(FORTUNE Magazine) – More and more people in business are genuine intellectuals, and managing these brainy, often quirky individualists can be quite a challenge. Few executives had more experience -- or were better at it -- than Hedley Donovan. As managing editor of FORTUNE and later editor-in-chief of Time Inc. (now Time Warner), Donovan spent three decades ''managing the unmanageable,'' as he puts it in a new book, Right Places, Right Times: Forty Years in Journalism Not Counting My Paper Route (Henry Holt & Co., $27.95). His lessons are valuable for anyone trying to lead those highly creative employees who generally don't like the idea that they have leaders. DEFINED RATHER liberally, intellectuals are people who both by inclination and occupation deal mainly with ideas rather than things, who have minds of some depth or originality, and who have a considerable compulsion to share their thinking with others -- on paper or out loud. Managing them is a craft or trade, maybe even an art. It is definitely not a science. Twenty-seven years ago, Professor George Stigler, the University of Chicago economist, arrived at a guess -- he didn't say exactly how -- of one million full-time intellectuals in the United States. Considering the expansion of the ''knowledge industry'' over the years since then, and the doubling in the numbers of college graduates and holders of advanced degrees, one might extrapolate that there are now two million American intellectuals. Who can disprove it? A large majority of intellectuals are on somebody's payroll. They work in the planning, forecasting, and research departments of corporations, banks, brokerages, government agencies; in universities, colleges, schools; in scientific and medical laboratories, think tanks, foundations, and many kinds of public service organizations; even in the hierarchical branches of organized religion; even in some areas of the military; even on Capitol Hill. Only a few are self-employed -- novelists, poets, critics, J. D. Salinger, Alexander Solzhenitsyn, the thinkers and brooders off on their own. The rest may be working for IBM, the CIA (yes), Bell Labs, Time Warner, Princeton, the Heritage Foundation, Young & Rubicam, the Naval War College, the Washington Post. So the intellectuals have a boss -- and the boss has them. The essential tension in the management of intellectuals arises from the employer's urgent need for creative, independent people and his equal need to keep them under some degree of discipline. He needs to give leadership to people who would generally be repelled by any notion that they had a leader. He is presiding over a kind of institutionalized anarchy, and he needs at least a few good bureaucrats to help him keep the show on the road. He needs from his intellectuals work not easily defined, measuring up to highly subjective standards, delivered more or less on time. During the years that I tried to master this branch of management, I did begin to discern certain patterns and principles. Some of what I think I learned applies primarily to journalism, perhaps especially to Time Inc., but much of it I believe has broader relevance. Here are 15 of my working rules. -- BE YOURSELF, BUT: The boss in an organization of intellectuals is going to be far better known to his staff than an industrial manager is to his. The organization is likely to be smaller and much more informal, and a high proportion of the staff will be social peers of the boss -- fellow scholars, fellow journalists, professional colleagues. So the boss is going to be seen and studied from very close up, by smart people who love gossipy shoptalk. Intellectuals may not be any quicker at spotting phoniness than blue-collar workers, but when they do, the conversation can be merciless. For the boss, the moral is: No Airs -- Be Yourself. But . . . There is always room for improvement. Though no boss in 20th- century America could have been more supremely himself than Henry Luce, Time Inc.'s fierce and demanding founder, he learned over the years to temper his considerable arrogance and to sand down his erratic manners. -- BOSSING INTELLECTUALS IS A HIGH CALLING: The individual who undertakes this job is seeking to organize/improve/protect an environment in which creative people can do something close to their best work. Those people may not always be so grateful as their boss thinks they should be. All the many ways that employees can be suspicious, resentful, or critical of the boss are accentuated when the employees are intellectuals. They can be temperamental, cantankerous. But it is still true that one of the greatest possible executive satisfactions is to feel you have helped bring out or bring along an intellectual talent. Sensitively managed, even large and complex organizations can stimulate and liberate creative individuals. The manager of intellectuals must never imagine he created the talent. It had to be there (mainly in the genes, I happen to think).

-- LOYALTY DOWN NO LESS THAN UP: This traditional ideal in military command is at least equally critical in the management of intellectuals. The good colonel will stand up for his people -- not blindly, but giving them always the benefit of the doubt, awarding credit liberally, deflecting blame onto himself when that is halfway plausible. The good boss of intellectuals will do the same, vis-a-vis his bosses; or, if he has no boss, vis-a-vis the outside world. Intellectuals tend to be skeptical, little given to hero worship. They need to know their boss practices loyalty down. With it comes a real , sensitivity to subordinates' opinions of the boss -- equal perhaps to his avid interest in what the next layer up thinks of him.

