Management has always been a pivotal aspect of running an organization. Whether it be spearheading a business or leading a team, management is one of the most important skills that is essential to ensure success. In this blog, we will talk about Peter Drucker, considered by many to be the father of modern management.
“Management is a multi-purpose organ that manages business and manages managers and manages workers and work.” This management definition was given by Peter F. Drucker in his book, The Practice of Management.
Who is Peter F. Drucker?
Peter Ferdinand Drucker (1090-2005) was an Austrian-born, American management thinker, professor, and author.
He also spent part of his life in England and attended a lecture by John Maynard Keynes. Afterwards he said, “I suddenly realized that Keynes and all the brilliant economic students in the room were interested in the behaviour of commodities while I was interested in the behaviour of people.”
In 1954, he launched one of his most illustrious books till date: The Practice of Management. While he was working on this book, he realised he was laying down the foundations of a new discipline. This book led to people hailing him as the ‘father of management’.
Management, according to Drucker, should prioritize the well-being of all of its constituents because, in his view, businesses exist to serve society. The key to organizational success, he said, is decentralization, delegation, and collaboration. In addition, Drucker was an outspoken supporter of the importance of continuous learning for both individuals and business organizations.
Drucker’s views and ideas have had a tremendous impact on management practices around the world. His management by objectives (MBO) and knowledge worker principles have become widely adopted in enterprises across all industries. MBO is a collaborative process in which management and employees define specific, measurable, achievable, relevant, and time-bound objectives that align individual and organizational goals.
Awards & Honours
Drucker has received numerous awards and recognition throughout his illustrious career. Here are some notable accolades that he has earned:
- Presidential Medal of Freedom
- Grand Silver Medal for Services to the Republic of Austria
- Grand Gold Decoration for Services to the Republic of Austria
- Austrian Cross of Honour for Science and Art, 1st class
- Order of the Sacred Treasure, 3rd class, from the government of Japan
- Seven-time McKinsey Award recipient by Harvard Business Review
- Godkin Lecturer at Harvard University
- Honorary member of the National Academy of Public Administration
Drucker had a decorated career and was awarded with numerous awards and honours. Some of these are mentioned below:
Godkin Lecturer at Harvard University
Presidential Medal of Freedom
Honorary Member of the National Academy of Public Administration
Why is it important to read about Peter Drucker?
It is important to read about Peter Drucker because he was one of the twentieth century’s most significant management theorists. His observations and ideas had a profound impact on management practices across the globe, and his concepts and principles remain relevant today.
The fundamental concept of Drucker’s management approach was the significance of generating value for all stakeholders, including customers, employees, and society in general. He held on to the belief that organizations exist to serve society, and that management’s main responsibility is to accomplish this purpose while also assuring the organization’s long-term success.
Drucker was also a popular and powerful teacher, influencing generations of business leaders and entrepreneurs around the world. Business students and professionals continue to read and study his books and other bodies of work.
Drucker’s contributions to management:
Nature of management:
Drucker opposed bureaucratic management and was in favour of creative management. According to him, the aim of management should be to innovate. This could be done in the form of combining old and new ideas, developing new ideas, or encouraging others to innovate.
According to Drucker, management is the key organ of any organisation. In his opinion, management is performed through a series of tasks. A manager has to perform several functions such as setting of objectives, increasing productivity, organising and managing social impacts and responsibilities, and motivating employees. Drucker gave importance to the objective function and specified the divisions where clear objective is necessary. These are innovation, productivity, market standing, financial resources, profitability, managerial performance and development, employee performance, and social responsibility.
According to Drucker, there are three characteristics of an effective organisation structure as explained below:
The institution must be structured to achieve maximum performance;
It should contain least possible number of managerial levels;
It must be responsible for the testing and training of future managers.
There are three aspects in organising that are undermentioned:
Activity analysis explains the work that has to be done, what kind of work needs to be done, and what importance needs to be given to the work.
Decision analysis determines or decides at which level a decision can be made.
Relation analysis assists in defining the organisational structure.
What Can We Learn from Peter Drucker?
As a key person in revolutionizing the way business organizations approach management practices, Peter Drucker has made a significant impact in the lives of generations of people worldwide. Here are some of the important things we can pick up from Drucker’s ideologies:
- Business is an important social institution, and its success is dependent on its ability to innovate and adapt to change.
- Management’s goal is to make human abilities productive and human weaknesses irrelevant.
