Peter Drucker, generally known as Drucker, was born of Adolf Drucker an Australian lawyer serving a high level civil servant post and Caroline Bondi who had studied medicine. Peter Drucker had the privilege being raised in a home that hosted high profiled government officials, intellectuals and scientists who would share new ideas. At the age of twenty two years, Drucker earned his doctorate degree in international law at university of Frankfurt. Peter Drucker was a writer as well as a management consultant who described himself as a social ecologist. His love for knowledge dissemination saw him conduct a class at the age of ninety two, three years before his death in year 2005.
Drucker distinguished himself in writing and practice in 1934, when he overheard John Maynard Keynes lecture at Cambridge University and realized that the lecturer in addition to the economic students seated in that room had interest in product behaviour while his was on behaviour of people (Drucker, 1954). His interest would later be manifested in his thirty nine managerial books available in excess of thirty languages translations, which included two novels, and an autobiography in addition to tens of articles. Drucker became a renown international figure by his efforts to convince corporate leaders to concur with their juniors on goals and objectives then trust them with the task of deciding on the 'how' for their achievement.
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Drucker's scholarly work endeavored to explore the organization of individuals across businesses, nonprofit and government sectors of the society, which he termed as principle science of management. Form the onset, Drucker highly regarded the profit making goal of an enterprise but advocated for employees to be honored and perceived as resource but not as cost. Though his thoughts were before the business environment time of the day, executives would by and by attest to his relevance with the dynamic trends in politics and business. His predictions of dynamism in the late twentieth century which included Japan rising to economic power, emergence of information society, need for vigorous marketing, privatization and decentralization issues in the organization, have become real in today's business environment (Forgang & Einolf, 2006).
Drucker's scholarly work is a bank of lessons on how firms can achieve the best results from people and how employees can attain an experience of community as well as dignity in contemporary society structured around large institutions. His first book, 'Economic man's end' proved his long life intention of supporting free world's will against fascism that would promote the human dignity while the society would be vaccinated against the economic and political pandemonium. In his book, the concept of corporation, Drucker focused on the in-depth social scientific analysis of General Motors Company (GM) and suggested dramatic changes that he deemed necessary in regard to customer relations, employee relations and dealer relations. Though the suggestions were based on two year analysis of GM via employee interviews and assessment of decision making processes, GM never thrilled them (Drucker, 1954). It was his 1942 publication on industrial man's future that revealed to the world of the deep seated problem on how business enterprises and organizations tended to shun away the social tasks of family and community. Drucker was by then fascinated by the increasing effects of individuals that utilized their minds more than their hands, intrigued who were in certain aspects more informed than their managers and colleagues but had to be in teams with them, all which the maturity of business enterprises could accommodate by the second half of the twentieth century.
Among the remarkable management theories that Peter Drucker is renowned for is the management by objectives (MBO) theory outlined in the 'practice of Management' book that he authored in 1954. MBO theory is based on the definition of organizational objectives to each employee in the organization so that individual employees are directed in their performance by the objectives and not pure supervision. The practice of MBO is based on principles that bide individual objectives together. To start with, the management of the organization cascades the organizational objectives to the workforce. Organizational objectives are then broken down into individual customized objectives that are more specific. Third, the management involves the employees in the decision making process to determine the strategy for achieving the outlined individual objectives. During the decision making process, an explicit time frame is designed within which employees should have achieved their objectives. The performance of the employees is then evaluated against the prior objectives arrived at.
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Performance measurement in MBO theory is based on objectives hence the objectives should be valid. Validity of the objectives is determined by the following parameters as outlined by Drucker. First, the objectives have to be specific to every individual employee. The said specificity places an employee to accountability level necessary for owning up of the organizational objectives (Forgang & Einolf, 2006). Second, the objectives are framed in such a way that they are measurable. This implies that during the performance period, an employee as well as supervisors can determine the percentage of achievement of the objectives and the remaining bit. The objectives must be achievable implying that the capability of the employee, depending on the job specification, should be at par with the challenge of achievement of the objective. In addition the objectives should be real and not vague. The reality of the objectives implies that they should appeal to human logic and in partial fulfillment of the organizational objectives. Finally, Drucker suggested that objectives must be time-related to enhance their validity. MBO theory to management practice is perhaps the best modern approach to ensuring participative management in organizations and subsequent employee loyalty to the organization as employees can experience a sense of belonging.
