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How Do You Identify A Good Manager?

Author

Listed:
  • Weidmann, Ben

    (Harvard Kennedy School)

  • Vecci, Joseph

    (Department of Economics, University of Gothenburg)

  • Said, Farah

    (Lahore University of Management Sciences)

  • Bhalotra, Sonia

    (University of Warwick, IFS, CESifo, CEPR, IZA)

  • Adhvaryu, Achyuta

    (University of California San Diego, NBER, J-PAL, BREAD, Good Business Lab)

  • Nyshadham, Anant

    (University of Michigan, NBER, J-PAL, BREAD, Good Business Lab)

  • Tamayo, Jorge

    (Harvard Business School and Digital Reskilling Lab)

  • Deming, David

    (Harvard Kennedy School and NBER)

Abstract

We introduce and validate a novel approach to identifying good managers. In a pre-registered lab experiment, we causally identify managerial contributions by randomly assigning managers to teams and controlling for individual skill. We find that manager contributions are crucial for team success, and that people who self-select into management roles perform worse than randomly assigned managers. Managerial performance is strongly predicted by economic decision making skill, but not by demographic characteristics. Two validation studies support our experimental results. Participants who succeed in the lab receive more real-world promotions and, in a separate study of retail store managers, skill measures strongly predict store sales. A one standard deviation increase in manager quality increases annual per-store sales by $4.1 million USD (25% increase). Selecting managers on skills rather than demographic characteristics or the desire to lead could substantially improve organizational performance.

Suggested Citation

  • Weidmann, Ben & Vecci, Joseph & Said, Farah & Bhalotra, Sonia & Adhvaryu, Achyuta & Nyshadham, Anant & Tamayo, Jorge & Deming, David, 2024. "How Do You Identify A Good Manager?," CAGE Online Working Paper Series 715, Competitive Advantage in the Global Economy (CAGE).
    • Handle: RePEc:cge:wacage:715
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    File URL: https://warwick.ac.uk/fac/soc/economics/research/centres/cage/manage/publications/wp715.2024.pdf
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    References listed on IDEAS

    as
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    Cited by:

    1. Max Coveney & Pilar Garcia-Gomez & Teresa Marreiros Bago d'Uva, 2025. "Gender and Performance in Collaboration: Evidence from Random Student Teams," Tinbergen Institute Discussion Papers 25-032/V, Tinbergen Institute.
    2. David Dorn & Florian Schoner & Moritz Seebacher & Lisa Simon & Ludger Woessmann, 2024. "Multidimensional Skills on LinkedIn Profiles: Measuring Human Capital and the Gender Skill Gap," Papers 2409.18638, arXiv.org, revised May 2025.
    3. Mitchell Hoffman & Christopher T. Stanton, 2024. "People, Practices, and Productivity: A Review of New Advances in Personnel Economics," NBER Working Papers 32849, National Bureau of Economic Research, Inc.

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    More about this item

    Keywords

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    JEL classification:

    • M54 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Management
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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