abandonment policy, 106–107, 116–117
in employment, 18–19, 26–30, 32–33, 129, 132–133, 153, 177
accountability. See also performance
of school system, 136, 138–139
accounting
cost of capital in, 65
executive compensation and, 21–22
inflation-adjusted, 4
profits versus costs in, 51
agricultural industry, investment in, 220–221
alienation
of knowledge workers, 109–110, 113
Marxian, 176
All-Nippon Airways, 234
antitrusters, 116
asset management, profit planning versus, 56
AT&T, 221
audit committees, mandatory, 31, 34
automation
in agricultural industry, 220
labor force changes and, 169, 191
re-industrialization and, 92–93, 219
automobile industry, 121, 204, 206, 219
labor-income ratio in, 95, 96–98
production sharing in, 170
automobiles
consumer demand for, 68–69, 81
“planned obsolescence” and, 70–71
exceptional demands on, 166
expectations of, 165
pace of career moves by, 165
very early versus last cohorts in, 164–167
balance sheet, P and L versus, 54, 56
banking, commercial, capital management in, 62
benefits policies, 41, 108–109, 188
in auto and steel industries, 96
options in, 148
pension protection in, 175, 176
Blue Cross, 127
boards of directors
changing role of, 32
as company’s representative, 35–36
examination of own role by, 34
independent directors in, 34–35
key outside relationships and, 33
management as basic function of, 32, 34
objectives of business and, 33
overseeing of top management by, 32–33
post-retirement executives on, 29, 34–35
resource productivity and, 33
staff of, 35
book publishing, size versus profitability in, 85
Boston Consulting Group, 85
Brazil, 183
Bretton Woods Conference, 211
British National Health Service, 128
budgets. See also capital investment and structure
full-employment, 220
short- versus long-term, 42–43
Bullock Report, British Royal Commission, 195
business. See also companies
destructive “rational” policies of, 5
growth as hazard for, 14
long-term policies as essential to, 6
public’s economic illiteracy about, 47
authority versus responsibility in, 241
Confucian ethics (relationships of interdependence) and, 242–247, 248–249
cost-benefit mentality and, 234, 236
extortion and, 230–231, 234–235
hostility to business and, 247
model role of executives in, 240
organization ethic and, 241, 245, 247, 248–249
Prudence Ethic and, 238–241, 249
sexual harassment and, 228, 242–243
social-cultural mores and, 231–232
traditional ethics versus, 230, 232
business growth. See also speculative growth
concentration needed for, 17, 87
desirable versus undesirable, 57, 85, 88
as “different” versus “more,” 16
distortions of inflation and, 88
exploitation of opportunity for, 87
five rules in management of, 14–19
need in near future for, 56–57
provisions for, as capital charge, 75
realistic appraisals and, 18
risk period following, 75
speculative, aftermath of, 53–60
volume versus, 88
what to abandon for, 18, 87–88
in zero growth years, 89
business travel, 81
information technology and, 36–37
Cahn, Edmond, 228
California, retirement law in, 27
capital
changes in supply sources of, 54–55
cost of, 48, 50, 65, 74, 75–76
fixed human, 66
“genuine” savings and, 71
capital charges, in earnings-per-share measure, 75–77
capital formation
full-investment budgeting and, 220–222
income distribution versus, 59
industrial growth and, 220–222
in Keynesian theory, 218–219, 220
labor-income ratio and, 95, 96–97, 98–99
savings in, 70
capital investment and structure
after go-go era, 54
board of directors’ role in, 33
as core strategy, 221
in creation of jobs, 50, 54, 220–221
by foreign managers, 43
in inflationary period, 5
managing productivity of, 61–67
meaningful components in, 63–64
Rostow thesis and, 205
rules for managing productivity and, 64–66
capitalism
job as property right and, 177
profit and, 51
CARE, 106
Carlyle, Thomas, 224
cartels, business ethics and, 235–236
Carter, Jimmy, 114, 118, 120, 124, 209
cash flow, emphasis on, 54, 56
casuistry
as apology for power, 234
business ethics versus, 232–238
