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1. The practice of Management

THE MANAGER AND HIS WORK 347 ume. lt is, however, possible tO guide a manager toward an in ・ telligent allocation 0f his time. Managers whO know hOW tO use time well achieve results by planning. They are willing t0 think before they act. They spend a great deal of time on thinking through the areas in which 0b ・ Jectives should be set, a great deal more on thinking through system ・ atically what to do with recurrent problems. Most managers spend a large amount of time—in small driblets—- on attempts to appraise the performance and quality of the men wh0 work under them. GOOd time users do not. lnstead, they system ・ atically appraise their men once a year. As the result 0f a few hours' work, they then have the answers for 1 the decisions—concerning a man's salary, for instance, or hiS promotion or work assignment—on which judgment is required. Good time users do notspend a great deal of time on the modifica ・ tion engmeermg of their products. They sit down once a year—for a few days perhaps—and work out with their sales and manufactur- ing departments the basic poli , the objectives and the rules for the necessary determining then hOW much Of it there should be—and assign engineering manpower in advance tO the ] Ob. ln their eyes it iS no praise tO say: ・ 'This year we managed tO get through this inventory crisis, thanks to the expenence we had acquired last year. '' If they have a recurrent crisis, they spend the time tO find out What causes it SO as tO prevent its repetition. ThiS may take time, but in the long run it saves 1 Ⅱ ore. The time users among managers spend many 1 ore hours on their commumcations up than on their communications down. They tend to have good communications down, but they seem tO obtain these as an effortless by-product. They do not talk t0 their men about their own problems, but they know how t0 make the subordinates talk about theirs. They are, for instance, willing tO spend a great deal 0f their time on the half-yearly Manager Letter' ⅲ which each subordinate sets down the objectives of his job, his plans, and what his superior does t0 help and to hamper him. They may spend a whole day every six months with each 0f their ten or twelve men going carefully over the Manager Letter—and as a result they dO Ⅱ 0 【 have tO worry much in between about their communica- tions down. The manager who utilizes his time well also spends a great deal

2. The practice of Management

MAKING DECISIONS 365 what change in behavior is expected of them, and what change [ 0 expect in the behavior 0f others with whom they work. What they have tO learn iS the minimum necessary tO make them able to act the new way. lt iS poor decision-making tO present a decision as if it required people [ 0 learn all over again or tO make themselves over intO a new image. The prmciple Of effective communication tO convey only the significant deviation or exception—and that in clear, precise and unambiguous form. lt iS a problem in economy and preciSlon. But motivation is a problem in psychology and therefore stands under different rules. lt requires that any decision become "our decision" tO the people WhO have tO convert it intO action. This in turn means that they have tO participate responsibly in making it ・ They should not, to be sure, participate in the definition of the problem. ln the first place, the manager does not know who should participate until the definition and classification are done; only then does he know what impact the decision will have and on Whom. Participauon iS unnecessary—and usually undesirable—in the information-gathering phase. But the people who have to carry out the decision should always participate in the work of develop ・ ing alternatives. lncidentally, this is also likely t0 improve the qual ・ ity 0f the final decision, by revealing points that the manager may have missed, spotting hidden diffculties and uncovering available but unused resources. Precisely because the decision affects the work of other people, it must help these people achieve their objectives, assist them in their work, contribute tO their performing better, more effectively and with a greater sense Of achievement. lt cannot be a decision designed merely to help the manager perform better, do his job more easily or Obtain greater satisfaction from it. T ん New T00 な可 D ル M g Nothing I have said SO far about decision-making is new; on the contrary, it only repeats what has been known for thousands 0f years. But while many managers use the decision-making method well, few understand clearly what they are doing. TWO new developments, however, make it important that every manager understand the process. ln the first place, a whOle new

