The Drucker Difference: Complaining about uncertainty? Get over it

Rick Wartzman

I agree with Peter Drucker that no business, regardless of what the federal government does, can expect much control over the major forces shaping the world.

Here is an excerpt from an article written by Rick Wartzman for Bloomberg Businessweek magazine “The Drucker Difference” series. To read the complete article, check out other resources, and obtain subscription information, please click here.

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If there is one thing you can be certain about, it’s that Peter Drucker wouldn’t countenance all the complaining by business people about uncertainty.

They’re directing their grousing primarily at the federal government, as illustrated by an interview I caught last week on National Public Radio with Andrew Liveris, the chief executive of Dow Chemical (DOW). Commenting just before President Barack Obama’s State of the Union address, Liveris reeled off a litany of concerns that many American chief executive officers have expressed in recent months.

“Well, I not only have high taxes; I have uncertain taxes,” he said. “Right now, I have more regulations coming at me that are not fact-based, not science-based, not data-based. I actually don’t even know what my costs are going to be in the next five years. And so I’m sitting back waiting for regulatory reform, and the government, of course, is now engaged on that—health care and the uncertainty around the health-care bill and what’s going to end up happening there. Energy policy—we’ve got lots of uncertainty in the energy policy regimen. I mean, I can keep going, but that’s half a dozen.”

It’s not that Drucker would have felt entirely unsympathetic. “Modern government has become ungovernable,” Drucker asserted in his 1968 book The Age of Discontinuity, hitting on a theme that he never backed away from as the decades wore on. “There is no government today that can still claim control of its bureaucracy and of its various agencies.”

Drucker also believed that in the grand scheme of things, government’s influence tends to be relatively minor. (Unless, I suppose, you’re a federal contractor and your primary customer is Uncle Sam.) Forces outside the public arena act as the main drivers of the most profound changes shaping our world, including the continuing transition to a knowledge age.

“THE FUTILITY OF POLITICS”

“If this century proves one thing, it is the futility of politics,” Drucker wrote in 1994. “It is the social transformations, like ocean currents deep below the hurricane-tormented surface of the sea, that have had the lasting, indeed the permanent, effect. They, rather than all the violence of the political surface, have transformed not only the society but also the economy, the community, and the polity we live in.” Drucker added that “headline-making political events” would remain in this lesser role well into the 21st century.

Yet beyond all that there exists another, more fundamental reason to stop griping: Uncertainty is simply part of doing business. Executives need to manage uncertainty, not whine about it.

In fact, ever since the economy shifted from agriculture to manufacturing, uncertainty has been part of the equation. “The farmer knew that if he did not have a corn crop by the time the frost came, he would not have a corn crop at all that year,” Drucker wrote in his 1950 book The New Society. “The husbandman knew that if the ewes failed to lamb in the spring, he would not be able to restock his herd. But in industrial production it cannot be predicted with any certainty when a product or service will be successful. Whether it will be successful … we call ‘risk proper;’ but whether it will be successful in one year, five years, or in 20 years is ‘uncertainty.’”

More than 50 years later, with the bulk of the nation’s blue-collar manufacturing jobs supplanted by knowledge and service work, the amount of haziness managers face has only increased.

“Uncertainty—in the economy, society, politics—has become so great as to render futile, if not counterproductive, the kind of planning most companies still practice: forecasting based on probabilities,” Drucker wrote in his 1995 book Managing in a Time of Great Change.

So what then, is a bewildered executive to do?

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Rick Wartzman is executive director of the Drucker Institute at Claremont Graduate University. He spent the first 20 years of his career as a reporter, editor, and columnist for The Wall Street Journal and Los Angeles Times. His most recent book, Obscene in the Extreme: The Burning and Banning of John Steinbeck’s The Grapes of Wrath, was published by PublicAffairs in September 2008.