political nature of, 234
catastrophic-illness insurance, 125–126
China, People’s Republic of, 59, 92, 203
Japanese exports to, 192, 200, 201
Chrysler Corporation, 86, 168, 170, 195
churches, role of, 106
co-determination issue, 194–196
disenfranchisement of managers and, 195–195
political aspects of, 194, 195
college recruiting, 166
Common Market
production sharing in, 182
U.S. export surplus with, 96
Communist economies
downward capital productivity in, 62
profit and, 51
companies. See also executives
audit committee of independent directors in, 31, 35
board of directors’ role in (See boards of directors)
mandatory audits and, 9
pension funds as controlling element in, 177
computers, changes caused by, 37–39
Confucian ethics of interdependence, 242–247
appropriateness for modern society of, 248–249
five basic relationships in, 242
Legalists and, 246
obligation versus power in, 244–246
“sincerity” in, 242
consumer demand
capital investment and, 54
economic activity linked to, 68–69
for health-care services, 124, 128
Keynesian theory and, 218–219, 220, 222, 224, 225
of married working women, 83–84
of young adults, 83
consumer market
historical changes in, 84
corporation income tax, as regressive, 71–72
“cost of capital,” 48
costs
counselors, post-retirement executives as, 28–29
credit
capital management policies and, 65–66
currencies, 207–212. See also transnational currencies
political aspects of, 210, 211–212
two-tier structure for, 207–208, 212
U.S. dollar, 208, 210, 211, 223
cyclical earnings, 77
deficiency of revenue, as capital charge, 75
deficits, government, 55, 219, 220, 224
“demand-management,” 179
in Keynesian theory, 218–222, 224, 225
demography, 156
baby boom problem and, 164–167
growth planning and, 87
labor supply and, 51, 54, 66–69, 91–92, 121, 142, 144, 150–151, 169, 182–183, 187–190, 221
re-industrialization and, 91–92, 92–93, 94
school enrollments and, 135
Social Security program and, 117
world economy and, 121, 169–170, 180, 182–183
dental insurance plans, 126
developed countries
downward capital productivity in, 62
job as property right in, 174–177
Keynesian investment theory in, 218–219, 222
obsolete economic policies in, 179
re-industrialization in, 91–93
unionism versus production sharing in, 122, 170, 184
developing countries
appropriate technologies for, 202–206
capital investment theory in, 205
production sharing and, 122, 169–170, 182–184
“smallness” rhetoric in, 203, 205–206
unskilled workers in, 39, 92, 182–183
earnings per share
as measure of performance, 55–56, 74–79
as misnomer, 75
“taxable earnings” versus, 75
on corporation income tax, 71–72
on income distribution, 72
on nature of consumer demand, 68–69, 80–81
on oversaving, 71
on “planned obsolescence,” 70–71
“economic progress,” definition of, 50
Eisenhower, Dwight D., 126
Employee Retirement Income Security Act (ERISA), 55
energy problems, capital formation and, 219
“equivalent” figures as possibility for, 161
measurement difficulties in, 161
Phillips Curve and, 159
traditional index and, 158–159
ethics. See also business ethics
Ethics of Prudence and, 238–239, 249
fundamental axiom of, 228–230, 241
Ethics (Spinoza), 237
Eurocurrencies. See transnational currencies
European Community High Court ruling on redundancy rights, 174
European Monetary System, 209
exchange rates, floating, 207
executive management programs, 7, 155
executives. See also top management; young executives
agenda for evaluations of and by, 3–44
auditing performance of, 8–13, 32
business ethics and (See business ethics)
in career extension planning, 28–30
compensation policy for, 51–52, 56, 79
information as main tool of, 37
information technology and, 36–39
Japanese, in Western countries, 215, 216
mandatory retirement policies and, 26–30, 153
perception of excessive compensation for, 20–25
present versus past functions of, 9
work force as seen by, 141–142
exports, U.S. increases in, 96
fair-employment regulations, 175
family, changes in work patterns and, 148–149
