Can you read the article under below and answer the following question like tell us what...

Transcribed Image Text:

Can you read the article under below and answer the following question like tell us what article you read and your reaction to the article. Your 'audien is your peers, so can you explain reaction to be of the most value to them. It can include things like: What was new or surprised you? • What you agree or disagree? • What in your own experience corresponds to what you read? • What was the main 'takeaway'? Should your peers read it or not? Why or why not? i ● . Thirty hirty years after City Manager Luther Gulick ap- plied management principles to the running of a municipality, the Federal Government, which had grown out of control in the New Deal years, was finally organized more effectively. It was not until 1950 and 1951, that is, more than 10 years later, that similar management concepts and principles were systemati- cally applied in a business enterprise to a similar task: the reorganization of the General Electric Company af- ter it had outgrown its earlier, purely functional organ- ization structure. Today, surely, there is as much "management" outside of business as there is in business-maybe more. The most management-conscious of our present institutions is probably the military, followed closely by the hospital. Half the clients of a typical manage- ment consulting firm are nonbusinesses: government agencies, the military, schools and universities, hospi- tals, museums, professional associations, and commu- nity agencies like the Boy Scouts or the Red Cross. In- creasingly, holders of the advanced degree in business administration, the MBA, are the preferred recruits for careers in city management, in art museums, and in the Federal Government's Office of Management and Budget. Yet most people still hear the word business when they hear or read the word management. Man- agement books outsell all other nonfiction books on the best-seller lists, yet are normally reviewed on the busi- ness page. And while one graduate business school af- ter another renames itself the School of Management, the degree they award has remained the Master of Business Administration. Most management books, whether for college classes or the general reader, deal mainly with business and use business examples or business cases. A Social Function and Organ Why is this so? Simply, the business enterprise, though not the first of the managed institutions, did not evolve gradually out of traditional organizations as the others did, but represented a fairly radical and highly visible development. No one could possibly have mistaken the new business enterpris as it arose in the third quarter of the nineteenth century, for a direct continuation of the old and traditional "business firm" the "counting house" with two elderly brothers Management: The Problems of Success (Keynote Address at 50th Anniversary Meeting of the Academy of Management, Chicago, Illinois, August 14, 1986) By Peter F. Drucker For modern society has become a society of orga- nizations. The overwhelming majority of all people in developed societies are employees of an organization; they derive their livelihood from the collected income of an organization, see their opportunities for career and success primarily as opportunities within an organ- ization, and define their social status largely through their position within the ranks of an organization. In- creasingly, especially in the United States, the only way an individual can amass property is through the pension fund-that is, through membership in an organization. In a society of organizations, managing becomes a social function and management the constitutive, the determining, the differential organ of society. The New Pluralism The society of organizations, then, is a pluralist society. The dogma of the "liberal state," still taught in our university departments of government and in our law schools, says that all organized power is vested in one central government. (The clearest modern formula- tion of this dogma is the "Pure Theory of Law," which the Austro-American jurist and philosopher, Hans Kel- sen, developed in the 1920s, to worldwide renown.) However, in open defiance of the prevailing dogma, so- ciety contains a diversity of organizations and power centers.¹ The institutions of today's New Pluralism, though, are very different from those of the Old Plural- ism the princes and feudal barons, the free cities, the artisans, the religious institutions of Medieval Europe and Japan. Those institutions acted as separate gov- ernments. They levied taxes, for example, and estab- lished churches and schools. The purpose of today's pluralist institutions-to make and sell goods and services, to protect jobs and wages, to heal the sick, to teach the young, and so on-is nongovernmental. Each exists to do something that is different from what government does-or to do something so that government need hot do it. The institutions of the New Pluralism have no purpose except outside of themselves. They exist in contemplation of a "customer" or a "market." Achieve- ment in the hospital is not a satisfied nurse, but a cured ex-patient. Achievement in the business is not a happy work force, however desirable that may be, but a satisfied customer who reorders the product. All institutions of the New Pluralism, unlike those of the Old, are single-purpose institutions. They are tools of society to supply one specific social need, whether it be making or selling cars, giving telephone service, curing the sick, teaching children to read, or providing benefits checks to unemployed workers. To make this one specialized contribution, they need a considerable measure of autonomy: they need to be or- ganized in perpetuity, or at least for long periods of time; they need to dispose of a considerable amount of their autonomy only if they and society altogether are rendered unable to perform, such as through Stalin's "purges" or Mao's "Cultural Revolution." The opposite approach to that of the totalitarian state is the American system. Each of the "interests" in the United States is free to pursue its own goals re- gardless of the common good; it is indeed expected to do so. The American pluralist doctrine is, however, hardly adequate. Indeed, just as the Old Pluralism did, the New Pluralism has given birth to so many vested interests and pressure groups that it is almost impossi- ble to conduct the business of government, let alone to conduct it for the common good. For the past two years, almost everyone in the United States has agreed that the country needs drastic tax reform-with a few tax rates, and with exemptions eliminated-to re- place an increasingly complicated and irrational tax code. Congress had a tough time enacting such a code this past year. Although not a drastic change, a new tax law was signed into law October 1986. The tax laws therefore have undergone change. Yet, vested interests will remain, no doubt, just in different forms. Is there a way out? The Japanese seem to be the only ones so far able to reconcile a society of organiza- tions with the pursuit of the common good. The major Japanese interests are expected to take their cue based on what is good for the country. They are expected to fit what will benefit them into the framework of a pub- lic policy designed to serve the national interest. It is doubtful, however, whether even Japan can long main- tain this approach. It reflects a past in which Japan saw itself as isolated in a hostile and alien world-so that all of its interests had to hang together lest they hang separately. Will this approach have a chance in the West, where interests have traditionally been ex- pected to behave as interests? Some will ask, "Is this a problem of management? Is it not a problem of politics, of government, or politi- cal philosophy?" But if management does not tackle it, then political solutions will almost inevitably be im- posed. When, for instance, the health-care institutions in the United States did not take responsibility for spi- raling health-care costs, the government imposed such regulations as the Medicare restrictions for the care of the aged in hospitals. And these rules clearly do not benefit health care at all; in fact, they may even be det- rimental to it. They are designed to serve short-run fis- cal concerns of government and employers-that is, to substitute a different but equally one-sided approach for the one-sided, self-centered approach of the health- This must be the outcome unless the manage- ments of the institutions of the New Pluralism see it as their job to reconcile concern for the common good with the pursuit of the special mission for which their institution exists. care interests. The Legitimacy of Management To be effective in any way, however, management ers, and later agement is management has of itself