Society in all developed countries has become a society of organizations in which most, if not all, social tasks are being done in and by an organization. Organizations do not exist for their own sake. They are means: each society’s organ for the discharge of one social task. The organization’s goal is a specific contribution to individual and society. The test of its performance, unlike that of a biological organism, therefore, always lies outside itself. This means that we must know what “performance” means for this or that institution.
Each institution will be the stronger the more clearly it defines its objectives. It will be more effective the more yardsticks and measurements there are against which its performance can be appraised. It will be more legitimate the more strictly it bases authority on justification by performance. “By their fruits ye shall know them”—this might well be the fundamental constitutional principle of the new pluralist society of institutions.
Noneconomic institutions need a yardstick that does for them what profitability does for business.
Nonbusiness institutions flock in increasing numbers to business management to learn from it how to manage themselves. The hospital, the armed service, the Catholic diocese, the civil service—all want to go to school for business management.
This does not mean that business management can be transferred to other, nonbusiness institutions. On the contrary, the first thing these institutions have to learn from business management is that management begins with the setting of objectives and that, therefore, noneconomic institutions, such as a university or a hospital, will also need very different management from that of a business. But these institutions are right in seeing business management as the prototype. Business, far from being exceptional, is simply the first of the species and the one we have studied the most intensively. Noneconomic institutions need a yardstick that does for them what profitability does for the business. “Profitability,” in other words, rather than being the “exception” and distinct from “human” or “social” needs, emerges, in the pluralist society of organizations, as the prototype of the measurement needed by every institution in order to be managed and manageable.
Above all management is responsible for producing result.
Management has to give direction to the institution it manages. It has to think through the institution’s mission, has to set its objectives, and has to organize resources for the results the institution has to contribute. Management is, indeed, J.B. Say‘s “entrepreneur” and responsible for directing vision and resources toward greatest results and contributions.
In performing these essential functions, management everywhere faces the same problems. It has to organize work for productivity; it has to lead the worker toward productivity and achievement. It is responsible for the social impact of its enterprise. Above all, it is responsible for producing the results—whether economic performance, student learning, or patient care—for the sake of which each institution exists.
“It’s the abilities, not the disabilities, that count.”
Two sayings sum up the “spirit of an organization.” One is the inscription on Andrew Carnegie‘s tombstone:
Here lies a man
Who knew how to enlist
In his service
Better men than himself
The other is the slogan of the drive to find jobs for the physically handicapped: “It’s the abilities, not the disabilities, that count.” A good example was President Franklin D. Roosevelt‘s confidential adviser in World War II, Harry Hopkins. A dying, almost a dead man for whom every step was torment, he could work only a few hours every other day or so. This forced him to cut out everything but truly vital matters. He did not lose effectiveness thereby; on the contrary, he became as Churchill called him once, “Lord Heart of the Matter” and accomplished more than anyone else in wartime Washington. Roosevelt broke every rule in the book to enable the dying Harry Hopkins to make his unique contribution.
The demands for a “managerial attitude” on the part of even the lowliest worker is an innovation.
No part of the productive resources of industry operates at a lower efficiency than the human resources. The few enterprises that have been able to tap this unused reservoir of human ability and attitude have achieved spectacular increases in productivity and output. In the better use of human resources lies the major opportunity for increasing productivity in the great majority of enterprises—so that the management of people should be the first and foremost concern of operating managements, rather than the management of things and techniques, on which attention has been focused so far.
We also know what makes for the efficiency and productivity of the human resources of production. It is not primarily skill or pay; it is, first and foremost, an attitude—the one we call the “managerial attitude.” By this we mean an attitude that makes the individual see his job, his work, and his product the way a manager sees them, that is, in relation to the group and the product as a whole.
Management is what tradition used to call a liberal art—“liberal” because it deals with the fundamentals of knowledge, self-knowledge, wisdom, and leadership; “art” because it deals with practice and application. Managers draw upon all of the knowledges and insights of the humanities and social sciences—on psychology and philosophy, on economics and history, on the physical sciences and ethics. But they have to focus this knowledge on effectiveness and results—on healing a sick patient, teaching a student, building a bridge, designing and selling a “user-friendly” software program.
Decision makers need to factor into their present decisions the “future that has already happened.”
Decision makers—in government, in the universities, in business, in the labor unions, in churches—need to factor into their present decisions the future that has already happened. For this they need to know what events have already occurred that do not fit into their present-day assumptions, and thereby create new realities.
Intellectuals and scholars tend to believe that ideas come first, which then lead to new political, social, economic, psychological realities. This does happen, but it is the exception. As a rule, theory does not precede practice. Its role is to structure and codify already proven practice. Its role is to convert the isolated and “atypical” from exception to “rule” and “system,” and therefore into something that can be learned and taught and, above all, into something that can be generally applied.
Management always deals with the nature of Man, and with Good and Evil.
Management always lives, works, and practices in and for an institution, which is a human community held together by a bond: the work bond. And precisely because the object of management is a human community held together by the work bond for a common purpose, management always deals with the nature of Man and (as all of us with any practical experience have learned) with Good and Evil, as well. I have learned more theology as a practicing management consultant than when I taught religion.
