Where Schmidt Meets Sloan

Eric Schmidt, the executive chairman of Google, has long professed to admire Peter Drucker’s teachings on how to manage workers in an age defined by knowledge and information.

“At Google, we think business guru Peter Drucker well understood how to manage the new breed of ‘knowledge workers,’” Schmidt once wrote. “After all, Drucker invented the term.”

But it appears that some Drucker-like thinking from an earlier era—when people used their hands even more than their heads—is also being put to good use at Google.

“One of the things about companies is, as you build them, you get a chance to sort of determine the culture, the people, the style,” Schmidt said in an interview published this week in the McKinsey Quarterly. “And one of the things that I learned . . . is that it makes an enormous difference who you hire at every level. And people don’t really sort of manage that.”

Drucker believed the very same thing. “There are no more important decisions within an organization than people decisions,” Drucker wrote—adding that this is true up and down the line.  It is a piece of wisdom he learned way back in the 1940s (more than a decade before coining the term “knowledge worker”) from Alfred Sloan, the legendary chairman of General Motors.

“If the assistant plant manager of a minor division doesn’t perform,” Sloan said, according to Drucker, “all our clever top-management decisions won’t produce results.”

[EXPAND More]In the McKinsey interview, Schmidt noted the care that Google takes in placing people into a job, with the convening of a special hiring committee and candidates put through five separate interviews. “If five people interview a person,” Schmidt said, “you should be able to make a decision whether you’re going to hire them.”

This, too, is reminiscent of Sloan. Drucker recalled how a top GM committee would take up to four hours to decide on someone far down in the organization. Confused, Drucker asked Sloan how he and his senior executive team could afford to devote so much time to figuring out “a minor job.”

“If that master mechanic in Dayton is the wrong man,” Sloan responded, “our decisions might as well be written on water. He converts them into performance. . . . If we didn’t spend four hours on placing a man and placing him right, we’d spend 400 hours on cleaning up after our mistake—and that time I wouldn’t have.”

What about where you work? How much care does your organization put into placing people not just at the top, but throughout the entire enterprise?[/EXPAND]