Synopsis of on Profession of Management Essay

On the Profession of Management is a compilation of Druckers work that has appeared in the Harvard Business Review over the last 30 years. Review editor Nan Stone has organized 13 articles into two sections. The first, The Managers Responsibilities, focuses on the burgeoning business realities that have serious implications on the present business scenario. Dynamic shifts in the current business theory, management practices and the ways to make effective decision are some of the key challenges faced by today’s managers.

The second, The Executives World, focuses on – the history of management, the transformation from the traditional command-and-control model to knowledge-based organizations, emergence of information technology, and valuable lessons that can be learnt from non-profit organizations. In the first part of the book, Business philosopher, Peter Drucker portrays the business model of today, and highlights the necessary interactions of managers with the model. According to Drucker every organization is based on some assumptions – these assumptions are about markets, organizations mission and core competencies.

It is highly imperative that there is a strong fit between assumptions and actual reality. One of the prime reasons of current business failures hinges on the gap between the reality and perceived notions about market, environment, technology, core competencies on the organizations part. The success of a company depends upon a sound and realistic business theory that successfully addresses the reason a company is paid for, what it wants to accomplish, how it want to accomplish and while doing that in what manner it contributes to society.

Drucker furthermore stresses that the theory of business must be understood throughout the organization and tested constantly to ensure that it stays valid for the business in the overhaul. One of the common denominator in all managerial functions is making decisions – and not just decisions but the kind that satisfies the intent, the purpose behind the decision. Drucker proposes that a manager must first analyze or classify the nature of the problem whether it is a generic problem or a unique problem.

The former calls for a day to day or routine procedures whereas the latter demands creative solutions. Effective decision in both cases can only be made if the defined problem fully explains all observable events and facts, adequately satisfies the boundary conditions i. e. the objectives of the decision, aims to accomplish what is right rather than what is acceptable, has built in action commitment in the decision. Furthermore the manager must proactively seek feedback through direct interaction rather than endless reports so that stagnation can be avoided.

We have emphasized earlier the important of decision making – in fact making decisions is so pervasive that all encompasses all areas of a manager’s responsibilities and duties and to the extent that almost every decision that is made eventually boils down to one key factor i. e. People. In Drucker words: “In no other area of management would we put up with such miserable performance”. No one can promise to deliver perfect decisions all the times, deviations from boundary conditions; judgment errors are very much part of it but a manager can still use some basic principle.

A manager must not engage in blame game rather be gutsy enough to take responsibility when an erroneous decision is made by him, make sure that responsible people in the organization perform. One big Don’t in this scenario is to avoid giving challenging assignments to newly hired employees. One extremely valuable lesson in this regard is that people decisions are yardstick and gauge with which performance capacity of an organization is determined.

There are number of factors and steps that should be taken in to account while making people decision (staffing and promotion) . The employee or candidate must possess thorough knowledge of the job, qualified people must be hired. The challenges and requirement of the job must be in conjunction with the individual capabilities. The focus of manager should be on the strengths not the weakness of the candidates, and decisions the individual must understand the job.

By and large Drucker emphasizes that making right decisions is not only imperative but speaks volumes about the management, its values and long term objectives; if we look at the staffing and promotion decisions mentioned above we can easily infer that if a disparity occurs in employee capabilities and job requirements how it diminishes the productivity of the company but also at the same time it promotes a culture highly charged with politics & tardiness. It is usually considered by organizations to capitalize on a magical idea irus that aims to achieve future economic – such a stance is based on what future will hold? And long-term planning responds to this very notion. Drucker strongly dismisses that and proposes that it is not absolutely necessary for every business to search for the idea that promises future. He furthermore says that future cannot be known and it is not determined and not formed but can be shaped through strong willed action; A proactive approach regarding how future should be is what generates ideas, actions that lead to success in future.

Small organizations who believed in what future should hold have earned success in long run such as IBM or Xerox. Long term planning is not only for large companies but also for small businesses that the future. An idea is not just an idea but an entrepreneurial idea, having the potential to produce wealth; an organization that possesses such an idea has a deep understanding of its business theory and current market challenges and knows equally well how to respond to them. Some examples of the big power of little idea include commercial banking, chemical industry, modern merchandising, mass distribution and discount chain.

