This article is an excerpt from the Shortform book guide to "The Essential Drucker" by Peter Drucker. Shortform has the world's best summaries and analyses of books you should be reading.
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Do you want your employees to perform at their best? How can you help employees advance in their positions?
It goes without saying that an organization is nothing without the people who comprise it. The task of managers has always been to give those people direction, though the old style of top-down control is no longer always effective.
Let’s look at how to develop employees to their full potential.
Developing People
We’ll explain how Peter Drucker says the workforce has changed, how businesses may have to adapt, and how to develop employees to their full potential.
Drucker is clear that managing people is different from managing work. The latter is focused on tasks and processes and relies on the faulty assumption that everyone who works for you is a subordinate who can’t accomplish anything without direct supervision. However, we now live in an age in which we’ve transitioned from a mostly unskilled workforce to one that’s more educated than ever before. Therefore, instead of directing people like cogs in a machine, it’s the role of modern management to help them grow their skills so that they can be more productive.
(Shortform note: In The Hard Thing About Hard Things, Ben Horowitz identifies training employees as one of the most valuable activities a company can engage in, with a high return on investment. While Drucker mainly discusses what Horowitz calls functional training, which educates employees on how to better perform their tasks and increases their ability to be productive, Horowitz also emphasizes management training, which enhances managers’ ability to lead and prepares employees to take on greater management roles as their careers progress.)
Structure and Motivation
To guide an organization toward its goals, management must decide the most appropriate organizational structure to coordinate the activities of its workers. In the past, those structures were purely hierarchical, but Drucker argues that this thinking is out-of-date. Because so many professional specialists understand their work better than their supervisors, they’ll often be called upon to make decisions that the managers above them aren’t qualified to. For example, a software engineer will make decisions to improve a computer program (which is vital to meeting her business’s goals) that her nonprogramming supervisor can’t. While hierarchies still have their place, managers must explore a variety of options to better empower their people.
(Shortform note: Though Drucker doesn’t elaborate on what the alternatives to traditional hierarchies are, in Reinventing Organizations, Laloux describes several. While classifying hierarchies as traditional organizations, Laloux differentiates them from modern organizations in which individuals’ roles aren’t static and people are allowed to innovate and question procedures at all levels of the group. A new iteration is the inclusive organization, which utilizes group consensus for decision-making instead of relying on executive direction.)
In developing employees, Drucker says that for-profit enterprises can learn a lot from nonprofit groups. Nonprofits rely heavily on volunteers who don’t depend on the organization for a paycheck. Instead, volunteers are attracted to the organization’s mission. They expect to be challenged and to feel the satisfaction of doing work that makes a difference. With modern workers’ freedom to change employers and careers, this has also become true for profit-driven businesses. Whereas past management practices focused on the needs of the organization, modern managers must also concern themselves with what their employees want to get out of the job, especially when it comes to knowledge workers, as we’ll see next.
(Shortform note: While Drucker recognizes that modern employees wish to be challenged and do meaningful work, they’re also motivated by being empowered to carry out their jobs with a measure of autonomy. In Carrots and Sticks Don’t Work, Paul Marciano suggests that managers should delegate as much decision-making responsibility as possible to the people actually doing the work. While this may necessitate even more training, it encourages workers to experiment and generate novel solutions to problems. Empowerment also demonstrates trust that employees will work toward the company’s goals, which in turn creates feelings of ownership and accountability for the company’s progress.)
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