and presents to its society. In Japanese law, as in American and European law, man- the servant of the stockholders; the reality is that the behavior of Japanese big business manage- ment (even in companies that are family-owned and family-managed, like Toyota) is that management is an organ of the business itself. Management is the servant of the "going concern," bringing together in a common interest a number of constituencies: employees first, then customers, then creditors, and finally suppliers. Stockholders are only a special group of creditors, rather than "the owners" for whose sake the enterprise exists. Of course, as their performance shows, Japanese businesses are not run as philanthropies. They know how to obtain economic results. In fact, the Japanese banks, which are the real powers in the Japanese econ- omy, watch economic performance closely and move in on a poorly performing or lackluster top management much faster than do the boards of Western publicly held companies. But the Japanese have institutional- ized the "going concern" and its values through "life- time employment," under which the employee's claim to job and income comes first, unless the survival of the enterprise itself is endangered. The Japanese formulation presents real problems, especially now that rapid structural change in technol- ogy and economy demand labor mobility. Still, the Japanese example indicates why management legiti- macy is a problem in the West. Business management in the West (and, in particular, business management in the United States) has not yet realized that our soci- ety has become a society of organizations, of which management is the critical organ. Thirty years management began, ago or so, when the serious study of Ralph Cordiner, then CEO of the (American) General Electric Company, tried to reformulate the responsibility of corporate top manage- ment. He called it the "trustee for the balanced best interest Is be called "stakeholders" or "constituencies." an impact or any other activity constitute grave social ills? Clearly bility of business, or competence. of stockholders, employees, customers, suppli- plant communities"-the group that would As a slogan this caught on fast. Countless other American companies wrote it into their "corporate phi- losophy" statements. But neither Mr. Cordiner nor any of the other chairmen and presidents who embraced his rhetoric did what the Japanese have done: institu- tionalize their professions. They did not determine what the "best balanced interest" of these different "stakeholders" would be, how to judge performance against such an objective, and how to create accounta- bility for it. The statement remained a good intention, and good intentions are not enough to make power legitimate. been inundating Underlying years and lief that it lacks has competence to York City was on verge late 1960s and early 1970s, New ecutives bilized ward slide. the wave of hostile takeovers that has the American economy these last few is spilling over into Europe now-is the be- the business enterprise exists solely for the sake of stockholder profits, and short-run, immediate profits at that. what about problems that do not result from of business and yet it is not a responsi- The Job employees. at stake. To only ones holders, but aggeration, a small group of senior ex- of major York business enterprises mo- the business community to reverse the down- who there a message in this? lenge. For management of the full legitimacy while remaining "private," it will have to accept that it has a social, a "public," role and function. employees' regardless the could real owners possibly the employees. to be to their ment sounded States, and making as Property Right That social role applies to its relationship to its for example, that in 1985 a fair- size Japanese Consider, company found threatened by a hostile takeover bid made British "raiders," of American and the first recent Japanese history. The company's asserted that share the of its size, the the employees claim in a large Japanese company, business faces a crisis sion fund priority sure. But jobs of any organization, to act. where But it treat 12 times of revenues in pay Western ears, very actually the the West in general, may be as far along in the employee the dominant "interest" in busi- ness enterprise as is Japan. All along, of course, the almost the initiative property right company, and maintain flexibility possible changes ganization. tion of can act in areas proper way beyond anything Japanese the Japanese worker. Above "authoritarian" than half social strange. nues that the "wage poor years pension fund and more. Moreover, American law now gives of possibly hope to get. ranges from times large (that is, 7% for profits post-tax, against 25% for wages and salaries) to as large (that is, 5% for prof- its versus 60% for wages and salaries). The pension fund greatly increased the share of the reve- go into the point that in profit the pen- the West, with converting and in which it problems. When New of self-destruction in the mandates, journals, zation structures pact Ideal a a century). The evolution were not the stock- was considerable ex- it true the rights of are the first and overriding except when the so severe that its very survival is over the stockholders and their rights in a company's liquidation, a provision law and custom give to of sell This is the revenues of a business, has exceeded what the owners can It four as for a company to hire new its employment. And this means noose the Europeans have severance the position all, the lead, is rapidly the individual job into a new property right-at the very time, para- doxically, at which the absolute primacy of stockholder short-term rights is being asserted in and by the hostile takeover. The vehicle for this of information. of There surely is big business workers knowledge work, integrating it, and We know that from one of manual we know pitifully the Japanese company state- But United than ones, Innovation York: Management fund" may Harper & of employment. ployer First, there tive and equal performance standards forming age. Second, to satisfy the requirements cess," performance appraisals demands by truly disinterested a right of appeal (something, company as IBM pay laws. Academy of Management EXECUTIVE management the business, and the it, so it equally serves the employee, the economy. Above all, we We need people we put around making it so expensive of the of transformation this development and shape this new the to to claim (New parties. knowledge and years off anybody that companies simply do not hire. That Belgium and Holland have such extraordinarily high entirely the result of these unemployment is almost countries' severance Whichever way we structure this new property right, there will be several requirements that every em- will have to satisfy. must be objec- that the a given job, regardless of race, color, itself suddenly job into Indeed, the equally, society changing United States in the employee's will have Finally, Academy of Management EXECUTIVE concepts. information-based organization specialists groups of professional gerial generalists. a chal- to attain managers we have February, 1987 individual by a group such bid in in We is entire if not for it must their necks has It will change the posi- the organization in clear what at present is still nebulous: organized man- aged institutions have increasingly become the organs of opportunity, of achievement, and of fulfillment for the individual in a society of organizations. Conclusion In the next 50 ahead for the schools and practicing are editorial Dr. to the United for everyone per- sex, or rather need to make it and increase February, 1987 avoid the with to lay there is still important work of management, management themselves. Organi- the im- a good parts 13 what traditionally of a structure in organization theory-especially man- agement "levels"-are nothing but information relays rapidly being made redundant ogy and information Drucker of "due pro- be reviewed "due process" by the way, as had for more a "property right" within the or- more, will rapidly now know that been considered 15 make and under by information technol- that international law is from Frankfurt University in Germany. the Wall Street Journal, Besides being an thor of many books ment, economics, and books, which have 20 languages, also know likely to center than in the organization is rapidly shifting workers to knowledge workers. But little about productivity with about organizing knowledge work, measuring it. an in mana- about managing knowledge work, columnist is the on manage- for au- and articles business in general. His been translated into more include his most recent and Entrepreneurship (New Row, and Frontiers of 1985) York: E. P. Dutton, 1986). and one clerk, which figures so prominently in Charles