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How do you identify a good manager?

Author

Listed:
  • Weidmann, Ben
  • Vecci, Joseph
  • Said, Farah
  • Bhalotra, Sonia
  • Adhvaryu, Achyuta
  • Nyshadham, Anant
  • Tamayo, Jorge
  • Deming, David

Abstract

We introduce and validate a novel approach to identifying good managers. In a preregistered 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 US$4.1 million (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, 2026. "How do you identify a good manager?," LSE Research Online Documents on Economics 137018, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:137018
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    File URL: https://researchonline.lse.ac.uk/id/eprint/137018/
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    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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