- Decentralization and delegation are essential for effective management because they allow individuals and groups to make decisions and take responsibility.
- Leadership is about inspiring and encouraging others to work together to achieve common goals.
- Organizational culture plays an important role in moulding behavior and achieving shared goals and objectives.
- Continuous learning and development are required for both individuals and companies to thrive in today’s fast-changing environment.
- Businesses have a duty to contribute to societal well-being and to address social and environmental challenges.
- Effective management necessitates a thorough understanding of the organization’s mission, goals, and values.
Drucker is in favour of the concept of federalism. It refers to centralised control in a decentralised structure. A decentralised structure creates a new organisational standard. It is similar to the relationship between a central and state government. Federalism trumps other methods of organising in the following ways:
It allows the top management to focus on the important functions;
It defines the roles and responsibilities of the employees;
It sets a benchmark to calculate the success and efficiency of the employees.
Management by objectives (MBO):
This is considered to be one of the most important contributions made by Drucker to the field of management. Management by objectives (MBO) is a management approach where equilibrium is required to be achieved between the objectives of employees and the objectives of an organisation. There are certain conditions that must be met to make MBO management a success. Take a look at these conditions here:
The objectives are set after discussions between the managers and employees;
The set objectives are quantitative and qualitative in nature;
Daily feedback must be given to the employees with regards to their performance;
Employees with high performance must be rewarded;
The guiding principle should be growth and development.
According to Peter Drucker, management by objectives can be employed by following five steps as explained below:
Define organizational objectives: Setting organisational objectives is the first step in initiating management by objectives. These objectives should be in line with the organisation’s vision and mission statement.
Inform the employees about the organizational objectives: According to MBO, the objectives must be informed to the employees at all levels. This enables the employees to understand their roles and responsibilities. Communication is another important aspect in this step. High performing employees should be given positive feedback, which is reinforced in the form of rewards.
Involve the employees in determining the objectives: Involving the employees in the decision-making process helps them in understanding why certain things are expected of them. This increases the commitment and the motivation of employees.
Monitoring the objectives: The objectives need to be measured on a regular basis to ensure that the work is being done keeping the objectives in mind. The detection of problems must be done in advance so that the problem could be prevented or easily sorted. In MBO management, each objectives has sub-objectives and so on. The managers must motivate and encourage the employees to complete the sub-objectives.
Evaluation and Feedback: This is an important aspect of management by objectives. A comprehensive evaluation system must be in place. Employees must be given honest feedback, and high performance needs to be rewarded.
According to Peter F. Drucker, swift technological development will result in speedy changes in the society. He expresses concern about the effect of these rapid changes on human life. He says that these changes can be counteracted by developing dynamic organisations that are adept at absorbing change.
The aforementioned contributions are also considered to be the principles of management as described by Drucker.
Peter Drucker’s management principles are extremely important in today’s time. Hence, his teachings are a part of the curriculum at Toronto School of Management (TSoM).
- What was Peter Drucker known for?
Peter Drucker was a business consultant, lecturer, and author. He is known as the “Father of Modern Management” because of his numerous works and seminars on management theory and practice.
- What is Peter Drucker’s famous quote?
Throughout his decorated career, Peter Drucker has been attributed to numerous quotes that have been used and lived by many professionals and organizations. These include:
- “The most important thing in communication is to hear what isn’t being said.”
- “Management is doing things right; leadership is doing the right things.”
- “Only three things happen naturally in organizations: friction, confusion, and underperformance. Everything else requires leadership.”
- Why is Peter Drucker called the father of management?
Peter Drucker is known as the “Father of Management” because of his breakthrough contributions to management theory and practice. He was among the first management thinkers to suggest that management was a separate science requiring specialized knowledge and skills.
- What books did Peter Drucker write and which ones are the most popular?
Peter Drucker wrote over 30 business and leadership books. His best-selling books include “The Practice of Management,” “Innovation and Entrepreneurship,” “The Effective Executive,” and “Management: Tasks, Responsibilities, Practices.”
- What are the key concepts in Peter Drucker’s management philosophy?
Peter Drucker’s management philosophy is based on a few key ideas, such as the importance of good leadership, the need for constant innovation and change, the value of knowledge workers, and the importance of putting the customer first. Drucker also said that managers need to look at their organizations as a whole, taking into account the social, cultural, and economic factors that affect how they work.