Drucker continues his session discussing productivity and how it should not be assumed that just because there is a governmental productivity center that the manager is off the hook. Management is never off the hook, Drucker says, because management pays for productivity. He goes on to highlight impediments to productivity, including government and the U.S. tax system, and recommends that organizations seek out what other organizations are doing properly in terms of productivity. Loomis proceeds to observe that inflation is the enemy of productive capital, and how, today, the best firms have difficulty getting more than 4% ROI because the cost of capital is around 13% or 14%. After a coffee break, they go on to discuss what participants should take away from the symposium, and Drucker recommends that three things be written down. First, he suggests that participants write what they do or don’t do as managers that helps them; second, he recommends determining what the people who work around him--subordinates and peers--do that helps or hampers the manager; third, he stresses determining in what areas of work the manager is doing the job with excellence. Productivity, he states, begins at home, and the great weakness of resistance to productivity in a company is a consequence of the company’s lack of spirit. If one does not start with one’s self, Drucker says, productivity isn’t going to take. Loomis observes that really good companies are good in all of their departments, and Procter & Gamble, according to Loomis, is a prime example of that. Loomis goes on to state that unions tend to come in when management has not done the kind of job it should. When the workforce perceives unfairness, they would rather have everything determined by seniority and strive to be paid equally. Drucker then adds to Loomis’s comments in stating that, in the U.S., the unions are in the old industry and that a smaller proportion of the workforce in the private sector today is unionized than there was before the New Deal push. Drucker states that the important thing is responsibility, rather than job content, and that one must commit oneself to finding a new job for workers if they become redundant on the job. In research and innovation, Drucker states that he is appalled at how poor the U.S. is. He notes that there are two areas in which one is never bright, namely, marketing and people. Loomis adds that one of the problems in applying wisdom in such concerns as innovation is that one has to know the areas in which one applies the wisdom. They then discuss the effects of a slowing economy on rates of inflation over the near to medium term, and Drucker moves on to talk about how the new communications is something that will enable people to shift resources to high productivity. The sooner organizations shift their scarcest resource time out of business travel into work, the better. Moreover, events like meetings should not be held because they are easy, but because they have a purpose. Communication tools are the key to working closely with people and maximizing available time. Suboptimization is a process of trading off--where does an organization take on the cost so that the functioning system can improve efficiency in other areas. The discussion then shifts to a focus on the applicability of European experiments in worker codetermination to the American scene and whether such experiments will improve productivity in the U.S. Drucker states that codetermination/unions are not healthy for businesses and the economy, and provides the example of Volkswagen to illustrate the unfavorable effect of unions on an organization’s productivity. Unions are dangerous because they are essentially political animals. Loomis adds that codetermination is really about the sharing of power and that businesses can survive well without being unionized. As it relates to business productivity, Loomis says that the option is either to grow or die, while Drucker clarifies that there is a difference between productivity and orderliness. Growth is disorderly, he says, and if growth endangers productivity, it isn’t growth at all, but cancer. The basic concept of growth is to shift resources out of yesterday at the risk of shrinkage. Loomis then talks about productivity and multinationals in the less developed parts of the world, and how one should teach ideas like productivity, citing a study by the Financial Executives Institute on the views of multinationals by the citizens of France. Productivity is a universal interest and acceptable, Loomis states, as long as it is not perceived as oppressive. Drucker adds that there has been a shift in the economy from an emphasis on management of supply to an emphasis on management of demand, a development which assumed that the problems of supply had been solved.
Drucker, Peter F. (Peter Ferdinand), 1909-2005 New York University New York University. Graduate School of Business Administration Zand, Dale E Taxes Taxation Procter & Gamble Company Unions, Trade New Deal, 1933-1939 Communication Communication and technology Inflation (Finance) Volkswagen automobiles Productivity Financial Executives Institute France Loomis, Worth Return on investment Unionization Suboptimization Compromises Codetermination, Worker Symposia
Source
Original recording, April 18, 1979; Drucker Archives; Box 68
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