3. The practice of Management

MANAGERS MUST MANAGE 3 Finally, the manager has responsibilities downward, 【 0 his subordinate managers. He has first t0 make sure that they know and understand what is demanded of them. He has to help them set their own objectives. Then he has [ 0 help them to reach these objectives. He is therefore responsible for their getting the t001S , the s ね圧 , the information they need. He has to help them with advice and counsel. He has, if need be, to teach them [ 0 dO better. Ⅱ a one ・ word definition of this downward relationship be needed, assistance ” would come closest. lndeed, several successful ( 0 ーれ・ panies—-notably lnternational Business Machines (IBM)—have de ・ fined the manager's J0b in relation to his subordinates as that Of an asristant" tO them. Their jobs are theirs—by objective necessity. Their performance and results are theirs, and so is the responsibility. But れ is the duty of the superior manager to help them all he can tO attain their objectives. The Catholic Church is customarily considered tO exercise authoritarian ( on [ r01 over its priests. A Bishop can appoint a priest to a parish (though he cannot remove him except for cause and after a hearing). The Bishop can set up new parishes and abolish or merge existing ones. But he cannot tell a parish priest what to do; that is determined objectively by the nature of the job and laid down in the charter 研 the Church, canon Law. Nor can the Bishop himself exercise the functions of the parish priest; as long as the parish has a duly appointed priest the authority and the responsibility of the offce are exclusively his. ln theolo each priest holds 0 伍 ( e by delegation through Apostolic Succession; in law he has 0 ロ & nal and 50 厄 authority grounded in the objective requirement of his function and limited on け by the limits his ん n ( ⅱ on. The objectives of a managerial unit should always and exclusively consist Of the performance and results it has [ 0 contribute 【 0 the success 0f the enterprise. They should always and exclusively focus upward. But the objectives Of the manager whO heads the unit in ・ clude what he himself has to do to help his subordinate managers attain their objectives. The vision Of a manager should always be upward—-toward the enterprise as a WhOle. But his responsibility runs downward as well—to the managers on his team. That his relationship toward them be clearly understood as duty rather than as supervision iS perhaps the central requirement for organizing the manager's i0b effectively.

4. The practice of Management

366 THE PRACrICE OF MANAGEMENT battery t001S to help ⅲ decision-making has become available. These are powerful and valuable t001S ; but they cannot be used unless the manager understands their purpose. SecondIy, the new technology is rapidly shifting the balance between tactical and strategic decisions. Many decisions that have always been tactical, if not routine, are rapidly becoming strategic decisions containing a high degree Of futurity, a great impact and a large number Of qualitative considerations; they are becoming de ・ cisions of a high order, in other words. And they can only 反 taken successfully and effectively if the manager knows what he is doing and does it systematically. The new tools have been introduced under the rather confusing name Of "()perations Research. " They are neither "operations" nor "research. " They are the t001S of systematic, logical and mathematical analysis and synthesis. Actually it is not even correct tO say that the t001S are new; they differ very little from the t001S used by the medieval symbolical logician, such as St. Bonaventure. The only new things are a few mathematical and logical techniques. lt is not suffcient therefore to train people in using the new tOOls and then turn management decisions over tO them. Management decisions still have to be made by the manager. And they are still decisions based on judgment. But the new t001S can help greatly in 50 一 e phases Of decision-making. ln any new t001 it is important tO say 6 t what it cannot d0. Operations Research and all its techniques-—mathematical analysis, modern symbolical logic, mathematical information theory, the "Theory of Games," mathematical probability and so on cannot help in defining what the problem is. They cannot determine what is the right question. They cannot set objectives for the solution. Nor can they set rules. Similarly, the new tools cannot make the decision concerning the best solution; they cannot by themselves make a decision effective. Yet these are the most important phases in decision-making. But the new [ 81S can be of great help in the two middle stages: analyzing the problem and developing alternatives. They can find and bring out the underlying patterns in the behavior of the busi ・ ness and in its envzronment, including those that have hitherto lain

