Peter Drucker: Contribution Analysis

More from Peter Drucker's Management: Tasks, Responsibilities, Practices follows.

“There are four major groups of activities distinguished by their contribution to a businesses.

“There are, first result-producing activities – that is activities which produce measurable results which can be related, directly or indirectly, to the results and performance of an entire enterprise. Some of these activities are directly revenue-producing. Others contribute measurable results.

“There are, second, support activities which, while needed, and even essential, do not by themselves produce results but have results only through the use made of their “output” by other components within the business.

“There are, third, activities which have no direct or indirect relationship to the results of a business, activities which are truly ancillary. They are hygiene and housekeeping activities.

Finally, and different in character from any of these, is the top-management activity” (MTRP, 532).

Results producing activities directly bring in revenues. “Here belong innovating activities, selling and all the work needed to do a systematic and organized selling job, such as sales forecasting, market research, sales training, and sales management. Here also bring the treasury function, that is, the supply and management of money in the business.” Also included are information activities.

Support activities can also be called resulting-contributing. Manufacturing is typical of these activities. Also included are training, human resources, purchasing and physical distribution, engineering, and operations such as the handing of data and paper, and in an insurance company, claims settlement.

Hygiene and housekeeping activities include such things as janitorial service, cafeterias, administration of benefit programs, and record keeping requirements.

This is a rough, nonrigid classification, and far from scientific. (MTRP, 533-4).

Top-management activities will be addressed in my next post.