The Value of Bosses

From the WSJ Ideas Market:

In a working paper for the National Bureau of Economic Research, the professors found that bosses matter a lot, that they vary widely in quality, and that going from a worst decile boss to a best decile boss improves productivity as much as adding another worker to a nine-member team. Even more surprising, the boss’s main contribution isn’t made by motivating workers. Bosses make a difference by teaching skills that improve productivity.

Counter-intuitively, the study found, it pays to assign the best workers to the best bosses, because that results in the largest productivity gains. One finding will bring comfort to workers afflicted with inept supervisors: the worst bosses are the most likely to leave, the study found.

From the abstract:

…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, (the) 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.