Nuggets from 'The Practice of Management' by Peter Drucker
Despite its high importance and high visibility, management is the least understood of basic institutions. Even those, who are involved in business and perform managerial jobs daily, are not aware of management as an institution. What is management and who is a manager? A manager does his job by getting others do theirs.
Management is an organ of the business enterprise. The enterprise can act and behave only as its managers do; by itself the enterprise does not effectively exist. Any business enterprise—no matter what its structure—must have a management to be alive and functioning. Management is so obvious that it tends to be taken for granted. The government, the army, the church, all are managed but the management of the business enterprise is unique and sets it apart from all others. Business management is distinct because a business enterprise’s goal is to provide goods and services to the people.
Management must always give utmost priority to the economic performance. It can only justify its existence by the economic results it produces. Happiness and wellbeing of employees is important but if the management does not produce good economic performance then it has failed. It has failed if it does not provide goods and services desired by the customer at the price the customer is willing to pay. It has failed if it does not improve or at least maintain its wealth producing capacity.
Management’s first job
Managing a business is very different from management, in say, army or government. The skills and the competence that are common and therefore transferable are analytical and administrate. They are extremely important, but secondary to the attainment of the primary objectives of the non-business institutions.
Management is not an exact science
This is true that management is not an exact science, but it should not be perceived as a shortcoming but as a strength. It is not an exact science but work of a manager can be systematically analysed and classified. So management is not an exact science but it’s a scientific endeavour. Management cannot be done with haunch or native ability. Its elements and requirements can be analysed, systematically organized, and taught to anyone. The manager can improve his managerial skills by analysing in all areas through the systematic study of principles, the acquisition of organized knowledge and the systematic analysis of his or her own performance.
Management is a practice rather than a science or profession, yet it contains features of both.
Another function of management is to make a productive enterprise out of human and material resources. The enterprise must be capable of producing more or better than the resources that compromise it. Its output must be larger than the sum of its inputs. The enterprise cannot be a mechanical assemblage of resources, and this cannot come from any material resource such as capital; it requires management.
To grow, the enterprise cannot depend on material resources only; it requires human brains. A material resource can be better utilized or worse utilized, but it cannot be produce an output greater than the sum of its all resources. Man, alone of all the resources available to man, can make an enterprise grow and develop.
Often, the blue collar job holder is seen equivalent to a material resource. He does what he is directed to do. The reality is that many of the rank-and-file workers’ job is managerial in nature. If their job is non-managerial then it would be better to make them managerial.
To manage managers is to make resources productive by making an enterprise out of them. Management is so complex a thing even in a small enterprise, that managing managers is not only vital but a complex job.
Managing workers and work
One function of management is to manage workers and work. Work must be done with workers contributing their best. Whether the contributor is a wheel-barrow pusher or the vice-president, they must be managed to give their best. Managing human beings is the most difficult thing to do because they have emotions; they can get encouraged or discouraged. Their efforts need to be incentivize. They must be rewarded for their good work and must be punished for the bad work.
The role and effect of time
The manager has to make decisions both for short time and long time. Decisions that make rapid short term profit but jeopardise long term functioning of the enterprise must be avoided. Instant gratification is always alluring but a manager should be always circumspect at such decisions and think for the long time.
The Integrated Nature of Management
As mentioned above, management has three jobs: managing business, managing managers, and managing workers and work. These three functions can be analysed, studied, and appraised separately. But in daily work these functions appear not to be distinguished. Even decisions for present and future cannot be isolated. However any decision or action affects all the the three functions as well as the both the present and future of the enterprise.
Managing a business is important because the enterprise is an economic institution. Managing managers and managing workers is also important, precisely because society is not an economic institution.