Dickens's popular books. For one, the new business enterprise-the long- distance railroad that developed in the United States after the Civil War, the "Universal Bank" that devel- oped on the European continent at the same time, the "Trusts" such as U. S. Steel, which J. P. Morgan forged in this country at the turn of the twentieth cen- tury were not run by owners. Indeed, there were no owners, but shareholders. To accommodate the new business enterprise, a new and different legal person had to be invented: the corporation. In the "corpora- tion," shares become a claim to profits rather than property. And capital is provided by large numbers of outsiders, each of whom holds only a minute fraction of the total and none of whom necessarily has any inter- est in or-a totally unheard of circumstance-any lia- bility for the conduct of the business. This new corporation could not be explained away as a reform, which is how the new army, the new university, and the new hospital presented themselves. It clearly was a genuine innovation. And this innova- tion soon came to provide the new jobs, at first for the rapidly growing urban proletarians and then for edu- cated people as well. It soon came to dominate the economy. What in the older institutions could be ex- plained as different procedures, different rules, became in the new institution a new function: management. And this function invited study, it invited attention and controversy. But even more extraordinary and un- precedented was the position of this newcomer in soci- ety. It was the first new autonomous institution in many hundreds of years, the first power center in soci- ety in hundreds of years that was independent of the central government of the national state. This was an offense, a violation of everything the nineteenth cen- tury considered (and the twentieth-century political scientists still consider) the "law of history" and, frankly, a scandal. By now, almost a hundred years after manage- ment arose in the early large business entreprises of the 1870s, it is clear that management pertains to every single social institution. In the last hundred years every major social function-caring for the sick, education, and defense, for example-had become lodged in a large and managed organization. The identification of management with business can thus no longer be maintained. Management has become the pervasive, the universal organ of a modern society. 17 14 society's resources-land, raw materials, money, and, above all, highly trained and highly educated people- and they need a considerable amount of power over people, coercive power at that. It is only too easy to forget that in the not-so-distant past, only slaves, low- level servants, and convicts had to be at the job at a time set for them by someone else. This institution has-and has to have-power to bestow or to withhold social recognition and economic rewards. Whichever method we use to select people for from assignments and promotions-appointment above, selection by one's peers, even rotation among the jobs-these are always power decisions made for the individual on the basis of impersonal criteria re- lated to the organization's purpose. The individual is at the mercy of a power grounded in the value system of whatever specific social purpose the institution has been created to satisfy. And the organ through which this power is exercised in the institution is the organ we call "management." 16 The features of the New Pluralism immediately raise a question: Who takes care of the Common Weal when society is organized in individual power centers, each of which is concerned with a specific goal rather than with the common good? must have legislative power-that is, power grounded in something transcending the organization that is ac- cepted as a genuine value, if not a true absolute, by those subject to the power. Such values have included "Descent from the Gods" or "Apostolic Succession," the "Consent of the Governed," popular election, or what is so valued by so much of modern society, the magical "advanced degree." If power is an end in itself, it becomes despotism, which is both illegitimate and tyrannical. Each institution in a pluralist society sees its own purpose as the central and the most important. Indeed, it cannot do otherwise. The school, for instance, cannot function unless sees teaching and research as the tools that make a good society and good citizens. Surely nobody chooses to go into hospital administra- tion or into nursing unless he or she believes in health as an absolute value. And, as countless failed mergers and acquisitions attest, no management will do a good job running a company unless it believes in the product or service the company supplies, and unless it respects the company's customers and their values. Here we encounter a puzzle. Management of the key institutions of our society of organizations is by and large accepted as legitimate. The single exception is the management of the business enterprise. Indeed, society is often more concerned with the survival of a large business or an industry than it is with that of any other single institution. And desperate attempts are made to salvage a major business in trouble. But at the same time, business enterprise is suspect. Any exercise of management power is denounced as "usurpation," with cries from all sides for legislation or judicial action to curb, if not suppress altogether, managerial power. One common explanation is that the large busi- ness enterprise wields more power than any other insti- tution. But this simply does not hold water. Not only is business enterprise hemmed in-by government and government regulations, by labor unions, and so on-in exercising its power; but the power of even the largest and wealthiest business enterprise is insignificant next to that of the university, now that a college degree has become a prerequisite for access to any but the most menial jobs. The university and its management are often criticized; but their legitimacy is rarely ques- tioned. The large labor union in western European and U. S. mass-production industries surely holds more power than any single business enterprise there or here. But even its most bitter critics rarely question the union's legitimacy. Yet each of these "missions" is one, and only one, dimension of the common good. They're important, yes; indispensable, perhaps; yet a relative rather than an absolute good. As such they must be limited by, bal- anced with, and often subordinated to, other considera- tions. Somehow the common good must be made to emerge out of the clash and clamor of special interests. Can the New Pluralism do this? One solution is, of course, to suppress the pluralist institutions. The total- itarian state, whether it calls itself Fascist, Nazi, Stalinist, or Maoist, makes all institutions subservient to and extensions of the state (or of the omnipotent "Party"), stripping away all free thought and expression. Another explanation-the prevalent one these days is that the managements of all other institutions are "altruistic," whereas business is "profit seeking," "out for itself," and "materialistic." But even if, for many people, "non-profit" is virtuous and "profit" du- bious, the explanation that profit undermines the legit- imacy of business management is hardly adequate. In all Western countries the legitimacy of owners and their profits is generally accepted. Yet professional management obtains profits for other people rather than for itself-and its main beneficiaries today are the pension funds of employers. And then there is the situation in Japan. In no other country, not even in France or in Sweden, was the intellectual climate of the post-war period as hos- tile to profit as in Japan, at least until 1970 or so. The left-wing intelligentsia of Japan in the universities or the newspapers might have wanted to nationalize Ja- pan's big businesses, but it never occurred even to the purest Marxist among them to question the necessity of management or its legitimacy. The reason clearly lies in the image that Japanese The State (or the "Party") is then indeed the only power center, as traditional theory preaches. But it can maintain its monopoly on power only, as Lenin was first to realize, if it is based on naked terror. And even at that horrible price, it does not really work. As we all know-and the experience of all totalitarian re- gimes is exactly the same, whether they call themselves "rightist" or "leftist"-pluralist institutions persist be- hind the monolithic facade. They can be deprived of By now it has become accepted widely-except on Wall Street and among Wall Street lawyers-that the hostile takeover is deleterious and in fact one of the major causes of the loss of America's competitive posi- tion in the world economy. One way or another, the hostile takeover will be stopped. No matter how, the solution