5. The practice of Management

MAKING DECISIONS 367 beyond the manager's field of vision or range of imagination. They can thus bring out alternative courses Of action. They can ShOW which factors are relevant (that is, facts) and which are irrelevant (that is, mere data). They can show the degree of reliability of the available data and what additional data are required tO arrive at sound judgment. They can show what resources will be needed in any Of the alternative courses Of action, and what contribution from each component or function would be required. They can be used tO ShOW the limitations Of each available course Of action, its risks and its probabilities. They can show what impact a gven acuon would have on Other areas, components and functions, the relationship between input and output and the location and nature of bottlenecks. They can tie together the work and contribution of each function or component with those Of all others and show this tOtal impact on the behavior and results Of the entire business. The new t001S are also not without danger. ln fact, unless properly used they can become potent means for making the 、打 ong decisions. Precisely because they make possible concrete and specific analysis of problems which hitherto could only be roughly defined or sensed, the new tOOlS can be abused tO "SOlve" the problems Of one small area or Of one function at the expense 0 [ Other areas or functions or Of the entire business. They can be abused, as the tech- nicran calls it, tO "sub-optimize. " And it iS important tO stress that practically all the problems which are given in the literature so far as illustrations of Operations Research are problems which should never be SOlved by themselves as such a solution inevitably results in serrous "sub-optimization. " ln fact proper use Of these t001S iS possible only if they are first applied to the analysis and definition of the characteristics of the whole business. Only then can they be profitably used for the analysis of individual problems and for the improvement Of individual decisions. FinaIIy, the new tools promise help in making others understand what action is required Of them and what to expect from associates. Mathematical information theory is still in its infancy. But it is likely to produce t001S capable of identifying the relevant and new deviation in an action pattern and defining it in precise symbols. AII these things have been done for generations by imagmative ople. What the new t001S do is to bring this accomplishment

6. The practice of Management

以 8 THE PRACTICE OF MANAGEMENT likely to be that messengers and typists get fired, and that 5 , 08 executives are forced tO dO $50-a-week work typing their own letters. And yet many managements have not drawn the obvious conclusion that drives are, after all, not the way to get things done ・ But over and above itS ineffectiveness, management by drive nisdirects. lt puts all emphasis on one phase 0f the job t0 the in ・ evitable detriment Of everything else. "For four weeks we cut inventories," a case-hardened veteran Of ・ agement by crisis once summed it p. "Then we have four weeks Of COSt ・ cutting, followed by four weeks of human relations. We just have time tO push customer service and courtesy for a month. And then the in- ventory is back where it was when we started. We don't even 町 ' tO dO our j0b. AII management talks about, thinks about, preaches about, is last week's inventory figure or this week's customer complaints. HOW we do the rest of the job they don't even want to know. ' ln an organization which manages by drives people either neglect their jOb tO get on with the current drive, or silently organize for collective sabotage of the drive to get their work done. ln either event they become deaf [ 0 the cry of "wolf. " And when the real crisis comes, when all hands should drop everything and pitch in, they treat れ as just another case Of management-created hysteria. Management by drive, like management by "bellows and meat ax,' IS a sure Sign Of confusion. It iS an admiSS10n Of incompetence. lt is a sign that management does not know hOW tO plan. But, above all, it is a sign that the company does not know what to expect of its managers-—that, not knowing how to direct them, it misdirects them. 日 0 田 S ん 0 イ Ma ” ag どな ' 0 りど Be Set れ d とッⅣん om ? By definition, a manager is responsible for the contribution that his component makes tO the larger unit above him and eventually tO the enterprise. His performance aims upward rather than down- ward. This means that the goals of each manager's J0b must be de ・ fined by the contribution he has to make to the success of the larger unit 0f which he is a part. The objectives of the district sales man ・ ager's job should be defined by the contribution he and his district sales force have to make to the sales department, the objectives of