-- THE FIRST-CLASS MIND IS AN INDEPENDENT MIND: It is never totally for hire. The intellectual does not automatically agree with the boss and he would not be of much use if he did. But in an organization of intellectuals, positions must from time to time be taken that cannot please everybody. In these situations, the most to be hoped is that the losers will respect the process by which the decision was reached. The best test comes the next time a controversial decision is to be made: Do all those whose opinions would be relevant believe they will get a fair hearing? -- THE BOSS AS BOTTLENECK: This is a much more serious hazard in an organization of intellectuals than in operations with precedents for everything and deputies and subdeputies who can safely make almost any decision. The bottleneck was a persistent problem for the Time Inc. magazines. Luce once asked me to critique the editorial management structure of Life. I reported back to him that the managing editor, Edward Thompson, ''towers an undesirable distance above his Asst. M.E.s and chief department heads. The kind of dominance Ed has on Life would be appropriate to a magazine with a staff of 50 or to a factory of 5,000 people manufacturing valves to standard specifications. It's an expensive way of operating a staff of circa 200 creative and professional people. Too much work goes forward at Life on the chance that the boss might like it.'' What Life needed was one or two more men of something approaching Ed's stature. Not just so there would later be several people to choose the next M.E. from, but for the sake of getting out the magazine right then. -- CHANNELS, CHARTS, AND WHEN TO FORGET THEM: Maybe somewhere there was a Time Inc. editorial organization chart, but if so, I never saw it. I sent editors on short rotation tours away from their own magazines and brought them in and out of my own office as acting deputies. It made for some healthy ferment, in my head among others. The rotations also helped break down the clannishness of the individual magazine staffs. The good side of the clannishness is of course esprit de corps. The manager's life is full of trade-offs. Luce would go outside channels whenever he felt like it, to the amazement -- and anxiety -- of freshman writers or ad salesmen who found themselves suddenly invited to tell the Proprietor what was wrong with Time Inc. Not being the Proprietor, I was more circumspect. I did feed a good many lunches to relays of brand-new writers and researchers, usually with one of their bosses present. And I did a lot of listening, all over the building. -- TELLING GOOD FAT FROM BAD: The lack of absolute standards for measuring quality in the work of intellectuals imposes peculiar responsibilities on the manager. In the budgeting for a magazine, for instance, he must calculate not only whether the final 15% of his costs adds perhaps only 5% to the final quality of his product but also whether this 5% is an essential edge over the competition. The locating of fat in intellectual organizations, and the distinguishing between good and bad fat, are interesting work, as the lean, mean new owners of CBS, NBC, and ABC have been discovering. -- ''FAIR,'' EVEN IF UNREASONABLE: Again because of the subjective standards of performance, it is especially desirable that a manager of intellectuals be perceived as ''fair.'' He will never convince everybody, intellectuals being intellectuals, but he needs to have a very large majority -- say, 90% of his staff -- convinced that his criteria of quality, be they difficult to define or even unreasonable, are applied evenly. Better an impartial son of a bitch than a nice boss who plays favorites. -- REMIND THEM WHY THEY LIKE WHAT THEY ARE DOING: A very high proportion of intellectuals consciously chose their line of work rather than drifting into it or feeling there was no alternative. But they also complain a lot; they can expect the impossible. They need to be reminded why they chose these careers in the first place, why those still look like smart decisions. -- DON'T BE STINGY WITH CRITICISM: It goes without saying that the manager must be generous with praise, but the judicious application of criticism to very touchy people is more challenging work. There are three messages that must be implicit in successful criticism of intellectuals. First, you can do better work than this; in fact, some of this is very good; I just wish more of it were as good as the best of it. Second, the same standards are being applied to your peers. And last, I myself want to be held, by you and others, to these standards. These messages can be conveyed with varying degrees of subtlety or directness, but it obviously helps if there is a presumption that the boss himself could perfectly well do the work in question if he didn't have to attend to so many other things. For this presumption to prevail, the boss needs a proven track record as an individual performer in some of the work he now oversees. -- KNOW WHEN TO BE THE AUTOCRAT: A high degree of permissiveness pervades most organizations of intellectuals. Consultation is continuous; consensus is sought; direct order-giving is frowned upon. Still, there comes times when the place can no longer be a democracy. A decision must be made, and not all votes can count the same. -- KEEP THOSE IDEAS COMING: Intellectuals tend to have a lot of ideas as to how their employer could do a better job. New ideas will be intermingled with, and often inseparable from, griping about the present state of affairs. The boss must get used to this. These tendencies to assist management should be encouraged and receipt of the ideas, bad and good, unfailingly acknowledged. This idea flow is in fact essential to institutional vigor and renewal. The boss needs the ideas of his staff even more than they need the outlet and recognition. A FORTUNE writer once complained to his editor that his story suggestions seemed to disappear into a bottomless pit. The editor hinted in a friendly way that that was the right place for them. ''At least let me know you saw them on their way down,'' said the writer. A modest enough request. -- KNOW WHEN THE JUNGLE DRUMS ARE COMING CLOSER: As in an army barracks, there is a more or less steady level of grousing within an organization of intellectuals. But the boss must know, firsthand or through his scouts, when the drums are getting louder. Something may need looking into. At Time Inc. in the early 1970s, for instance, the editors were slow -- and I was among the slowest -- to sense the new force and urgency in the complaints of women about their promotion opportunities. We had many good traditional answers, but they weren't good enough anymore; things had changed. One hard-boiled school of thought holds that some kinds of people problems get magnified when there's somebody to listen to them. The theory has undeniable appeal, but it must be resisted. Some problems are no doubt enlarged by being told, but others explode if not told, and a boss can't distinguish which is which without listening. -- PAY THE INTELLECTUALS WELL: They are worth it. Time Inc. was very generous in this regard, and as a boss I always felt the company gave me ample resources to reward the deserving. But once more, the inexact standards $ applying to our people's work made salary determinations, so cut and dried in many other places, almost an aesthetic judgment. I labored over our payroll. -- A MIGHTY DETAIL: A flow of fresh talent is so important to organizations of intellectuals that the boss should get fairly deep into this ''detail'' himself, no matter that he has good deputies assigned to it. I spent a lot of time at it. I was proud of my hirings as managing editor of FORTUNE, though my predecessor did better. (But he had 12 years at it, and I just had six.) I always stressed to writers I hired for FORTUNE that we were both taking a big chance. The job was very different from most other forms of journalism -- and neither of us could be sure it would work out. I said it was a fifty-fifty chance -- nobody declined -- and about two out of three did make it. I think it is impossible for a manager of intellectuals to know too much about what kind of people are attracted to his organization -- and I mean as the place is today, not as he remembers the organization that hired him. Over three decades I earned some good salaries for trying to manage intellectuals. And now and then I was also rewarded in coin better than dollars: a glimpse of trust and respect, perhaps even gratitude, felt by some highly creative people.