will have tackled the problem of management legitimacy. We know some of the specifications for the solu- tion. First, the performance of a business-its market standing, the quality of its products or services, and its performance as an innovator-must be safeguarded. And financial performance must be controlled. If the takeover boom has taught us one thing, it is that man- agement must not be allowed substandard financial performance. Somehow the various "stakeholders" also have to be brought into the management process. And some- how the maintenance of the wealth-producing and job- 18 producing capacities of the enterprise-that is, the maintenance of the "going concerns"-needs to be built into our legal and institutional arrangements. It should not be too difficult. After all, we built the pres- ervation of the "going concern" into our bankruptcy laws all of 90 years ago when we gave it priority over all other claims, including the claims of the creditors. Closely connected to the problem of management legitimacy is management compensation. Academy of Management EXECUTIVE To be legitimate, management must be accepted as a professional occupation. While professionals have always been paid well and deserve to be paid well, it has always been considered unprofessional to put money ahead of professional responsibility and profes- sional standards. This means there must be limitations on managerial incomes. It is surely not "professional" for a chief executive officer to give himself a bonus of several million dollars when the pay of the company's other employees is being cut by 30%-as the chief ex- ecutive officer of Chrysler did a few years ago. It is surely not professional for employees-who are not owners to pay themselves salaries and bonuses greatly in excess of what their own colleagues in the organization receive. And it is not professional to pay oneself a salary and bonus so far above the norm that it creates social tension, envy, and resentment. Work is needed on the preparation, testing, and selection of, and on the succession to, the top manage- ment jobs in the large business enterprise; on the struc- ture of top management and the institutional arrange- ments for monitoring and enforcing them. Business must also determine what its "social re- sponsibilities" are-and what they are not. Surely busi- ness-like any organization or person, for that mat- ter-is responsible for its impacts. Responsibility for one's impacts is, after all, one of the oldest tenets of the law. And surely business is in violation of its re- sponsibilities if it allows itself impacts beyond those necessary to and implicit in its social purpose, which is to produce goods and services. To overstep these limits constitutes a "tort," that is, a violation. States is not the union contract or laws mandating sev- erance pay, as it is in many European countries. The vehicle is the lawsuit. First came the suit alleging dis- crimination on grounds of race, sex, age, or handicap in the hiring, firing, promotion, pay, or job assignment of an employee. But increasingly these suits do not even allege discrimination: they allege violation of "due process,' claiming that the enjoyment of a job and its fruits which include pay and any promotions ex- pected can be diminished or taken away on the basis of pre-set and objective standards and through an es- tablished process that includes an impartial review and the right to appeal. This is how property has been treated in the history of the law. And as few manage- ments yet realize, in practically every such suit the plaintiff wins and the employer loses. This develop- ment was predictable. Indeed, it was inevitable. And it is irreversible. It is also not "novel" or "radical." What gives access to a society's productive resources gives ac- cess thereby to a livelihood and to social function and status and constitutes a major, if not the major, avenue to economic independence. This independence, how- ever modest, has always been a "property right" in Western society. And this is what the job has become, especially the knowledge worker's job as a manager or a professional. We still call land "real" property. For until quite it was land alone that gave 95% or more of the what property productive recently population over, society's hood and to social status and function; and, finally, a chance at "estate" (the term itself meant, at first, a land holding) and, with it, economic independence. In today's developed societies, however, all but 5 or 10% of the population gain access to and control over productive resources and access to a livelihood and of is practically the only access route. Ninety-five percent or more of all people with college degrees will spend their entire working lives as employees of an organiza- tion. The modern organization is the first, and so far February, 1987 to social status and function by being an employee an organization. For highly educated people the job the only, place where we can put large numbers of highly educated people to productive work and pay them for applying knowledge. For the great majority of Americans, moreover, at the pension fund an estate-that dence. By the time only access to or blue collar, in to the claim ily's largest asset, exceeding in far the family's equity in the home or such personal belongings as an automobile. only question gives: access to, and control resources; access to a liveli- the pension fund is likely to value by Thus the job had to become a property right-the was in what form and how fast." Working things like this out through lawsuits may be as American as apple pie, but it is hardly as whole- some. There is still a chance for management to take the main breadwinner, white collar the American family is 45 years old, be the fam- the in the last about how how to kindle it. And despite all the and supportive their place of employment is their is, economic indepen- research done on motivation 50 years, we really so far know very much to quench motivation and very little about is work needed on how the multinational up, organized, and directed in a rapidly now know that manage- as such, transcends There must be set changing world economy. We ment is a "culture" in itself and, national boundaries. Yet it has to be compatible with of distinct national cultures. is thus a great deal to be learned in While there traditional management areas, the major challenges are of management as we argued that the new ones, well beyond the field it. challenges at all, ory and public commonly define be challenges I have been discussing are not management but belong in political and social the- law. Precisely. The success of management has not changed the work of management, but it has greatly changed its meaning. Its success had made manage- function and distinct ment the general, the pervasive organ of our society of organizations. As such, manage- ment inevitably has become affected with the public interest. To work out what this means for management practice constitute the Indeed, it will theory and management management problems of the next hospitals. sor of Peter F. Drucker is a management con- sultant specializing in economic and business licy and has been U.S. and foreign companies; to agencies of the U.S. Government and several foreign govern- ments, in top management organization. He a consultant to several of the largest such as Japan and Canada; and to pub- lic service institutions such as universities and has will 50 years. Drucker 1. The among others. awards Dr. social science and management mont Graduate School in Claremont, California since 1971. From 1950 to 1972, he was professor of management at the Graduate Business School at New York University, where he still serves as Distinguished University Lecturer. been Clarke Profes- at Clare- Dr. Drucker Association for the Advancement is a fellow of the American Science, an honorary member of the National Academy of Public Administration, and a Fellow of the American Academy of Arts and Sciences, In addition to the numerous has received from various associa- he tions and institutions, orary Dr. Drucker doctorates from American universities and orders from the governments of doctorate in public and Austria and Japan. His has 15 hon- and foreign ENDNOTES most recent and best-known formula of the American pluralist doctrine is Kenneth Galbraith famous, the book that first made John his American Capitalism, New York: Houghton Mifflin, 1956, its theory of "counter- essay, "Calhoun's Pluralism," with vailing powers." Also, see my in my book New York: Harper & Row, 1971. of the job Men, Ideas and Politics, 2. For additional thoughts on the evolution subsequent effect on the individual within the organization, see Chapter 31 of the Executive, New into a "property right" and the the posi- tion of of my book, The Changing World York: Truman Talley/Times Books, 1982. Can you read the