The Drucker Difference: Making performance reviews worthwhile

Rick Wartzman

Yes, You Can Make Performance Reviews Worthwhile

….and less odious for all parties. The key is to concentrate first and foremost on employees’ strengths.

Here is an excerpt from an article written by Rick Wartzman for Bloomberg Businessweek magazine’s “The Drucker Difference” series (April 8, 2011). To read the complete article, check out other resources, and obtain subscription information, please click here.

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A few weeks ago, the head of the federal Office of Personnel Management took on what for many people is the bane of organizational life: performance reviews.

When it comes to setting employee standards, giving appraisals, and rating and compensating people, the processes now in place across the government “have dehumanized management to a degree that we can no longer ignore,” the office’s director, John Berry, declared in a speech delivered at a major interagency conference.

Peter Drucker saw this problem long ago, and not just in the public sector. “For a superior to focus on weakness, as our appraisals require him to do, destroys the integrity of his relationship with his subordinates,” Drucker wrote in his 1967 classic The Effective Executive.

For Drucker, in fact, assessing an employee’s performance should always begin with someone’s strengths, not with his or her weaknesses—an emphasis picked up decades later by Marcus Buckingham, Gallup’s Tom Rath, and others. “The effective executive makes strength productive,” Drucker asserted. “He knows that one cannot build on weakness.”

And yet most traditional appraisal systems, Drucker explained, are based on the work of clinical psychologists. “The clinician is a therapist trained to heal the sick,” Drucker noted. “He is legitimately concerned with what is wrong, rather than what is right, with the patient.”

Behind the Murky Vail

This week’s threat of a government shutdown aside, the federal performance-management system is full of idiosyncrasies, including a civil service bureaucracy that largely rewards longevity in a job. Most companies don’t have to deal with such strictures or the messy politics often associated with them. But one frustration common to many enterprises—whether a business, government operation, or nonprofit—is the lack of transparency and consistency that people sense when they are evaluated.

“For many employees, performance standards are too unclear and subjective,” Berry said. “And then you don’t fully know what’s expected of you or how you’re doing.” Among the reforms Berry is calling for the government to implement are detailed yardsticks that are “objective, aligned to agency mission and goals,” and have true “employee buy-in.”

Drucker certainly would have agreed with this approach. “One can measure the performance of a man only against specific performance expectations,” he wrote, adding that the best kind of review begins with a statement of the key contributions expected from the employee, along with a record of how he or she has fulfilled these particular goals.

A Series of Questions

But Drucker didn’t stop there. After analyzing how the worker has (or hasn’t) met these objectives, the ideal appraisal in Drucker’s eyes would ask a handful of questions, the first three of which would zero in on an individual’s strengths: What has he or she done well? What, therefore, is he or she likely to do well in the future? What new knowledge or skills must he or she acquire in order to coax the full benefit from his or her strengths?

It is only the next set of questions that veers in a different direction: If I had a son or daughter, would I be willing to have him or her work under or alongside this person? If yes, why? If no, why not?

That’s the entire form, top to bottom. “This appraisal actually takes a much more critical look … than the usual procedure does,” Drucker wrote. But it concentrates on what people naturally do well and should do even more of. At the same time, it positions weaknesses so they are “seen as limitations to the full use” of an employee’s talents, not as deficiencies that one needs to obsess over.

For all of his attention on the positive over the negative, Drucker was no softie regarding staff. He believed that employers should make every job as “demanding and big” as possible. That’s because it’s only when jobs challenge people that their full strengths emerge, he said. And only if there’s scope will “any strength that is relevant to the task … produce significant results.”

[To read the complete article, check out other resources, and obtain subscription information, please click here.]

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Rick Wartzman is executive director of the Drucker Institute at Claremont Graduate University. He spent the first 20 years of his career as a reporter, editor, and columnist for The Wall Street Journal and Los Angeles Times. His most recent book, Obscene in the Extreme: The Burning and Banning of John Steinbeck’s The Grapes of Wrath, was published by PublicAffairs in September 2008.