7. The practice of Management

172 THE PRACTICE OF MANACEMENT cate their work, and cut them 0 圧 from easy communicauon with the chief executive. They are the worst causes Of malorganization—— government by crony. '' Yet the one-man chief executive needs his kitchen cabinet. NOt being allowed tO organize a proper team, he has tO make dO with errand boys, private secretaries, chief clerks and favorites intO whose hands critical control Of the basic decisions ・ aeasingly drifts. The worst example of this I have seen was in a fairly large 5 記 el com・ pany where the president had twice as many assistants as there were vice ・ presidents. NOt one Of these assistants had clearly defined responsi• bilities; they did whatever the president assigned them to do. The same man, for instance, did the president's Christmas shopping and the ( om ・ pany's financial planning. Not one 0 [ them was supposed t0 have any authority, but they made the final decisions in effect. Yet, when the president was asked by a new board chairman tO get rid Of this mon- strosity, he answered: "I know I ought [ 0. But ow else can I get through my work load?" The solution was quite simple. The vice-presidents were organized in a "Planning Committee. " They were asked to set aside tWO days each week for the work of the committee ()o make this possible some functions were split and four new vice-presidents were appointed). The committee has full responsibility for the formulation 0 [ objectives, the preparation Of all recommendations on policy, organization and senior management personnel, and for the preparation 飜 financial plans and budgets. The company, ⅲ other words, is run by a team composed of the president as "man Of action" and "front man," and the PIanning Committee as "thought man. " There has been no trouble since, and no tendency to restore the kitchen cabinet. Another sign Of the disintegration of the one-man chief-executive concept is the tendency toward a fO ロ 0f executive dropsy in the large company. More and more levels of top management intervene between the actual business and the chief executive. At General Motors—one 0f several examples—there are now two such levels Of top management between the president and the chief operating Ofrers, the heads 0f the autonomous product businesses or divisions. Even the general manager of as enormous a business as Chevrolet (employing 200 , 80 ople and selling almost $ 4 , 000 , ooo , 000 worth 0f automobiles a year) does not work directly with the chief execu ・ tive Of GeneraI Motors. He reports to a group executive who in turn reports tO an executive vice-president. And only then does anything

8. The practice of Management

WHAT OU BUSINESS—AND WHAT SHOULD IT BE? 53 around the traditional wholesaling organization Of the industry with its high distributive expenses will sweep the market. The next question is: "What does the customer buy?" The Cadillac people say that they make an automobile and their busi- ness is the CadilIac Motor Division General Motors. But d 5 the man wh0 spends four thousand dollars on a new Cadillac buy trans ・ portation or does he buy primarily prestige? Does the CadiIIac, in other words, compete with the Chevrolet and the Ford; or does it compete—-to take an extreme example—with diamonds and mink coats? The best examples of bo 山 the right and the wrong answers to t 5 question are found ⅲ the 肥 and fall of the Packard M0tor Car Com・ pany, only a dozen years ago Cadillac's most formidable competitor. Packard, alone among the independent producers of high-priced cars, survived the early depression years. lt prospered because れ had shrewdly analyzed what the customer buys and had come up with the right answer for depression times: a high ・ priced but carefully engineered, solid and un ・ ostentatious car, ・ 01d and advertised as a symbOl Of conservative solvency and security in an insolvent and insecure world. By the mid ・ thirties, hOW• ever, this was no longer adequate. Since then Packard has found it dificult [ 0 figure out what its market is. Though it has highly priced cars, they d0 not symbolize that the owner has "arrived"—perhaps because they are not high-priced enough. Though it brought ou 【 medium-priced cars, it did not succeed in making them symbolize the sterling worth and solid achievement Of the successful professional. Even a new management re ・ cently come ⅲ did not find the right answer. As a result, Packard in the midst 0 [ a boom had tO merge with another company tO stave 0 disaster. TO raise the question "what does the customer buy?" is enough tO prove inadequate the concepts Of market and competition on WhiCh managements usually base their actions. The manufacturer Of gas kitchen stoves used tO consider himself in competiuon only wi th the 0 ther m anu facturers 0 ー gas 5t0V05. But the hO sewi , his customer, does not buy a stove: she buys the easiest way k food. This may be an electric 5 【 0 Ⅳ e , a gas stove (whether for tO manufactured, natural or bOttled gas), a ( 0a1 stove, a WOOd stove, 0 「 any combination 山 e 代 Of. She only rules out—at least in tOday'S America—— 山 0 ketde OV the open e. Tomorrow she might well consider a stove that 社 5e5 supersonic waves or infra-red heat ()r one that runs water