On compensation, Drucker in his 1984 essay emphasized the need for a moral and social responsible management practices in remunerating members of staff in an organization. The chief executive officers in an organization were to have a compensation of not more than twenty times the proceeds of the file and rank. His argument was founded on the alarming laying off of employees as companies progressed yet much of a company's budgetary expense was on compensating the management team. In the America's social sector, Drucker encouraged workers to engage more in volunteer activities in nonprofits to have access to satisfaction. In addition volunteer practices would restore citizenship via civic responsibility and community through civic pride. According to Berger (2008), though motivation is not entirely dependent on remuneration, organizations need appreciate the importance of commensurate compensation as the easiest method of motivating employees.
Peter Drucker rationalized the concept of change in organizations. In his article 'landmarks of tomorrow', Drucker did put forward the need for change for change in matching up organizations in the dynamic business environment that includes shifts from consumers, competitors, legal framework among others. Change may be defined as any deviation from the normal running of an organization that may target technology, labour force or the organizational processes. Indeed, change is a restoration of order, a call to come back to the profitable path that repositions a business setup to reap from the market. Organizations that accept change as the norm positively move with the business environment dynamism rather that spending resources to oppose the same change. Such organizations perceive change in itself being the order not as an alteration of order. In his predictions, Drucker seemed to launch an attack on the conservatism organizations at the time. The relevance of his prediction on change has however withstood the test of time and is widely adopted by organizations including government owned corporations. In the modern business, unacceptability of change in organizations is unthinkable (Hiatt & Creasey, 2003).
On technology, peter Drucker was skeptical on the overemphasis that organizations were putting on it at the expense of the days' operations. He was however in support of readiness for tomorrow's modernization of work methods. Technology may be defined as usage of tools that enhance efficiency and effectiveness in performance of work for productivity. Drucker's support for automation was followed by numerous cautionary measures that organizations were supposed to put in place so as to reap from such an undertaking lest they crash down (Berger, 2008). For example, Drucker cautioned that after automation, production needed to be fairly constant over a substantially long time period. With automation, Drucker emphasized the greater importance of marketing the automated products more than the automated production. As such businesses could thrive more with less automation but much marketing. According to Drucker, technological innovations had an effect on the quality of labour by creating a shift from labour which implied physical utilization of human resource to working with the mind.
The said shift would then displace the semi-skilled and non-skilled workers since machines would perform manual work more efficiently. On the other hand, enormous quantity of specialized human resource would be required to maintain machines, program them, design and redesign among other technological activities. Management of business during automation era requires a systematic knowledge, exceptional ability in decision making guided by lots of systematic study and analysis. His predictions have become relevant in the modern business environment as organizations endeavor to adopt the highly dynamic technology while amending the shortcomings especially related to replacement of human labour with technology. Moreover, organizations are faced with the challenge from interest groups such as trade unions and human rights activists when adapting in automation of work processes.
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As a renowned writer, a social business consultant as well as a lecturer, peter Drucker knew how important economy in management was. According to Drucker (1954), a business enterprise is indeed an economic institution obliged to observe economic principles to realize any success. Economics is a science dealing with production, utilization of material and allocation. The study of economics aims at use of the minimum possible resources while attaining maximum production. In organizations, time is among the resources manipulated by those at the management level in enhancing productivity. Drucker stressed on the need for economy in management for a sound organization. He focused on two major demands in management of human resources. First, Drucker focused on the need to shorten the time span that management of organizations get committed in while making decisions. Though the decisions may be critical to the organization, Drucker noted that the management team's longest time should not be spent on making decisions to be effected five years down the organization's life and which would bear fruits ten years from their effective date. The implication of the lengthening time span in making economic decisions is that the dynamism of the business environment may render such decisions obsolete by the time they get implemented.
