4 Ways to Implement Peter Drucker’s Theory of Management

This guide to Peter Drucker’s management theory explains its basic concept and how to apply it to your small business.

By Nadia Reckmann, Contributing Writer | Editor Reviewed: Adam Uzialko, Senior Editor
Business News Daily | Updated August 21, 2024

Peter Drucker was an influential Austrian-American author, mentor and consultant many consider the father of modern business management. His innovative thinking revolutionized business theory and transformed it into an actionable and ethical discipline used by progressive business leaders worldwide. Central to his approach is the idea that businesses must prioritize the development and well-being of their people, not just the bottom line, to succeed.By applying Drucker’s people-centered management theory, business owners and leaders can create a sustainable and nurturing work environment that supports long-term growth and goals.  We’ll explain more about Drucker’s theory of management and share practical tools for implementing it.

What is the Drucker theory of management?

Using his extensive experience as a consultant for companies like IBM, General Motors and Procter & Gamble, Drucker wrote 1954’s The Practice of Management. In it, he presented a holistic approach to organizational operations and introduced a business management discipline — the first in business history. He believed successful managers must understand subjects like psychology, science and religion and be guided by ethical and moral principles.

“Peter Drucker focused his message on the belief that all businesses need and deserve to be managed well and must think about their future no matter how successful they have been,” explained Michael Kelly, executive director of The Drucker Institute.

Drucker encouraged creative rather than bureaucratic management and insisted managers should, above all else, be true leaders. Instead of setting strict hours and discouraging innovation, Drucker favored a more flexible, collaborative approach.

At the core of Drucker’s management theory are the concepts of decentralization, knowledge work (he coined the term “knowledge worker”), management by objectives (MBO), and the SMART goal method:

• Decentralization: Decentralization means managers should empower employees by delegating tasks.
• MBO: MBO involves superiors and subordinates working together to set common goals, identify employees’ areas of expertise and define measurable expected results.
• SMART goals: The SMART method calls for goals to be specific, measurable, achievable, relevant, time-specific and recorded.

Drucker’s theory of management and the origins of CSR

Corporate social responsibility (CSR) is a type of business self-regulation that prioritizes being socially accountable and contributing to the well-being of communities and society. Small businesses can implement CSR in various ways, including the following:

• Being environmentally conscious
• Establishing a comprehensive diversity, equity and inclusion policy in the workplace
• Treating employees with respect
• Introducing employee volunteerism and charitable initiatives
• Ensuring ethical business decisions

“Corporations are also as much social entities as they are economic ones — which laid the foundation for corporate responsibility externally, where organizations can be a good corporate citizen, and internally by creating a positive company culture,” Kelly noted.

While embracing CSR has become the modern standard for ethical and progressive companies, the concept’s origins go way back…[MORE]

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To read the entire article by Nadia Reckmann, at the Business News Daily website, visit: 4 Ways to Implement Peter Drucker’s Theory of Management