definitions required in, 13
on performance versus expectation, 10–13
on productivity of capital, 63, 65
fee-for-service system, 124–125
financial management
for capital productivity, 65–66
inflation-adjusted data in data in, 4, 6
fixed assets, productivity of capital and, 63–64
flow systems, re-industrialization and, 92–93
food stamp program, 226
Ford Motor Company, labor income ratio at, 96–97
foreign management
benefits policies and, 41
national interest and, 43
obsolete rejected by, 42
profits and, 42
short- versus long-term assessments by, 42–43
fractional horsepower motor, 38–39, 93
managerial strategies in, 42, 43
electrical apparatus conspiracy and, 235–236
General Motors, 44, 69, 81, 84, 92
labor-income ratio at, 96
monitoring of capital investment decisions by, 10
Germany, 92, 127, 128, 224, 225
co-determination issue in, 194–195
currency issues and, 209, 210, 211
labor-income ratios in, 96, 97
managerial strategies in, 40
Giscard d’Estaing, Valéry, 224, 225
go-go era
growth as viewed in, 89
“going cost of capital,” as capital charge, 76
government bureaucracy, 114–118
abandonment policy for, 116–117
measurement of performance in, 116
political philosophy and, 116
three steps for streamlining of, 115–116
“European Sickness” and, 223, 224, 225
health-care delivery system, 124–128
cost to consumer of, 128
fee-for-service basis in, 124–125
fee setting in, 127
future shape of, 125
hospital admissions and, 128
hospital cost reviews in, 127–128
insurance coverage and, 125–126
peer review in, 127
union attitudes and, 125
Health Maintenance Organization (HMO), 126–127
Henry VIII, king of England, 233
Holland, 194
hospitals
U.S. admission levels to, 128
housing
consumer demand for, 68, 69, 80–81
subsidies for, 117
Humphrey-Hawkins Full
Employment Bill, 158–159, 159, 160
income. See also wages
extra incentive awards and, 24
hierarchy requirements and, 22–23
money versus real, 20
of rank-and-file workers versus executives, 20–21, 22–23, 24
for “star” employees, 24
in Third Sector, 103–104, 111, 112
income distribution
pension expectations and, 72
India
appropriate technologies for, 202–206
employment problems in, 202
government economic policy in, 203
job expansion industries and, 203–204
rural emphasis in, 203–204, 206
Individual Physicians Association (IPA), 127
Indonesia, 203
inflation
adjusting business figures to, 4
decline of executives’ income and, 20
“demand-management” and, 179
depreciation adjustments for, 76
financial panics in, 5
fundamental policy risk in, 5
Germany’s 1920s experience of, 5–7
“growth” and, 88
interest rates and, 55
long-term policies versus, 6–7
pension expectations and, 82–83, 146
Phillips Curve and, 159
protection of capital in, 76
short-term focus in, 5
systematic money management in, 4, 6
tax rates adjusted for, 23
information. See also feedback
capacity policy on, 38
defining of, 37
deliberate distortion of, 21–22
inflation accounting as, 4
information technology
production processes and, 38, 39
innovations, 42
in inflationary periods, 6
insurance
risk (See risk premiums)
interest rates
after go-go era, 55
“European Sickness” and, 223–224, 225
money management and, 4
Internal Revenue Service, U.S., 184
inventory, productivity of capital and, 63–64
investment policies (See capital investment and structure)
Iran, 203
automation in, 191
balance of payments surplus in, 197, 200
currency issues in, 197, 200, 210
demographic shifts in, 187–190, 193
economic malaise in, 198
educational status and job eligibility in, 189
employment practices in, 43, 120, 152, 170, 171, 174, 175, 176, 187–193, 213, 214, 231
entrenched social mores in, 213–215, 216–217
export losses taken by, 199–200
family obligations in, 214, 216
inflexibility in job crossovers in, 189, 190
international trade issues in, 191–193, 197–201
labor costs in, 188–189, 190–191
labor-income ratios in, 96, 97
managerial expertise in, 40–44, 141
nepotism in, 213
nine-to-five westernization in, 215
