Management Economics in a Large Retail Organization

William Siebert () and Nick Zubanov

No 3645, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We study the impact of and reward to middle management ability using data from 245 stores of a 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 raise labour productivity by 17% compared to less able. We show that the managers' incentive scheme 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 tradable.

Keywords: productivity; business economics; firm behaviour; compensation methods; management (search for similar items in EconPapers)
JEL-codes: D21 J24 J33 M20 M52 (search for similar items in EconPapers)
Pages: 60 pages
Date: 2008-08
New Economics Papers: this item is included in nep-bec, nep-cse and nep-lab
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Published - published in: Management Science, 2011, 56(8), 1398-1414

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