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Management economics in a large UK retailer

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Author Info
W. Stanley Siebert
Nick Zubanov ()

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Abstract

We study the link between middle-management ability and store labour productivity using data from 245 stores of a UK nationwide retailer. The company scores six broad areas of management practice, the most important of which turns out to be "commercial awareness", where able managers achieve 17% higher labour productivity in their stores compared to less able ones. We further show that the managers’ incentive pay scheme, required to encourage them to exert their ability in full, is implicitly an insurance one, with managers taking a share in deviations of actual sales from expected. At the same time, abler managers do not receive higher pay all else equal, which implies that middle management ability is not fully tradeable.

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Publisher Info
Paper provided by CPB Netherlands Bureau for Economic Policy Analysis in its series CPB Discussion Papers with number 125.

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Date of creation: May 2009
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Handle: RePEc:cpb:discus:125

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Related research
Keywords: labour productivity; commercial awareness; management ability;

Find related papers by JEL classification:
D21 - Microeconomics - - Production and Organizations - - - Firm Behavior
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
M20 - Business Administration and Business Economics; Marketing; Accounting - - Business Economics - - - General
J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
M52 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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