The Practice of Management (by Peter Drucker)

Developing a work approach that is adequate to the challenges ahead
a world moving toward new and different futureS

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 dimension 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

The Sears Story

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

Human Organization For Peak Performance

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”

Motivating To Peak Performance

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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