article under below and answer the following question like tell us what article you read and your reaction to the article. Your 'audien is your peers, so can you explain reaction to be of the most value to them. It can include things like: What was new or surprised you? • What you agree or disagree? • What in your own experience corresponds to what you read? • What was the main 'takeaway'? Should your peers read it or not? Why or why not? i ● . Thirty hirty years after City Manager Luther Gulick ap- plied management principles to the running of a municipality, the Federal Government, which had grown out of control in the New Deal years, was finally organized more effectively. It was not until 1950 and 1951, that is, more than 10 years later, that similar management concepts and principles were systemati- cally applied in a business enterprise to a similar task: the reorganization of the General Electric Company af- ter it had outgrown its earlier, purely functional organ- ization structure. Today, surely, there is as much "management" outside of business as there is in business-maybe more. The most management-conscious of our present institutions is probably the military, followed closely by the hospital. Half the clients of a typical manage- ment consulting firm are nonbusinesses: government agencies, the military, schools and universities, hospi- tals, museums, professional associations, and commu- nity agencies like the Boy Scouts or the Red Cross. In- creasingly, holders of the advanced degree in business administration, the MBA, are the preferred recruits for careers in city management, in art museums, and in the Federal Government's Office of Management and Budget. Yet most people still hear the word business when they hear or read the word management. Man- agement books outsell all other nonfiction books on the best-seller lists, yet are normally reviewed on the busi- ness page. And while one graduate business school af- ter another renames itself the School of Management, the degree they award has remained the Master of Business Administration. Most management books, whether for college classes or the general reader, deal mainly with business and use business examples or business cases. A Social Function and Organ Why is this so? Simply, the business enterprise, though not the first of the managed institutions, did not evolve gradually out of traditional organizations as the others did, but represented a fairly radical and highly visible development. No one could possibly have mistaken the new business enterpris as it arose in the third quarter of the nineteenth century, for a direct continuation of the old and traditional "business firm" the "counting house" with two elderly brothers Management: The Problems of Success (Keynote Address at 50th Anniversary Meeting of the Academy of Management, Chicago, Illinois, August 14, 1986) By Peter F. Drucker For modern society has become a society of orga- nizations. The overwhelming majority of all people in developed societies are employees of an organization; they derive their livelihood from the collected income of an organization, see their opportunities for career and success primarily as opportunities within an organ- ization, and define their social status largely through their position within the ranks of an organization. In- creasingly, especially in the United States, the only way an individual can amass property is through the pension fund-that is, through membership in an organization. In a society of organizations, managing becomes a social function and management the constitutive, the determining, the differential organ of society. The New Pluralism The society of organizations, then, is a pluralist society. The dogma of the "liberal state," still taught in our university departments of government and in our law schools, says that all organized power is vested in one central government. (The clearest modern formula- tion of this dogma is the "Pure Theory of Law," which the Austro-American jurist and philosopher, Hans Kel- sen, developed in the 1920s, to worldwide renown.) However, in open defiance of the prevailing dogma, so- ciety contains a diversity of organizations and power centers.¹ The institutions of today's New Pluralism, though, are very different from those of the Old Plural- ism the princes and feudal barons, the free cities, the artisans, the religious institutions of Medieval Europe and Japan. Those institutions acted as separate gov- ernments. They levied taxes, for example, and estab- lished churches and schools. The purpose of today's pluralist institutions-to make and sell goods and services, to protect jobs and wages, to heal the sick, to teach the young, and so on-is nongovernmental. Each exists to do something that is different from what government does-or to do something so that government need hot do it. The institutions of the New Pluralism have no purpose except outside of themselves. They exist in contemplation of a "customer" or a "market." Achieve- ment in the hospital is not a satisfied nurse, but a cured ex-patient. Achievement in the business is not a happy work force, however desirable that may be, but a satisfied customer who reorders the product. All institutions of the New Pluralism, unlike those of the Old, are single-purpose institutions. They are tools of society to supply one specific social need, whether it be making or selling cars, giving telephone service, curing the sick, teaching children to read, or providing benefits checks to unemployed workers. To make this one specialized contribution, they need a considerable measure of autonomy: they need to be or- ganized in perpetuity, or at least for long periods of time; they need to dispose of a considerable amount of their autonomy only if they and society altogether are rendered unable to perform, such as through Stalin's "purges" or Mao's "Cultural Revolution." The opposite approach to that of the totalitarian state is the American system. Each of the "interests" in the United States is free to pursue its own goals re- gardless of the common good; it is indeed expected to do so. The American pluralist doctrine is, however, hardly adequate. Indeed, just as the Old Pluralism did, the New Pluralism has given birth to so many vested interests and pressure groups that it is almost impossi- ble to conduct the business of government, let alone to conduct it for the common good. For the past two years, almost everyone in the United States has agreed that the country needs drastic tax reform-with a few tax rates, and with exemptions eliminated-to re- place an increasingly complicated and irrational tax code. Congress had a tough time enacting such a code this past year. Although not a drastic change, a new tax law was signed into law October 1986. The tax laws therefore have undergone change. Yet, vested interests will remain, no doubt, just in different forms. Is there a way out? The Japanese seem to be the only ones so far able to reconcile a society of organiza- tions with the pursuit of the common good. The major Japanese interests are expected to take their cue based on what is good for the country. They are expected to fit what will benefit them into the framework of a pub- lic policy designed to serve the national interest. It is doubtful, however, whether even Japan can long main- tain this approach. It reflects a past in which Japan saw itself as isolated in a hostile and alien world-so that all of its interests had to hang together lest they hang separately. Will this approach have a chance in the West, where interests have traditionally been ex- pected to behave as interests? Some will ask, "Is this a problem of management? Is it not a problem of politics, of government, or politi- cal philosophy?" But if management does not tackle it, then political solutions will almost inevitably be im- posed. When, for instance, the health-care institutions in the United States did not take responsibility for spi- raling health-care costs, the government imposed such regulations as the Medicare restrictions for the care of the aged in hospitals. And these rules clearly do not benefit health care at all; in fact, they may even be det- rimental to it. They are designed to serve short-run fis- cal concerns of government and employers-that is, to substitute a different but equally one-sided approach for the one-sided, self-centered approach of the health- This must be the outcome unless the manage- ments of the institutions of the New Pluralism see it as their job to reconcile concern for the common good with the pursuit of the special mission for which their institution exists. care interests. The Legitimacy of Management To be effective in any way, however, management ers, and later agement is management has of itself and presents to its society. In Japanese law, as in American and European law, man- the servant of the stockholders; the reality is