as non-Keynesian economy, 218–219
overstocked inventories in, 198–199, 200–201
production sharing in, 170, 182
redundancy planning in, 172
re-industrialization and, 92, 93, 122, 179
seniority-wage system in, 188, 190
social innovations in, 190
women’s status in, 213–214, 216
jobs, 141–176. See also labor force; unions
after go-go era, 54
as “ownership of means of production,” 142, 175–176
capital formation and, 99, 218–222
in direct production work, 108
distribution of skilled/unskilled, 39, 91–92, 120–123, 151, 169, 170, 182–184
entrance, restructuring of, 166
flexibility versus rights in, 176–177
gender discrimination in, 146–147
international production sharing and, 122, 169–170
investment per, 51, 54, 220–221
in Japan, 43, 120, 152, 170, 171, 174, 175, 176, 187–193, 213, 214, 231
Keynesian theory and, 218–219, 220
in knowledge work (See knowledge workers)
monopolies and, 98
protectionism and, 122
redundancy planning for, 168, 172–173, 177
re-industrialization and, 90–91, 93
“soft area,” 155
standards and reviews for, 177
technological displacement and, 120
Kennedy, Edward, 125
Keynes, John Maynard, 211, 212
investment theory in, 218–219, 222
labor-income ratio and, 97, 98–99
knowledge workers, 91, 92, 93, 108–113
appraisal of contributions of, 110
assignment control for, 111–112
capital investment and, 220–221
contribution as motivation for, 110
as expensive resource, 111, 112
income of, 108
managers as, 108
productivity of, 109, 111–112, 113
social capital investment represented in, 112–113
work assignments as frustrations for, 110–112
Labor Department, U.S., 158
baby boom generation in, 164–167
demography of, 51, 54, 68–69, 91–92, 120, 142, 144, 150–151, 164, 169, 182–183
“education explosion” and, 169, 221
as employees of organizations, 176
married working women in, 83–84, 143–144, 146, 147, 148
moonlighting and, 145
redundant workers in, 120, 122, 168–173, 185
as resource versus cost, 92
retirement policies and (See retirement policies)
second careers and, 29, 133, 147
in third industrial revolution, 39
unemployment figures for, 158–163
work ethic and, 149
in industrialized countries, compared, 95–97
leverage, dubious value of, 56
interest rate differentials versus, 55
Lockheed Corporation, business ethics and, 230, 231, 234–235
Malaysia, 92
management, defined, 101
business versus management performance in, 8–9
on capital appropriations, 9–10
of long-term planning, 9
on personnel appointments, 10–11
Managing in Turbulent Times (Drucker), 180
Marcuse, Herbert, 148
market
consumer segmentation and, 82–84, 148
definition of, 86
marginal status as hazard in, 85–86
world economy and, 42
by foreign managers, 41, 192, 200, 201
Matthofer, Hans, 209
3-M Company, 12
measurement. See performance
Metropolitan Museum of Art, 103
Mitsui group, 172
Mitterrand, François, 224
Mobil Oil, 237
Monetarists, cures advocated by, 225
money. See currencies
moonlighting, 145
management challenges for, 185
in marketing versus manufacturing, 185
opposition in U.S. to, 184
world economy and, 57–59, 183–184
museums, management of, 103, 104, 105
national interests, managerial interests and, 43, 179–180
Nehru, Jawaharlal, 203
Netherlands, 223
New Deal policies, 218
New York Stock Exchange, rules of, 31
New Zealand, 200
Nissan, 92
Nixon Administration, 122
non-profit institutions. See Third Sector
Norway, 223
nurses, as fixed human capital, 66
obsolete, as hindrance to growth, 86–87
pension funds, 71
board of directors’ supervision of, 33–34
corporation income tax and, 71–72
legal protection of, 175
“ownership” of business through, 177
pensions
as employees’ most valuable asset, 176
profits and, 50
retirement policy and, 28
audits of management for, 8–13
“bottom line” and, 45
business versus management, 8–9
costs versus profits in measurement of, 49–52
earnings-per-share measure of, 55–56, 74–79
four areas of management responsibility for, 9–13, 32
fulfilled expectations as measure of, 10–13
“full” disclosure” demand on, 79
