The IDB Project is a series of posts sharing summaries, snippets, and takeaways from INSIDE DRUCKER’S BRAIN (Jeffrey Krames)
CHAPTER THREE
Broken Washroom Doors
“Every business has its ‘broken washroom doors,’ its misdirections, its policies, procedures, and methods that emphasize and reward wrong behavior, penalize or inhibit right behavior.” — Peter Drucker
No business is perfect. Every business has flaws. Peter Drucker calls these flaws “broken washroom doors.” Obviously, in order for a business to achieve sustained success, it must minimize flaws that “reward wrong behavior” and “inhibit right behavior.”
By 1990, Drucker had turned much of his attention to helping non-profit businesses succeed. He was disenchanted with for-profit businesses because he felt the compensation system had evolved into a broken washroom door.
Drucker strongly believed executives were being wrongly rewarded with excessive stock options and sky-high salaries. He reasoned stock options are inappropriate compensation because they gave executives the incentive to manage for immediate results and not for long-term results. Drucker also bemoaned the escalating pay rate for CEOs. In 2006, the average salary of CEO from an S&P 500 company was 364 times greater than the pay of an average employee [source]. Drucker felt CEO pay should not exceed 20 times the average employee.
According to Drucker, another broken washroom door are the mission statements that attempt to give companies focus. Drucker says, “Mission statements have to be operational; otherwise, it’s merely good intentions.” The more specific a company’s mission statement, the easier it will be to have employees focused on making a worthwhile contribution.
The tendency to burden employees with an array of priorities becomes another broken washroom door. Drucker long-advocated assigning managers no more than two priorities. From his experience, he learned no manager could expertly deliver upon more than two priorities at any given time.
Next, Chapter Four of the The IDB Project.
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