(1909-)
Austrian-born US management expert who set out the theory of “management by objectives” (MBO), now a field of management theory in its own right, in his classic The Practices of Management 1954. He is also responsible for the idea of privatization, although he referred to it as “reprivatization”.
Drucker's five basic objectives for management—setting objectives, organization, motivation and communication, laying down performance targets, and personnel development—are still applicable today.
His theory of MBO came from his experience with General Electric, where each manager was assigned a profit center and set targets of 7% return on sales and 20% on investment to achieve. The targets were stringently applied and those who failed were sacked. Drucker reasoned that a business is ultimately judged by its bottom line of profit or loss, no matter what its other peripheral advantages or contributions to the community. Therefore, corporate goals should be divided into a list of objectives and targets to be attained and each assigned to units and individuals. MBO thus ensures that each individual in a chain of command performs efficiently or, as in the case of General Electric, leaves the chain. Drucker's contribution to management theory and practice is phenomenal; he has few, if any, rivals of equal influence in the field.