oversight of, by board of directors, 32, 33
return-on-all-assets measure of, 54, 56, 74, 77–79
return-on-selling-space measure of, 78
value-added measure of, 78
personnel appointments
pharmaceutical industry, 205, 206
Phillips Curve, 160
planned obsolescence, 70
Poland, 99
Prince,The (Machiavelli), 238
Procter & Gamble, 12
production sharing, 122, 169–170, 180, 181–186
as transcultural, 186
productivity, 39, 189. See also performance
capital investment and, 220–222
defined, 205
information technology and, 39
of knowledge worker, 109, 111–112, 113
labor-income ratio and, 95, 97
oversight of, by board of directors, 33
Rostow thesis and, 205
product mix, productivity of capital and, 63–64, 65
professionals, as inflation-proof, 7
professors, university policies for, 129–134
profit
capitalism and, 51
Communist economies and, 51
to cover future jobs and pensions, 49–50, 50
financial leverage versus, 52
in foreign management policies, 42
inflation-adjusted figures and, 4
measurement of, 47
performance and, 75
productivity of capital and, 62–63
risk “insurance” and, 49, 50, 51
in small growing business, 16
surplus versus, 48
“turnover tax” versus, 51
profit sharing, executives’ income and, 21
property, job as, 175
Provincial Letters (Pascal), 237
psychotherapy, 126
Reagan Administration, 96, 226
receivables, productivity of capital and, 65–66
recessions
of 1979–1980, 96
in Japan, 187
Belgian “solution” for, 171, 174, 176
emotional security and, 173
European Community ruling on, 174
lifetime employment policy and, 171
production sharing and, 122, 185
unemployment insurance and, 171
regulatory agencies, boards of directors and, 31
Rehn, Gösta, 172
re-industrialization, 39, 91–94
blue-collar employment in, 91–92, 93
competitiveness in, 90, 91, 92, 93
demographic factors in, 91–92, 93, 94
farm policy and, 94
flow systems in, 93
labor as resource in, 92
managerial attitudes in, 92
mini- and micro-computers in, 93
opposing meanings attached to, 91–92
political consideration in, 93–94
retail sales, consumer response and, 82
abolishing compulsory age limit in, 151–154
age discrimination laws and, 145
career extension options and, 28–30, 147, 153
inflation and, 146
for management and professional employees, 153
mandatory, 26–30, 144–146, 150–154, 177
moonlighting and, 145
nonfinancial needs and, 146
outside mediator and, 29
pensions and, 28, 145–146, 147, 151, 152
population pressures and, 26, 28
profit and, 51
redundancy planning and (see redundancy)
resistance to promotion and, 27
for small- and middle-sized businesses, 30
white-collar versus blue-collar views on, 27, 152
return-on-selling-space, as measure of performance, 78
return on total assets
execution compensation and, 79
as measure of performance, 74, 77–79
Ricardo, David, 97
risk premiums
as capital charge, 76
of economic activity, 48–49, 49, 51
robots, in industry, 92
Rostow, Walt W., 205
sales, economic versus accounting definition of, 16
sales force, as fixed human capital, 66
satellite transmission, for business subscribers, 37
Saudi Arabia, 192
savings, 87
capital formation and, 71
stagflation and, 82
of wage earners, 98
Say’s Law, 222
Schmidt, Helmut, 225
school system, 135–139. See also universities
continuing professional education and, 136–137, 138
demographic factors in, 135
diversity of teaching approaches required in, 137–138
fundamentalist and evangelical schools in, 139
humanities displaced in, 137
near-future objectives of, 136–138
“voucher” system in, 138
Schumpeter, Joseph, 61
Seattle Art Museum, 104
second careers, 29, 133, 147, 153
Securities and Exchange Commission, 31, 184
Siemens, 6
Simons, Henry, 98
Singapore, 181
Sloan, Alfred, 84
Smith, Adam, 98
social policies
changes toward age and gender in, 144–149
on displaced workers, 121
government bureaucracies and, 117–118
managerial policies and, 43
nineteenth-century, 143
profit linked to responsibility in, 52
social responsibility, casuistry and, 232–238
Social Security program, 117, 145–146, 151, 152, 226