that the behavior of Japanese big business manage- ment (even in companies that are family-owned and family-managed, like Toyota) is that management is an organ of the business itself. Management is the servant of the "going concern," bringing together in a common interest a number of constituencies: employees first, then customers, then creditors, and finally suppliers. Stockholders are only a special group of creditors, rather than "the owners" for whose sake the enterprise exists. Of course, as their performance shows, Japanese businesses are not run as philanthropies. They know how to obtain economic results. In fact, the Japanese banks, which are the real powers in the Japanese econ- omy, watch economic performance closely and move in on a poorly performing or lackluster top management much faster than do the boards of Western publicly held companies. But the Japanese have institutional- ized the "going concern" and its values through "life- time employment," under which the employee's claim to job and income comes first, unless the survival of the enterprise itself is endangered. The Japanese formulation presents real problems, especially now that rapid structural change in technol- ogy and economy demand labor mobility. Still, the Japanese example indicates why management legiti- macy is a problem in the West. Business management in the West (and, in particular, business management in the United States) has not yet realized that our soci- ety has become a society of organizations, of which management is the critical organ. Thirty years management began, ago or so, when the serious study of Ralph Cordiner, then CEO of the (American) General Electric Company, tried to reformulate the responsibility of corporate top manage- ment. He called it the "trustee for the balanced best interest Is be called "stakeholders" or "constituencies." an impact or any other activity constitute grave social ills? Clearly bility of business, or competence. of stockholders, employees, customers, suppli- plant communities"-the group that would As a slogan this caught on fast. Countless other American companies wrote it into their "corporate phi- losophy" statements. But neither Mr. Cordiner nor any of the other chairmen and presidents who embraced his rhetoric did what the Japanese have done: institu- tionalize their professions. They did not determine what the "best balanced interest" of these different "stakeholders" would be, how to judge performance against such an objective, and how to create accounta- bility for it. The statement remained a good intention, and good intentions are not enough to make power legitimate. been inundating Underlying years and lief that it lacks has competence to York City was on verge late 1960s and early 1970s, New ecutives bilized ward slide. the wave of hostile takeovers that has the American economy these last few is spilling over into Europe now-is the be- the business enterprise exists solely for the sake of stockholder profits, and short-run, immediate profits at that. what about problems that do not result from of business and yet it is not a responsi- The Job employees. at stake. To only ones holders, but aggeration, a small group of senior ex- of major York business enterprises mo- the business community to reverse the down- who there a message in this? lenge. For management of the full legitimacy while remaining "private," it will have to accept that it has a social, a "public," role and function. employees' regardless the could real owners possibly the employees. to be to their ment sounded States, and making as Property Right That social role applies to its relationship to its for example, that in 1985 a fair- size Japanese Consider, company found threatened by a hostile takeover bid made British "raiders," of American and the first recent Japanese history. The company's asserted that share the of its size, the the employees claim in a large Japanese company, business faces a crisis sion fund priority sure. But jobs of any organization, to act. where But it treat 12 times of revenues in pay Western ears, very actually the the West in general, may be as far along in the employee the dominant "interest" in busi- ness enterprise as is Japan. All along, of course, the almost the initiative property right company, and maintain flexibility possible changes ganization. tion of can act in areas proper way beyond anything Japanese the Japanese worker. Above "authoritarian" than half social strange. nues that the "wage poor years pension fund and more. Moreover, American law now gives of possibly hope to get. ranges from times large (that is, 7% for profits post-tax, against 25% for wages and salaries) to as large (that is, 5% for prof- its versus 60% for wages and salaries). The pension fund greatly increased the share of the reve- go into the point that in profit the pen- the West, with converting and in which it problems. When New of self-destruction in the mandates, journals, zation structures pact Ideal a a century). The evolution were not the stock- was considerable ex- it true the rights of are the first and overriding except when the so severe that its very survival is over the stockholders and their rights in a company's liquidation, a provision law and custom give to of sell This is the revenues of a business, has exceeded what the owners can It four as for a company to hire new its employment. And this means noose the Europeans have severance the position all, the lead, is rapidly the individual job into a new property right-at the very time, para- doxically, at which the absolute primacy of stockholder short-term rights is being asserted in and by the hostile takeover. The vehicle for this of information. of There surely is big business workers knowledge work, integrating it, and We know that from one of manual we know pitifully the Japanese company state- But United than ones, Innovation York: Management fund" may Harper & of employment. ployer First, there tive and equal performance standards forming age. Second, to satisfy the requirements cess," performance appraisals demands by truly disinterested a right of appeal (something, company as IBM pay laws. Academy of Management EXECUTIVE management the business, and the it, so it equally serves the employee, the economy. Above all, we We need people we put around making it so expensive of the of transformation this development and shape this new the to to claim (New parties. knowledge and years off anybody that companies simply do not hire. That Belgium and Holland have such extraordinarily high entirely the result of these unemployment is almost countries' severance Whichever way we structure this new property right, there will be several requirements that every em- will have to satisfy. must be objec- that the a given job, regardless of race, color, itself suddenly job into Indeed, the equally, society changing United States in the employee's will have Finally, Academy of Management EXECUTIVE concepts. information-based organization specialists groups of professional gerial generalists. a chal- to attain managers we have February, 1987 individual by a group such bid in in We is entire if not for it must their necks has It will change the posi- the organization in clear what at present is still nebulous: organized man- aged institutions have increasingly become the organs of opportunity, of achievement, and of fulfillment for the individual in a society of organizations. Conclusion In the next 50 ahead for the schools and practicing are editorial Dr. to the United for everyone per- sex, or rather need to make it and increase February, 1987 avoid the with to lay there is still important work of management, management themselves. Organi- the im- a good parts 13 what traditionally of a structure in organization theory-especially man- agement "levels"-are nothing but information relays rapidly being made redundant ogy and information Drucker of "due pro- be reviewed "due process" by the way, as had for more a "property right" within the or- more, will rapidly now know that been considered 15 make and under by information technol- that international law is from Frankfurt University in Germany. the Wall Street Journal, Besides being an thor of many books ment, economics, and books, which have 20 languages, also know likely to center than in the organization is rapidly shifting workers to knowledge workers. But little about productivity with about organizing knowledge work, measuring it. an in mana- about managing knowledge work, columnist is the on manage- for au- and articles business in general. His been translated into more include his most recent and Entrepreneurship (New Row, and Frontiers of 1985) York: E. P. Dutton, 1986). and one clerk, which figures so prominently in Charles Dickens's popular books. For one, the new business enterprise-the long- distance railroad that developed in the United States after the