to another
* Clear assignment of all parts of the chief-executive job
* How many on the team?
* The Board of Directors
* Why a Board is needed
* What is should do and what it should be
Developing Managers
* Manager development a threefold responsibility
* To the enterprise
* To society
* To the individual
* What manager development is not
* It cannot be promotion planning or finding “back-up men”
* The fallacy of the “promotable man”
* The principles of manager development
* Developing the entire management group
* Development of tomorrow’s demands
* Job rotation is not enough
* How to develop managers
* The individual's needs
* Manager manpower planning
* Manager development not a luxury but a necessity.
Structure of Management
What kind of Structure
* Organization theory and the “practical” manager
* Activities analysis
* Decision analysis
* Relations analysis
Building the Structure
* The three structural requirements of the enterprise
* Organization for performance
* The least possible number of management levels
* Training and testing tomorrow’s managers
* The two structural principles
* Federal decentralization
* Its advantages
* Its requirements
* Its limitations
* The rules for its application
* Functional decentralization
* Its requirements and rules
* Common citizenship under decentralization
* The decisions reserved to top management
* Company-wide promotions
* Common principles
* The symptoms of malorganization
* A lopsided age structure of the management group
The Small, The large, the growing business
* The myth of the idyllic small business
* How big is big?
* Number of employees no criterion
* Hudson and Chrysler
* The other factors
* Industry position
* Capitalization needs
* Time cycle of decisions, technology
* Geography
* A company is as large as the management structure is requires
* The four stages of business size
* How big is too big?
* The unmanageable business
* The problems of smallness
* The lack of management scope and vision
* The family business
* What can the small business do?
* The problems of bigness
* The chief executive and its job
* The danger of inbreeding
* The service staffs and their empires
* How to organize service work
* The biggest problem: growth
* Diagnosing the growth stage
* Changing basic attitudes
* Growth: the problem of success
The Management of Worker and Work
The IBM Story
* The human resource the one least efficiently used
* The one holding greatest promise for improved economic performance
* Its increased importance under Automation
* IBM's innovations
* Making the job a challenge
* The worker’s participation in planning
* “Salaries” for the workers
* Keeping workers employed is management’s job
Employing the Whole Man
* The three elements in managing worker and work
* The worker as a resource
* Human resource and human resource
* Productivity is an attitude
* Wanted: a substitute for fear
* The worker and the group
* Only people develop
* The demands of the enterprise on the worker
* The fallacy of “a fair day’s labor for a fair day’s pay”
* The worker’s willingness to accept change
* The worker’ demands on the enterprise
* The economic dimension
* Wage as seen by enterprise and by worker
* The twofold meaning of profit
Is Personnel Management Bankrupt?
* Personnel administration and human relations
* What has personnel administration achieved?
* Its three basic misconceptions
* The insight of Human relations
* And its limitations
* “Scientific Management,” our most widely practiced personnel-management concept
* Its basic concepts
* Its world-wide impact
* Its stagnation since the early twenties
* Its two blind spots
* “Cee-Ay-Tee” or “Cat”?
* The “divorce of planning from doing”
* Scientific Management and the new technology
* Is personnel Management bankrupt
* Engineering the job
* The lesson of the automobile assembly line
* Its meaning: the assembly line as inefficient engineering
* Mechanize machine work and integrate human work
* The rule of “integration”
* The application of Scientific Management
* The worker’s need to see the result
* The worker’s need to control speed rhythm of the work
* Some challenge in every job
* Organizing people for work
* Working as an individual
* Working as a team
* Placement
* “When do ninety days equal thirty years”
* What motivation is needed
* “Employee satisfaction” will not do
* The enterprise’s need is for responsibility
* The responsible worker
* High standards of performance
* Can workers be managed by objectives
* The performance of management
* Keeping the worker informed
* The managerial vision
* The need for participation
* The C.&O. example
* The plant-community activities
The Economic Dimension
* Financial rewards not a source of positive motivation
* The most serious decisions imminent in this area
* An insured expectation of income and employment
* The resistance to profit
* Profit sharing and share ownership
* “No sale, no job”
The Supervisor
* Is the supervisor “management to the worker”?
* Why the supervisor has to be a manager
* The supervisor’s upward responsibility
* The supervisor’s two jobs
* Today’s confusion
* Cutting down the supervisor’s department the wrong answer
* What the supervisor needs
* Objectives for his department
* Promotional opportunities for the supervisor and the worker
* His management status
* What the job should be
* Managers needed rather than supervisors
The Professional Employee
* Are professional employees part of management?
* Professional employees the most rapidly growing group in the working population
* Neither management nor labor
* Professional employee and manager
* Professional employee and worker
* The needs of the professional employee
* His objectives
* His opportunities
* His pay
* Organizing his job and work
* Giving him professional recognition
What parts of this can be done by top management and what part by the manager in charge of the operation
What it Means to be a Manager
The Manger and His Work
* “Long white bread” or “universal genius”?
* How does the manager do his work?
* The work of the manager
* Information: the tool of the manger
* Using his own time
* The manager’s resource: man
* The one requirement: integrity
* What makes a manager?
* The manager as an educator
* Vision and moral responsibility define the manager
Making Decisions
* “Tactical” and “strategic” decisions
* The fallacy of “problem-solving”
* The two most important tasks: finding the right questions, and making the solution effective
* Defining the problem
* What is the “critical factor”?
* What are the objectives?
* What are the rules?
* Analyzing the problem
* Clarifying the problem
* Finding the facts
* Defining the unknown
* Developing alternative solutions
* Doing nothing as an alternative
* Finding the best solution
* People as a factor in the decision
* Making the decision effective
* “Selling” the decision
* The two elements of effectiveness: understanding and acceptance
* Participation in decision-making
* The new tools of decision-making
* What is “Operations Research”?
* Its dangers and limitations
* Its contributions
* Training the imagination
* Decision making and the manger of tomorrow
The Manager of Tomorrow
* The new demands
* The new tasks
* But no new man
* Exit the “intuitive” manager
* The preparation of tomorrow’s manager
* General education for the young
* Manger education for the experienced
* But central will always be integrity
Conclusion: The Responsibilities of Management
* Enterprise and society
* The threefold public responsibility of management
* The social developments that affect the enterprise
* The social impact of business decisions
* Making a profit the first social responsibility
* Keep opportunities open
* Management as a leading group
* Asserting responsibility always implies authority
* What is management’s legitimate authority?
* Management and fiscal policy
* The ultimate responsibility: to make what is for the public good the enterprises’ own self-interest.
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