Moreover many small organizations have grown from amazing ideas to humongous corporations such as IBM, BATA, Sears, and Roebuck. Innovation is basically the particular function of entrepreneurship. It permeates every type of Organizations whether it is an existing business, a public institution or a newly started business by some individuals. The core activity of every business hinges upon innovation – its basic function is to create purposeful change in existing economic or social potential of an organization. Sources for innovation opportunities are found only in a few circumstances.

Some factors represent innovation within a company or industries (unexpected occurrence, incongruities between expectations and results, process needs, industry and market change). While other factors represent opportunities outside the company or industry (demographic changes, changes in perception, new knowledge). The capacity of innovation may lie in more than one area at a time, successful innovators analyze the figures and as well as interact with people to get a balanced idea of what areas of opportunity really do exist and try to capitalize on that by achieving a single clear objective.

Above all innovation demands hard work, focus and purposeful work. Above all mentioned areas of management clearly implies that effective management depends upon a clear understanding of what needs to done and how is it to be done. The reason of existence of any business corporation is to achieve high economic performance levels. In this regard the manager must avoid using cliches but try to understand the nature of the job, the root problem, and the principle (Pareto 20/80 principle).

Drucker gives further expands the topic and states that the company must understand that at the bottom most of its success of economic activity is being generated by a few products, people, etc. Focusing on successful areas of business boosts economic performance more than the clutter; companies usually end up creating in terms of products for example. In Druckers words: The manager’s job calls painful decisions, and risky ones. But that, after all, is what managers are paid for. In the second part of the book, Drucker breaks away and reveals a series of startling revelations about today’s business.

Technology has created a great diversity of information. In order for a manager, to be effective, managers need to identify the information in order to effectively perform their jobs. In recent years there has been a shift from the traditional cost accounting developed by the general motors’ towards activity based costing. It basically implies that in accounting the total costs are always allocated costs which may work perfectly for manufacturing organizations but it cannot be applied accurately on the service organizations.

The businesses of 20 years ago were a lot more different than the business of todays. The first step in understanding this transformation is to consider the importance of emergence of computer technology these days. Computers not only make the work easy but at the same time it can be done at greater speed and more accuracy. For example: to analyze capital investment we have to consider six time consuming steps, but now through spread sheet the same work can be done with ease. The availability of this information has transformed the capital-investment analysis from opinion into diagnosis.

The second key affected area is the focus of company on the data-processing capacity, it can clearly cut the number of managers, and their main purpose is not to lead but to act like boosters for the faint unfocused signals. To convert data into information requires knowledge, and knowledge comes from specialization which has given rise to a new type of organizations that have helped to bring about Knowledge or specialist workers. Information based organization requires clear, simple, common objective that can be translated into particular actions.

Drucker says that valuable lessons can be learnt from non profits for example the girls scout, Red Cross, pastoral churches & nonprofit organizations are becoming American management leaders. The motivation and productivity of knowledge workers are truly inspiring. Valuable lessons can be learnt from nonprofit such as how a clear mission, MBO, continous learning and teaching can help organizations to achieve success. As a rule, nonprofits are more money conscious than business enterprises are. They talk and worry about money much of time because it is hard to raise money some time.

Organizations represent a network of specialists, rather than a strong command and control hierarchy. However, technology of itself does not increase productivity. How do managers increase productivity? Managers increase productive by helping the knowledge worker to work smarter – not harder. Management creates the knowledge worker by empower them with specialized skills and knowledge. Productivity gaps are closed through training. Management must decide who gets trained. Training the right people, increase the worker’s capability, compensation, and productivity. Performance can only be achieved by the worker working smarter not harder.

Managers are responsible for creating and maintaining their career path. Receiving a higher education degree and employment, in a large company does not guarantee retirement, with the company. Managers are responsible for designing and maintaining their career. Through management we can employ our workers according to their skills, knowledge and determine common goals. Every type of knowledge worker whether it is joint venture expert, marketing expert, statisticians or psychologist would not be effective without the understanding of managerial issues and management by and large.

For the achievement of economic success countries must participate effectively in the world’s economy. It is based on new ideas and leadership in technology innovation. Management is all about human beings, its target is to make people capable of joint performance, to make their strengths effective and their weakness irrelevant. Every enterprise requires simple clear understanding and unifying objectives. Its mission, goals are clear enough and big enough to provide a common vision. Manager who develop successful, productive and achieving enterprise all over the world also establish standards and values.

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