The Key to Successful Management? Understanding People

Peter Drucker owes his position as one of the fathers of modern management theory to his understanding of the importance of the individual, something that came to him when attending a class given by John Maynard Keynes at Cambridge University in 1934. “I suddenly realized that Keynes and all the brilliant economics students in the room were interested in the behavior of commodities, while I was interested in the behavior of people,” said Drucker. (1)

 This week I was lucky to participate at the Global Drucker Forum in Vienna (2), where leading management thinkers from all quarters discussed about the ultimate management knowledge, as well as the opportunities and challenges brought by technology. During the conference, Drucker’s words “Management is about the people” resonated in my mind.

 In recent decades, business schools have developed and refined theories on corporate governance, the role of the CEO, or the defining characteristics of business leadership, producing any number of biographies and profiles of the business world’s great and good. Indeed, Management is about people and this fundamentally flies in the face of hard and fast professional structures. The human element also has a profound effect on how and what is taught at business schools.

 It is worth noting that the case study, a method used at most business schools, emphasizes the importance of personal factors in a director’s decision-making processes, recognizing that it is people who either create or destroy value, above and beyond immediate circumstances or factors. Most business schools taught early on that understanding the perspective of the individual, or groups of people, is just as important as economic theory.

 Management has moved from an unspoken, informal, ad hoc activity, into one, which is routinely analyzed and commented on from every angle possible. Management has emerged from the shadows to be recognized as one of the driving forces of economic and personal life.   No organization, no activity – now appears beyond the scope or ambition of management.  

 While management came of age during the twentieth century, with the establishment of the first business schools in the US, it would be foolish to suggest that it did not exist prior to 1900. Management has been practiced since the very dawn of civilization. But, only during the last one hundred years has it been recognized, analyzed, monitored, taught, formalized and even packed as a science.

 Over this period, management has often been narrowly defined as relating to business. As Drucker pointed out, this does management a disservice. Management applies to more than the world of business.   Indeed, Drucker argues that the creation of “city managers” early in the 1900s was one of the first occasions in which management, as it is now understood, was applied to a particular job. Management is as appropriate in local government as it is in a corporation. Management is at home in politics and government as it is in healthcare and hospitals. It is as useful in sports – coaching is just one aspect of management -- as it is on the factory floor.  

 Management is all-pervasive. “There are, of course, differences in management between different organizations—mission defines strategy, after all, and strategy defines structure. But the differences between managing a chain of retail stores and managing a Roman Catholic diocese are amazingly fewer than either retail executives or bishops realize,” Drucker observed. “The differences are mainly in application rather than in principles. The executives of all these organizations spend, for instance, about the same amount of their time on people problems—and the people problems are almost always the same.

 “So whether you are managing a software company, a hospital, a bank or a Boy Scout organization, the differences apply to only about 10 per cent of your work. This 10 per cent is determined by the organization's specific mission, its specific culture, its specific history and its specific vocabulary. The rest is pretty much interchangeable.” (3)

 Management’s recognition as a distinctive discipline has been hard earned. Despite the executive superstars with their superstar salaries; the power and influence clearly enjoyed by managers; and the fact that a huge percentage of the working population work in managerial jobs, management is rarely regarded as the noblest of callings – or a calling at all.   Management is something people fall into.   A job in the customer service department leads to marketing and, before you know it, you are vice-president and people are asking you the meaning of management.

“Corporations and managers suffer from a profound social ambivalence,” leading theorists, Sumantra Ghoshal, Christopher Bartlett and Peter Moran have observed. “Hero-worshipped by the few, they are deeply distrusted by the many.   In popular mythology, the corporate manager is Gordon Gecko, the financier who preaches the gospel of greed in Hollywood’s Wall Street.   Corporations are ‘job killers’.” (4)

 Management has had a bad press.   The attraction – and the trouble -- is that management is multi-faceted. Pinning it down is problematic.     It is marketing.   It is strategy.   It is inspiring people.   It is budgeting.   It is organizing projects and commitments.   It is a complex, highly personal and, now truly global, calling. It also has a huge impact on people’s lives.

 If Management is about leading people, we can do much better by learning more about people’s behaviors, ideals and aspirations. Here I include some final takeaways:

 -Knowing your people in depth - their concerns and worries, personal ambitions and family circumstances- improves your management profile. How much time do you dedicate to them? Do you know all those aspects of their lives?

-One of the major challenges for today’s managers is how to identify, and retain talent. Consequently, it makes sense that we learn and apply the best practices in talent recruitment. One of the speakers on my panel at the Drucker forum, Claudio Fernandez de Araoz, frequently asks at his presentations how many in the audience have learnt the basics in selecting talent. You may guess what the answer is.

-Reading Literature, philosophy and history may enhance our knowledge of human nature, fundamental for managing people and exercising leadership.

I really enjoyed my participation at the Global Drucker Forum. The other two speakers on my panel, Rosanne Somerson, President at the Rhode Island Institute of Design, and Gianpiero Petriglieri, Professor at Insead, also emphasized the importance of humanities and design in the development of managers. Management is irreducibly human: the more we know about our congeners, the better managers we may be.

This post is dedicated to Richard Straub, President of the Peter Drucker Society Europe and to Angelica Kohlmann, Chair of the Board of the Peter Drucker Society Europe 

Notes

Photo: At the Drucker Forum: Vienna, 5th November 2105

(1) The Drucker Institute, Claremont Graduate Institute: Timeline of Peter Drucker’s life and works, https://www.druckerinstitute.com/whydrucker/why_timeline.html

(2) https://www.druckerforum.org

(3) P. Drucker, ‘Management’s new paradigms’, Forbes, 5 /12/1998

 (4) S. Ghoshal, C. Bartlett and P. Moran, ‘A New Manifesto for Management’, Chap. 1 in Strategic Thinking for the Next Economy, edited by Michael A. Cusumano and Constantinos C. Markides (San Francisco: Jossey-Bass, 2001), p. 9-32 Sloan Management Review, Spring 1999.