Robert Metcalfe - Managers and Productivity in Retail
Abstract: Research has established that management explains a notable portion of productivity differences across producers. A more open question is whether it is managers or management practices that matter. We shed light on this question by analyzing store-level data from two multi-billion-dollar retail companies. In our setting, managers move between stores but management practices are set by firm policy and largely fixed, allowing us to hone in on managers' personal roles in determining store performance. We find: (i) managers affect and explain a large share of the variance of store-level productivity; (ii) negative assortative matching between managers and stores, which may be largely mechanical in a movers design; (iii) managers who move do so on average from inherently less productive to more productive stores; (iv) female managers less likely to move than male managers; (v) manager quality is generally hard to explain with observables in our data but is correlated with the ratio of full-time to part-time workers; (vi) managers who obtain high labor productivity also tend to obtain high energy productivity, revealing some breadth in managers' skills applicability; (vii) high-performing managers in times of steady economic growth are also high-performing during turbulent times; and (viii) exogenous productivity shocks improve the quality of initially low quality managers, suggesting managers can learn.
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