Managerial quality plays a key role in firm productivity and growth, and differences in firms’ managerial practices explain a substantial portion of the yawning productivity gap across rich and poor countries. Who is a good manager?
Ascertain which managerial skills, traits, and practices matter most for productivity. How does the observability of these features affect how appropriately they are priced into wages?
We match the granular administrative data on productivity and style produced to the survey data on managerial characteristics and practices at the supervisor level to answer the basic question: which managerial skills, traits, and practices best predict higher productivity?
Our empirical strategy consists of three steps.
Our work reveals a crucial role for managerial quality in determining firm productivity, and shows that intervening to improve management practices can generate meaningful impacts. We study the way in which managerial quality interacts with the learning by doing process in the case of ready-made garments production in India.
Which practices, skills, and personality traits combine to make a “good” manager? The answer to this question is critical for firms and public policymakers alike, in that it informs the design and targeting of skill development programs, as well as helps to create more effective screening and hiring policies.
Moreover, assessing the extent to which the dimensions of managerial quality that matter most in the workplace are appropriately priced into their pay generates crucial insights into the functioning of labor markets, specifically with regard to information frictions.
We suggest that screening on personality traits via psychometric measurement would improve the quality of new hires, and training on poorly observed (and unrewarded) but valuable practices like managerial attention could substantially raise firm productivity at low cost. The insights gleaned here have motivated the design and ongoing implementation of a tech to hire and promote managers at the firm.
Image credits: Nayantara Parikh
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