Furthermore, the human nature may limit making of an economically relevant decision ten or fifteen years into the future. Second, the development of a manager need a focus on availing people that can save decisions currently being made and not on providing staff for purposes of making tomorrow's decision. As such, management of organizations requires a mechanism for ensuring adequate provision of sufficiently trained people to implement decisions made lest the rationality and soundness of decisions would be lacking. In the modern business world, firms are still struggling with shortening of the time they spend on strategizing and future planning (Forgang & Einolf, 2006). There is usually disconnect between the planning and the doing of work since the implementation strategy is given less consideration. The results of long span decision making aforementioned is the existence of businesses that pegs their existence on the future decisions but lacks a firm foundation for current existence. Though this must not compromise the need for strategic planning, Drucker emphasized the need for proper analysis of the economic advantage of economic benefits achieved from intensive long span planning that consumes much time in making predictions and projections.
In collaboration with Robert Poole, 'reason magazine' founder, Drucker invented the concept of privatization of corporations. Privatization is the entrepreneurial act by the government to sell/transfer ownership and management of a state owned organization to the citizens. In many nations, there lacks effective mechanisms and procedures for citizens to question the running, productivity and service delivery qualities by state owned organizations. Furthermore, the government has many commitments some of which might eliminate/compromise the enterprise perspective in running corporations. Drucker enumerated the need for governments to give up the management of corporations to individuals in the population and monitor their operations from without the organization. Through privatization, organizations are subjected to more public scrutiny in addition to the natural market competition that forces organizations to match up with the public needs.
The efficiency of privatized organizations, in terms of meeting the demands for the contextual population, increases due to competition hence serving the citizens better. Drucker advocated for quality provision of products to the citizens as the ideal focus for any organization whether privately owned or a corporation. As such privatization was the answer to the decreasing delivery of services by government corporations. In addition privatization enhances denationalization and opening up of domestic economies in search of foreign capital and emerging markets. The mentioned trend was observed by Drucker with the 1990s collapse of Soviet Model. Opening up of foreign markets enlarges the market and hence avoiding cutthroat competition from the local market (Drucker, 1954). Similarly denationalization enlarges the field from which capital can be sourced.
In management of organizations, Drucker popularized decentralization in avoiding the traditional hands-on-management. He discounted the model of command and control and asserted that organizations achieve better results on decentralization. Decentralization which is an extended concept of delegation may be defined as spreading of tasks to lower levels of management of an organization, authorizing carrying out of those tasks and monitoring their performance. Decentralization leads to simplification of procedures which is associated with bureaucracy. In the contemporary business environment, organizations need to consider concentrating on production by avoiding expanding to avoidable economic sectors such as employee hiring and production of wide variety of products. Indeed, modern organizations do outsourcing of labour and even technology while they focus on production processes. When bureaucracy is eliminated, feedback mechanism in an organization is enhanced so that the procedures for work performance are demystified. Subsequently, the productivity in organization and opportunity for employees training are enhanced.
In entrepreneurship and investment, Drucker focused more on mergers and business acquisitions as easier ways of penetrating into the markets. From the guidelines suggested by Drucker, an entrepreneur should consider a commonality of organizations components such as technology, and market since financial ties are in themselves insufficient (Forgang & Einolf, 2006). Second, the market, customers and products of the acquired firm are maintained for the benefit of the temperamental fit that they hold. Ideally, merging of organizations should be perceived as a step towards enhancing performance of both the organizations though they may diffuse in each other and not as a business vice aimed at extinction of some of organizations. Moreover, the benefits accrued through mergers and acquisitions position the resulting organization so as to compete effectively in the market.
In conclusion, the contribution of Peter Drucker in the field of management has become practical in the modern business environment. Drucker faced opposition from the government and management teams of his times probably because he had lived before the revolution of business world to become what it is today. His numerous scholarly works are today cherished even with the dynamism that the word has experienced due to their validity and applicability. Drucker's predictions of technology turning managers into introverts and the changing trend of the workforce towards specialization and using of mental more than physical contributions to organizations has become very real in the modern business field. The importance of strong managerial teams as emphasized by Drucker in his works can never be overemphasized. Indeed the strength and sincerity of the management team is measured on the validity of the basic beliefs as well as professionalism in managing people, and in the manner by which it promotes its subordinates into higher levels within the organization structure respectively. Peter Drucker's focus on leadership of an organization as having a responsibility of strengthening the spirit, beliefs and values of free society using fundamental practices which demonstrate management's integrity and maturity is increasingly becoming real in the contemporary business world.