I started to study Peter Drucker’s books in the seventies of the last century.
I read this book in 1985. In the last decade I have studied all books by and about Peter Drucker. It was fascinating to realize that all books by Peter Drucker – starting with the “End of Economic Man” published in 1939 – are full of meaningful, wise and thought provoking content independent of the year of publication.
According to Drucker 29 of the forty chapters in this book were published before as leading articles in “The Wall Street Journal”, chapter 23 was published first in “Chronicle of Higher Education”, the last chapter “The Matter of ‘Business Ethics’” was published first in “The Public Interest”.
Peter Drucker introduces Part I with a focus on managing people as a key management responsibility while self-control as a key “task” is often ignored. Drucker explains that managing people is a rather uncertain activity while self-control is almost always possible or should be tried and attempted.
When Drucker became 90 years old he published his very important small book “Managing Oneself” which should be studied and observed by young people as early as possible. The subject “self-management” should be taught systematically and integrated in leadership initiatives, because without appropriate self-management effective leadership is almost impossible.
In chapter two Drucker argues that like in the area of innovation even the most effective companies don’t achieve a high level of accuracy, he assumes less than 30%.
In chapter three Drucker provides five simple rules for small businesses to manage growth without losing control and drifting into crises.
In chapter four Drucker repeats his view – see his book “The Next Society published in 1950 – that the ratio of the top executive’s salary to the lowest paid worker’s salary should be in the range of 15:1 to 25:1 depending on the size of the company. In 1950 Peter Drucker wrote:
“Today, I believe it is socially and morally unforgivable when managers reap huge profits for themselves but fire workers. As societies, we will pay a heavy price for the contempt this generates among the middle managers and workers. … ”
Today, in 2015! we find the following ratios on the website of payscale: “CEO to Worker Pay Ratio Top 5 … 5 Companies with the largest CEO-to-Worker Pay Gaps CEO Larry J. Merlo of CVS Caremark $12,112,603 422:1 Average Employee $28,700 … CEO Richard Kramer of Goodyear 323:1, CEO Robert A. Iger of The Walt Disney Company 281:1, CEO K. Rupert Murdoch of 21st Century Fox 268:1 and CEO David M. Cote of Honeywell $16,560,958 211:1 Average Employee $78,400.
In Part II Drucker explains the differences between healthy and unhealthy – good and bad – growth. He is urging top management to define realistic growth objectives, develop and execute an appropriate growth strategy to differentiate clearly between healthy growth on one side and fat and canter on the other side.
In chapter 23 Drucker is criticizing very bluntly “The Professor as Featherbedder” which induces to check the situation today.
In chapter 24 Drucker speculates about the Schools in 1990. From a European perspective it is evident that Drucker today is more relevant than ever: he claims for Thinking and Courage.
In chapter 26 Drucker argues that the retirement age 65 is over. It is evident that Drucker’s view has not yet been understood in Europe where the population is decreasing without immigrants while immigration is currently out of control.
In chapter 40 Drucker has no doubt that “A Return of Hard Choices” is unavoidable. If we compare the situation as described in 1982 with where we are today in Europe it is evident that Drucker’s messages have not been understood until now: policy makers on both sides of the Atlantic still think that economic politics is relatively painless and considered a “happy science.”
In his “Final Note” Drucker provides timeless and fundamental lessons about ethics which we find again in Drucker’s excellent book “The Ecological Vision” published in 1993, chapter 14 “Can there be “Business Ethics”, pages 195-214. Drucker writes: “The confusion is so great – and the noise level even greater …” He analyzes this fundamental question by elaborating on “Business Ethics and the Western Tradition: But – and this is the crucial point – these are qualifications to the fundamental axiom on which the Western tradition of ethics has always been based: There is only one code of ethics, that of individual behavior, for prince and pauper, for rich and poor, for the mighty and the meek alike. Ethics, in the Judaeo-Christian tradition, is the affirmation that all men and women are alike creatures – whether the Creator be called God, Nature, or Society … Casuistry: The Ethics of Social Responsibility … The Ethics of Prudence and Self-Development … The Ethics of Interdependence: … But there is another, non-Western ethics that is situational. It is the most successful and most durable ethics of them all: the Confucian ethics of interdependence … first codified shortly after the Master’s death in 479 B.C. ... considers illegitimate and unethical the injection of power into human relationships. It asserts that interdependence demands equality of obligations. …’Ethical Chic’ or Ethics.
Peter Drucker is closing is analysis as follows:
“Indeed, if there ever is a viable ethics of organization, it will almost certainly have to adopt the key concepts which have made Confucian ethics both durable and effective:
- clear definition of the fundamental relationships;
- universal and general rules of conduct – that is, rules that are binding on any one person or
organization, according to its rules, function, and relationships;
- focus on right behavior rather than on avoiding wrongdoing, and on behavior rather than on
motives or intentions. And finally,
- an effective organization ethic, indeed an organization ethic that deserves to be seriously
considered as ethics, will have to define right behavior as the behavior which optimizes each
party’s benefits and thus makes the relationship harmonious, constructive, and mutually
beneficial.
But a society of organizations is also a society in which a great many people are unimportant and indeed anonymous by themselves, yet are highly visible, and matter as leaders in society. And thus it is a society that must stress Ethics of Prudence and self-development. It must expect its mangers, executives, and professionals to demand of themselves that they shun behavior they would not respect in others, and instead practice behavior appropriate to the sort of person they would want to see in the mirror in the morning.”
It is obvious that reflecting on Drucker’s writing in 1982 is of great importance in 2015 and beyond.
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