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Making the invisible hand visible: Managers and the allocation of workers to jobs

Virginia Minni

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: Why do managers matter for firm performance? This paper provides evidence of the critical role of managers in matching workers to jobs within the firm using the universe of personnel records from a large multinational firm. The data covers 200,000 white-collar workers and 30,000 managers over 10 years in 100 countries. I identify good managers as the top 30% by their speed of promotion and leverage exogenous variation induced by the rotation of managers across teams. I find that good managers cause workers to reallocate within the firm through lateral and vertical transfers. This leads to large and persistent gains in workers' career progression and productivity. Seven years after the manager transition, workers earn 30% more and perform better on objective performance measures. In terms of aggregate firm productivity, doubling the share of good managers would increase output per worker by 61% at the establishment level. My results imply that the visible hands of managers match workers' specific skills to specialized jobs, leading to an improvement in the productivity of existing workers that outlasts the managers' time at the firm.

Keywords: managers; career trajectories; internal labor markets; productivity (search for similar items in EconPapers)
Date: 2023-10-05
New Economics Papers: this item is included in nep-bec and nep-eff
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Making the invisible hand visible: Managers and the allocation of workers to jobs (2023) Downloads
Working Paper: Making the invisible hand visible: Managers and the allocation of workers to jobs (2023) Downloads
Working Paper: Making the invisible hand visible: managers and the allocation of workers to jobs (2023) Downloads
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