Management: The Central Social Function
Non economic institutions need a yardstick that does for them what profitability does for business.
Non business institutions flock in increasing number to business management to learn from it how to manage themselves. The hospital, the armed service, the Catholic diocese, the civil service – all want to go to school for business management.
This does not mean that business management can be transferred to other, non business institutions. On the contrary, the first thing these institutions have to learn from business management is that management begins with the setting of objectives and that, therefore, non economic institutions, such as a university or a hospital, will also need very different management from that of a business. But these institutions are right in seeing, is simply the first of the species and the one we have studied the most intensively. Non economic institutions need a yardstick that does for them what profitability does for the business. “Profitability,” in other words, rather than being the “exemption” and distinct from “human” or “social” needs, emerges, in the pluralist society of organizations, as the prototype of the measurement needed every institution in order to be managed and manageable.
Society of Performing Organization
“By their fruits ye shall know them.”
Society in all developed countries has become a society of organizations in which most, if not all, social tasks are being done in and by an organization. Organizations do not exist for their own sake. They are means: each society’s organ for the discharge of one social task. The organization’s goal is a specific contribution to individual and society. The test of its performance, unlike that of a biological organism, therefore, always lies outside itself. This means that we must know what “performance” means for this or that institution.
Each institution will be the stronger the more clearly it defines its objectives. It will be more effective the more yardsticks and measurements there are against which its performance can be appraised. It will be more legitimate the more strictly it bases authority on justification by performance. “By their fruits ye shall know them” – this might well be the fundamental constitutional principle of the new pluralist society of institutions.
The purpose of Society
Society is only meaningful if its purpose and ideals make sense in terms of the individual’s purposes and ideals.
For the individual there is no society unless he has social status and function. There must be a definite functional relationship between individual life and group life. For the individual without function and status, society is irrational, incalculable, and shapeless. The “rootless” individual, the outcast – for absence of social function and status casts a man from the society of his fellows – sees no society. He sees only demoniac forces, half sensible, half meaningless, half in light and half in darkness, but never predictable. They decide about his life and his livelihood without the possibility of interference on his part, indeed without the possibility of his understanding them. He is like a blindfolded man in a strange room playing game of which he does not know the rules.
The Function of Management Is to Produce Results
Above all management is responsible for producing results.
Management has to give direction to the institution it manages. It has to think through the institution’s mission, has to set its objectives, and has to organize resources for the results the institution has to contribute. Management is, indeed, J.B. Say’s “entrepreneur” and responsible for directing vision and resources toward greatest results and contributions.
In performing these essential functions, management everywhere faces the same problems. It has to organize work for productivity; it has to lead the worker toward productivity and achievement. It is responsible for the social impact of its enterprise. Above all, it is responsible for producing the results – whether economic performance,, student learning, or patient care – for the sake of which each institution exists.