Solomon, Ezra, 48
Sony Corporation, 199
Spain, 174
speculative growth
structural changes in economy and, 54–56
Spinoza, B., 237
Stages of Economic Growth,The (Rostow), 205
stages of production process, 121, 169, 181–182, 183
stagflation, 219
steel industry, 120, 121, 168, 170, 203, 204 labor-income ratio in, 95, 96, 97–98
Stigler, George, 98
Stinnes, Hugo, 5
stock market, valuation criteria of, 78–79
stock options, executives’ income and, 21–22, 56
student-exchange programs, 106
sunset laws, 118
supply-side economics, 222, 224, 225, 226
surplus, as “profit,” 48
systems approach, for multinationals, 185
taxes, tax policies
executives’ shelters and, 21
indexing compensation and, 122–123
money versus real income and, 20–21
reform, union and business agreement on, 23
stimulation of capital formation and, 193
technological changes, 37–39. See also information technology; knowledge workers
jobs and, 170
re-industrialization and, 92
textile industry, 182
third industrial revolution, 38–39, 93
Third Sector (public-service enterprises), 101–136
abandonment policy for, 106–107, 129
compensation levels in, 103–104, 111, 112
employment levels in, 104
growth in size and complexity, 104, 105
health-care delivery system in, 124–128
management in, 105, 107–108, 109–113, 115–116, 127–128, 129–134, 137–139
measurement of performance in, 106, 109, 116
as need- versus want-oriented, 106
productivity in, 19, 111–112, 113
productivity of capital in, 63, 105
purposes of institutions in, 106–107
time, as cost item in capital management, 66
time-not-worked, in productivity of assets, 65
top management. See also executives
board of directors and, 32–33, 34
Peter Principle and, 11
replacement policy for, 18–19, 28–30, 32–33
“senility” of, 26
young executives’ view of, 157
trade statistics, production sharing and, 185
transnational currencies, 180, 207–212
description of, 210
Eurocurrencies as, 208
loans based on, 211
as protection against devaluation, 211
transportation problems, capital formation and, 219
unemployment statistics, 158–163
adult male heads of household employment rate and, 160–161
employment rate and, 158
unions, 119–123, 136, 148, 192
blue-collar workers in, 120
employment security issue and, 120
health-care benefits and, 125, 127
jobs outside traditional molds and, 121
jurisdictional strife between, 121
labor-income ratios and, 97–99
leadership of, 120
as monopoly, 99
need for, 9
political power of, 120
production sharing opposed by, 121, 170, 184
in public-service sector, 119–120
redundancy planning demand of, 168
security of, 120
technological changes and, 120–121
United Automobile Workers, 195
universities
merely competent faculty as burden to, 129, 130, 132–133
personnel development program in, 129, 131–132
placement services for mid-life faculty of, 129, 133
salary pressures in, 130
tenure policy in, 129–131, 165
value added
labor-income ratio and, 95
as measure of performance, 78
wage fund, capital fund versus, 97
in auto and steel industries, 95, 96
welfare programs, abandonment policy for, 117
Western Europe. See also specific countries, 195
co-determination issue in, 194–196
downward capital productivity in, 62
hard economic choices for, 225–226
hospital admissions in, 128
labor-income ratios in, 96, 97
managerial expertise in, 40–44
Socialists in, 195
Westinghouse Electric, 28, 235
Williams, Harold, 34
working assets, productivity of capital and, 63–64, 65–66
currency structure in, 207–212
future planning and, 42, 57–59, 179–180
sovereignty doctrines versus, 58–59, 180
young executives (class of ‘68), 154–157
ambitiousness of, 156
background of, 154
demographic pressures on, 156, 165
differences from older executives of, 157
expectations from management of, 157
in “hard” versus “soft” areas, 155
leadership moves of, 155
organization as seen by, 156–157
promotions and, 166
social and political stance of, 156
Zama car plant, 92
Zara census, 144
zero-budgeting, 114
zero growth, 89
zero-revenue planning, 114