Civil War, the "Universal Bank" that devel- oped on the European continent at the same time, the "Trusts" such as U. S. Steel, which J. P. Morgan forged in this country at the turn of the twentieth cen- tury were not run by owners. Indeed, there were no owners, but shareholders. To accommodate the new business enterprise, a new and different legal person had to be invented: the corporation. In the "corpora- tion," shares become a claim to profits rather than property. And capital is provided by large numbers of outsiders, each of whom holds only a minute fraction of the total and none of whom necessarily has any inter- est in or-a totally unheard of circumstance-any lia- bility for the conduct of the business. This new corporation could not be explained away as a reform, which is how the new army, the new university, and the new hospital presented themselves. It clearly was a genuine innovation. And this innova- tion soon came to provide the new jobs, at first for the rapidly growing urban proletarians and then for edu- cated people as well. It soon came to dominate the economy. What in the older institutions could be ex- plained as different procedures, different rules, became in the new institution a new function: management. And this function invited study, it invited attention and controversy. But even more extraordinary and un- precedented was the position of this newcomer in soci- ety. It was the first new autonomous institution in many hundreds of years, the first power center in soci- ety in hundreds of years that was independent of the central government of the national state. This was an offense, a violation of everything the nineteenth cen- tury considered (and the twentieth-century political scientists still consider) the "law of history" and, frankly, a scandal. By now, almost a hundred years after manage- ment arose in the early large business entreprises of the 1870s, it is clear that management pertains to every single social institution. In the last hundred years every major social function-caring for the sick, education, and defense, for example-had become lodged in a large and managed organization. The identification of management with business can thus no longer be maintained. Management has become the pervasive, the universal organ of a modern society. 17 14 society's resources-land, raw materials, money, and, above all, highly trained and highly educated people- and they need a considerable amount of power over people, coercive power at that. It is only too easy to forget that in the not-so-distant past, only slaves, low- level servants, and convicts had to be at the job at a time set for them by someone else. This institution has-and has to have-power to bestow or to withhold social recognition and economic rewards. Whichever method we use to select people for from assignments and promotions-appointment above, selection by one's peers, even rotation among the jobs-these are always power decisions made for the individual on the basis of impersonal criteria re- lated to the organization's purpose. The individual is at the mercy of a power grounded in the value system of whatever specific social purpose the institution has been created to satisfy. And the organ through which this power is exercised in the institution is the organ we call "management." 16 The features of the New Pluralism immediately raise a question: Who takes care of the Common Weal when society is organized in individual power centers, each of which is concerned with a specific goal rather than with the common good? must have legislative power-that is, power grounded in something transcending the organization that is ac- cepted as a genuine value, if not a true absolute, by those subject to the power. Such values have included "Descent from the Gods" or "Apostolic Succession," the "Consent of the Governed," popular election, or what is so valued by so much of modern society, the magical "advanced degree." If power is an end in itself, it becomes despotism, which is both illegitimate and tyrannical. Each institution in a pluralist society sees its own purpose as the central and the most important. Indeed, it cannot do otherwise. The school, for instance, cannot function unless sees teaching and research as the tools that make a good society and good citizens. Surely nobody chooses to go into hospital administra- tion or into nursing unless he or she believes in health as an absolute value. And, as countless failed mergers and acquisitions attest, no management will do a good job running a company unless it believes in the product or service the company supplies, and unless it respects the company's customers and their values. Here we encounter a puzzle. Management of the key institutions of our society of organizations is by and large accepted as legitimate. The single exception is the management of the business enterprise. Indeed, society is often more concerned with the survival of a large business or an industry than it is with that of any other single institution. And desperate attempts are made to salvage a major business in trouble. But at the same time, business enterprise is suspect. Any exercise of management power is denounced as "usurpation," with cries from all sides for legislation or judicial action to curb, if not suppress altogether, managerial power. One common explanation is that the large busi- ness enterprise wields more power than any other insti- tution. But this simply does not hold water. Not only is business enterprise hemmed in-by government and government regulations, by labor unions, and so on-in exercising its power; but the power of even the largest and wealthiest business enterprise is insignificant next to that of the university, now that a college degree has become a prerequisite for access to any but the most menial jobs. The university and its management are often criticized; but their legitimacy is rarely ques- tioned. The large labor union in western European and U. S. mass-production industries surely holds more power than any single business enterprise there or here. But even its most bitter critics rarely question the union's legitimacy. Yet each of these "missions" is one, and only one, dimension of the common good. They're important, yes; indispensable, perhaps; yet a relative rather than an absolute good. As such they must be limited by, bal- anced with, and often subordinated to, other considera- tions. Somehow the common good must be made to emerge out of the clash and clamor of special interests. Can the New Pluralism do this? One solution is, of course, to suppress the pluralist institutions. The total- itarian state, whether it calls itself Fascist, Nazi, Stalinist, or Maoist, makes all institutions subservient to and extensions of the state (or of the omnipotent "Party"), stripping away all free thought and expression. Another explanation-the prevalent one these days is that the managements of all other institutions are "altruistic," whereas business is "profit seeking," "out for itself," and "materialistic." But even if, for many people, "non-profit" is virtuous and "profit" du- bious, the explanation that profit undermines the legit- imacy of business management is hardly adequate. In all Western countries the legitimacy of owners and their profits is generally accepted. Yet professional management obtains profits for other people rather than for itself-and its main beneficiaries today are the pension funds of employers. And then there is the situation in Japan. In no other country, not even in France or in Sweden, was the intellectual climate of the post-war period as hos- tile to profit as in Japan, at least until 1970 or so. The left-wing intelligentsia of Japan in the universities or the newspapers might have wanted to nationalize Ja- pan's big businesses, but it never occurred even to the purest Marxist among them to question the necessity of management or its legitimacy. The reason clearly lies in the image that Japanese The State (or the "Party") is then indeed the only power center, as traditional theory preaches. But it can maintain its monopoly on power only, as Lenin was first to realize, if it is based on naked terror. And even at that horrible price, it does not really work. As we all know-and the experience of all totalitarian re- gimes is exactly the same, whether they call themselves "rightist" or "leftist"-pluralist institutions persist be- hind the monolithic facade. They can be deprived of By now it has become accepted widely-except on Wall Street and among Wall Street lawyers-that the hostile takeover is deleterious and in fact one of the major causes of the loss of America's competitive posi- tion in the world economy. One way or another, the hostile takeover will be stopped. No matter how, the solution will have tackled the problem of management legitimacy. We know some of the specifications for the solu- tion. First, the performance