The Value of Bosses

I found this paper The Value of Bosses via WonkBlog:

Do supervisors enhance productivity? Arguably, the most important relationship in the firm is between worker and supervisor. The supervisor may hire, fire, assign work, instruct, motivate and reward workers. Models of incentives and productivity build at least some subset of these functions in explicitly, but because of lack of data, little work exists that demonstrates the importance of bosses and the channels through which their productivity enhancing effects operate. As more data become available, it is possible to examine the effects of people and practices on productivity. Using a company-based data set on the productivity of technology-based services workers, supervisor effects are estimated and found to be large. Three findings stand out. First, the choice of boss matters. There is substantial variation in boss quality as measured by the effect on worker productivity. Replacing a boss who is in the lower 10% of boss quality with one who is in the upper 10% of boss quality increases a team’s total output by about the same amount as would adding one worker to a nine member team. Using a normalization, this implies that the average boss is about 1.75 times as productive as the average worker. Second, boss’s primary activity is teaching skills that persist. Third, efficient assignment allocates the better bosses to the better workers because good bosses increase the productivity of high quality workers by more than that of low quality workers.

The main thing that strikes me about this is the claim that the average boss is 1.75 times as productive as the average worker. The statistic that replacing a bottom 10% boss with a top 10% boss increases productivity by only 10% (one worker out of ten) is pathetic. I don’t see how the authors get from that stat to claiming that an average boss is 75% more productive than an average worker. But we’ll assume it does.

This doesn’t speak that well for bosses. In my experience, worker productivity in technology-based work is highly variable. I think the best employees are on the order of twice as productive as the average. This would make them roughly as productive as the average boss. Given that bosses are generally the best workers who have been promoted, wouldn’t we expect this? Doesn’t this imply that the bosses are just better than average workers and it isn’t their “supervision” that is adding to the productivity?

In case you are wondering, yes, I am suggesting that hierarchical systems are not very helpful in a business environment. I have found that they are often harmful. The best situation is where people have common goals and the best people guide their own work—which after all is what they know best anyway. Unfortunately, I doubt that a bunch of business and management graduates are going to be looking into this question.

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About Frank Moraes

Frank Moraes is a freelance writer and editor online and in print. He is educated as a scientist with a PhD in Atmospheric Physics. He has worked in climate science, remote sensing, throughout the computer industry, and as a college physics instructor. Find out more at About Frank Moraes.

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