Management economics in a large UK retailer

Stan Siebert () and Nick Zubanov ()

CPB Discussion Papers from CPB Netherlands Bureau for Economic Policy Analysis

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.

Keywords: labour productivity; commercial awareness; management ability (search for similar items in EconPapers)
JEL-codes: D21 J24 M20 J33 M52 (search for similar items in EconPapers)
Date: 2009-05
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Persistent link: http://EconPapers.repec.org/RePEc:cpb:discus:125

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