of a business-its market standing, the quality of its products or services, and its performance as an innovator-must be safeguarded. And financial performance must be controlled. If the takeover boom has taught us one thing, it is that man- agement must not be allowed substandard financial performance. Somehow the various "stakeholders" also have to be brought into the management process. And some- how the maintenance of the wealth-producing and job- 18 producing capacities of the enterprise-that is, the maintenance of the "going concerns"-needs to be built into our legal and institutional arrangements. It should not be too difficult. After all, we built the pres- ervation of the "going concern" into our bankruptcy laws all of 90 years ago when we gave it priority over all other claims, including the claims of the creditors. Closely connected to the problem of management legitimacy is management compensation. Academy of Management EXECUTIVE To be legitimate, management must be accepted as a professional occupation. While professionals have always been paid well and deserve to be paid well, it has always been considered unprofessional to put money ahead of professional responsibility and profes- sional standards. This means there must be limitations on managerial incomes. It is surely not "professional" for a chief executive officer to give himself a bonus of several million dollars when the pay of the company's other employees is being cut by 30%-as the chief ex- ecutive officer of Chrysler did a few years ago. It is surely not professional for employees-who are not owners to pay themselves salaries and bonuses greatly in excess of what their own colleagues in the organization receive. And it is not professional to pay oneself a salary and bonus so far above the norm that it creates social tension, envy, and resentment. Work is needed on the preparation, testing, and selection of, and on the succession to, the top manage- ment jobs in the large business enterprise; on the struc- ture of top management and the institutional arrange- ments for monitoring and enforcing them. Business must also determine what its "social re- sponsibilities" are-and what they are not. Surely busi- ness-like any organization or person, for that mat- ter-is responsible for its impacts. Responsibility for one's impacts is, after all, one of the oldest tenets of the law. And surely business is in violation of its re- sponsibilities if it allows itself impacts beyond those necessary to and implicit in its social purpose, which is to produce goods and services. To overstep these limits constitutes a "tort," that is, a violation. States is not the union contract or laws mandating sev- erance pay, as it is in many European countries. The vehicle is the lawsuit. First came the suit alleging dis- crimination on grounds of race, sex, age, or handicap in the hiring, firing, promotion, pay, or job assignment of an employee. But increasingly these suits do not even allege discrimination: they allege violation of "due process,' claiming that the enjoyment of a job and its fruits which include pay and any promotions ex- pected can be diminished or taken away on the basis of pre-set and objective standards and through an es- tablished process that includes an impartial review and the right to appeal. This is how property has been treated in the history of the law. And as few manage- ments yet realize, in practically every such suit the plaintiff wins and the employer loses. This develop- ment was predictable. Indeed, it was inevitable. And it is irreversible. It is also not "novel" or "radical." What gives access to a society's productive resources gives ac- cess thereby to a livelihood and to social function and status and constitutes a major, if not the major, avenue to economic independence. This independence, how- ever modest, has always been a "property right" in Western society. And this is what the job has become, especially the knowledge worker's job as a manager or a professional. We still call land "real" property. For until quite it was land alone that gave 95% or more of the what property productive recently population over, society's hood and to social status and function; and, finally, a chance at "estate" (the term itself meant, at first, a land holding) and, with it, economic independence. In today's developed societies, however, all but 5 or 10% of the population gain access to and control over productive resources and access to a livelihood and of is practically the only access route. Ninety-five percent or more of all people with college degrees will spend their entire working lives as employees of an organiza- tion. The modern organization is the first, and so far February, 1987 to social status and function by being an employee an organization. For highly educated people the job the only, place where we can put large numbers of highly educated people to productive work and pay them for applying knowledge. For the great majority of Americans, moreover, at the pension fund an estate-that dence. By the time only access to or blue collar, in to the claim ily's largest asset, exceeding in far the family's equity in the home or such personal belongings as an automobile. only question gives: access to, and control resources; access to a liveli- the pension fund is likely to value by Thus the job had to become a property right-the was in what form and how fast." Working things like this out through lawsuits may be as American as apple pie, but it is hardly as whole- some. There is still a chance for management to take the main breadwinner, white collar the American family is 45 years old, be the fam- the in the last about how how to kindle it. And despite all the and supportive their place of employment is their is, economic indepen- research done on motivation 50 years, we really so far know very much to quench motivation and very little about is work needed on how the multinational up, organized, and directed in a rapidly now know that manage- as such, transcends There must be set changing world economy. We ment is a "culture" in itself and, national boundaries. Yet it has to be compatible with of distinct national cultures. is thus a great deal to be learned in While there traditional management areas, the major challenges are of management as we argued that the new ones, well beyond the field it. challenges at all, ory and public commonly define be challenges I have been discussing are not management but belong in political and social the- law. Precisely. The success of management has not changed the work of management, but it has greatly changed its meaning. Its success had made manage- function and distinct ment the general, the pervasive organ of our society of organizations. As such, manage- ment inevitably has become affected with the public interest. To work out what this means for management practice constitute the Indeed, it will theory and management management problems of the next hospitals. sor of Peter F. Drucker is a management con- sultant specializing in economic and business licy and has been U.S. and foreign companies; to agencies of the U.S. Government and several foreign govern- ments, in top management organization. He a consultant to several of the largest such as Japan and Canada; and to pub- lic service institutions such as universities and has will 50 years. Drucker 1. The among others. awards Dr. social science and management mont Graduate School in Claremont, California since 1971. From 1950 to 1972, he was professor of management at the Graduate Business School at New York University, where he still serves as Distinguished University Lecturer. been Clarke Profes- at Clare- Dr. Drucker Association for the Advancement is a fellow of the American Science, an honorary member of the National Academy of Public Administration, and a Fellow of the American Academy of Arts and Sciences, In addition to the numerous has received from various associa- he tions and institutions, orary Dr. Drucker doctorates from American universities and orders from the governments of doctorate in public and Austria and Japan. His has 15 hon- and foreign ENDNOTES most recent and best-known formula of the American pluralist doctrine is Kenneth Galbraith famous, the book that first made John his American Capitalism, New York: Houghton Mifflin, 1956, its theory of "counter- essay, "Calhoun's Pluralism," with vailing powers." Also, see my in my book New York: Harper & Row, 1971. of the job Men, Ideas and Politics, 2. For additional thoughts on the evolution subsequent effect on the individual within the organization, see Chapter 31 of the Executive, New into a "property right" and the the posi- tion of of my book, The Changing World York: Truman Talley/Times Books, 1982.

Answer rating: 100% (QA)

In the article an aspect that surprised me was the historical perspective on the development of the ... View the full answer