9. The practice of Management

巧 2 THE PRACNCE OF MANAGEMENT Moreover, the salary system should never be SO rigid as tO exclude special rewards for "performance over and above the Ⅱ 0f duty. ln one company I know a member 0 [ the engineering department' wh0 himself never climbed beyond the bottom rungs on the promotion ladder, trained for many years a11 the young engmeers that entered the company's employ—including f0 successive chief engmeers. EverYb0dy in the department knew what he was doing. Yet the value 0f 3 ( on ・ tribution was not recognized until he 代ⅱ代 d. Then the company had t0 hire a training director and tWO assistants tO fill the gap. TO the hono 「 0f the company, let it be said thatit then made go its oversight through a substantial P0靆・ retirement れ tO the 01d man. Contributions of this kind should always be rewarded while they are being made. They may yield no directly measurable business results. But they build spirit and performance. They are rightly valued highly by the people in the organization wh0 are apt t0 consider it a serious injustice if management fails tO recognize and reward them. For itis the willingness of people t0 give 0f themselves over and above the demands of the j0b that distinguishes the great from the merely adequate organization. Any organization that has such a maker of men in its employ should count itself lucky—and forget that the sala limit for his job range is set at $ 8 , 58. The reward for such contributions should be rare like the Congressional Medal of Honor or the Victoria Cross. But it should a19 be as con ・ spicuous and as great. Financial rewards must not be bribes; they must not create the atmosphere in which executives can neither quit nor be fired. ThiS raises serious doubts regarding the various schemes for delayed compensation that, for tax reasons, have lately become 50 popular in American business. One example of their e 飛代 is that of the execuuve who for 記 r years has been wanting tO leave his company where his considerable qualities gnd aptitudes are not fully utilized. The man has had v attractive 0 圧 e , but in every case he as turned the 0 圧 e ー down at 山 0 1 t moment for 山 0 simple reason that he has a stake 0 [ $ 50 , $ 75. ⅲ delayed bonus with the company which he will only receive if he stays the next five ye 3. ん a result he is ⅵⅡ in his 01d job but frustrated, bitter, torn in tWO direcuons and a wurce of diwontent and dissatisfaction throughout an entire management 部 oup.

10. The practice of Management

THE PRACTICE OF MANAGEMENT mobile producer butstill less than one sixth the size 0f Ford—t0 buy out the Ford family and 【 0 take over the company. ln this way' and this way alone, Ford would have a chance tO survive. れ was agreed, the company might well have t0 be nationalized lest its COllapse seriously endanger the country ・ S economy and itS war effort. What brought Ford [ 0 this aisis? The story cf Henry Ford's personal misrule has been tOld in lurid and not t00 accurate detail several times. people in American management-—if not the public at large—have become familiar with his secret ・ police methods and his one-man tyranny. What is not understood, however, iS that these things were not pathological aberration or senility—though both may have played a part. FundamentaI to Henry Ford's misrule was a systematic, deliberate and conscious attempt ー 0 the と 0 れ・ dO 〃ーとれどれん 0 ー ma れ ag ど . The secret police that spied on a11 Ford executives served to infonn Henry Ford 0 [ any attempt on the part Of one Of his executives [ 0 make a decision. When they seemed tO acquire managerial authority or responsibility Of their own, they were generally fired. And one 0 [ the chief reasons why Harry Bennett, Ford's police chief, rose during these years tO almost supreme power in the organization was that he could never be any ・ thing but the 01d man's creature, and totally lacked the experience and competence tO hOld any managerial position. This refusal to a110W anyone to be a manager goes back to the early days of the Ford Motor Company. Even then it had been the 01d man's practice, for instance, t0 demote first-line superviS0ß regularly every few years or so lest they "become uppity" and forget that they owed their job to Mr. Ford's will. Technicians Henry Ford wanted; and he was willing to pay them generously. But man- agement was hiS personal jOb as owner. Just as, early in hiS career, he decided not to share ownership with anybody, he apparently de ・ cided not to share management. His executives had to be his per ・ 50na1 assistants, doing what he told them to do; they had at most to execute, never to manage. From this concept followed everything else: the secret police, Ford's fear of a conspiracy against him among hiS closest assoetates, his basic insecurity. The concept of the executive as an extension Of the owner and as his delegate has parallels in the development of many institutions. The army