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Management economics in a large UK retailer

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  • Nick Zubanov

    ()

  • W.S. Siebert

Abstract

We study the link between middle-management ability and shop labour productivity using data from 245 shops 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 shops 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.

Suggested Citation

  • Nick Zubanov & W.S. Siebert, 2009. "Management economics in a large UK retailer," CPB Discussion Paper 125, CPB Netherlands Bureau for Economic Policy Analysis.
  • Handle: RePEc:cpb:discus:125
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • 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; Personnel Economics - - 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 - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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