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Bob Hawkins continues the question and answer session discussing his agreement with Drucker on the point of human resource management and development, and how much more attention needs to be given to these components. Hawkins reiterates the lesson that a happy worker is a productive worker, and that the way to make a happy worker is to have longer than a six month or one year time horizon. The industries and companies in the least profitable positions are those which have rejected human resource development. Drucker then moves on to discuss how his colleagues still believe in several discredited assumptions. The first is the macroeconomic one, the idea that one can run a modern economy within a national state. Second, they believe in a soft landing. Finally, they believe in Adam Smith’s invisible hand theory of economics. Drucker states that people tend to expect much more from the economy than it is capable of delivering with the current administration. Hawkins then states that what leads one to a great deal of skepticism about the role of government in the modern economy is that it has become more specific and pervasive, and gradually stepping backwards from government involvement in management decision-making is preferred. Drucker then provides an answer to another question, stating that one of the great weaknesses of American management is that it switches to new programs very quickly when there is no impact from certain measures. So, people become cynical. What inflation does is create flabbiness, where the short term is focused upon. Leaders, Drucker contends, should provide the focus and direction for an organization, not short-term profits. The role of organized labor in assuming moral responsibility for increasing productivity, Drucker says, is the responsibility of unions. However, Drucker cautions that one cannot expect the American union to be a positive factor--it is very badly enfeebled. Hawkins adds that the power of unions is constrained by international trade. The ability of unions to raise wages, moreover, assumes a protectionist environment for the workers. According to Drucker, some businesses have to work both on capital and on the placement of professional knowledge and technical people. On the relationship between the expansion of welfare programs and decline in productivity and improvement, Hawkins states that the government’s encouragement of consumption, to the discouragement of saving, has, over the long term, harmed productivity improvement. However, the minimum wage as a suppressant to productivity improvement is what really concerns Hawkins, rather than welfare, because the minimum wage forces a substitution of capital or automation for labor, which would not otherwise occur. Therefore, the minimum wage places some people in the unemployable category, thereby losing them to the employment stream and losing the advantage of learning by doing. Welfare is an inferior solution to such problems. Drucker adds that a very high penalty in the U.S. for the economy stems from the nation’s assumption that the source of consumption is irrelevant, as long as it is there, thus putting a continuing negative discount on earning it the hard way. Drucker also argues that very high penalties on the earnings and workings of people force them into a great deal of dishonesty and disincentive to work. Last, Drucker argues that the labor force has become totally heterogeneous, so a homogeneous labor force is no longer the standard. Women and older people are now 60% of the labor force, while benefit programs assume they are marginal or undesirable, which is an enormous disincentive to performance. Drucker then receives questions concerning how productivity is measured and how productivity improvement is measured. Drucker responds that designing measurements is something that executives will eventually arrive at. Presently, any measurement designed would be based on very poor concepts. He identifies money and time as the key components that go into productivity measurement. Hawkins adds that input and output measurements are difficult to determine in any case, giving the example of NYU’s graduate business school as a case in point. A question is then raised concerning what can be done to get knowledge workers to work smarter. Drucker responds that continuous learning through feedback is the key--what one does to justify being on the payroll should be the objective focus. They then respond to a group of questions regarding worldwide energy production, and the effects of the absence of low-cost energy in activity improvement. Hawkins responds that the energy price change and potential shortage can be viewed as having two effects on productivity. He then talks about the output from OPEC countries and fuel conservation, and how oil price changes have affected the economy. Drucker then states that the answer to the energy crisis necessitates viewing OPEC as a cause or as a symptom. Exponential growth curves are very predictable, and any kind of energy crises are a symptom of a fundamental shift away from such predictability. Drucker proceeds to note that, if one takes the curve trend over the last three years, and from the point of view of energy, there is no reason to doubt the classical hypothesis, if one really sees OPEC as a cause and symptom. The cost of energy would thus have nothing to do with future growth, and such growth, in this case, would be more a matter of political and military factors than economics or energy.
Drucker, Peter F. (Peter Ferdinand), 1909-2005 New York University New York University. Graduate School of Business Administration Human resources Macroeconomics Management Management by objectives Inflation Inflation (Finance) Unions, Trade Leaders Leadership International trade Welfare economics Welfare state Minimum wage Productivity Labor force Labor Labor productivity Labor supply Labor unions Women Money Time Older people Energy Energy consumption Human resource management Happy workers Invisible hand theory Human resource professionals OPEC (organization of petroleum exporting countries) Oil Energy crisis Symposia
Original recording, April 21, 1981; Drucker Archives; Box 68