If you've ever wondered whether your boss is worth what he or she gets paid, you can stop now. A group of economists claim to have sorted out this question. Edward Lazear and Kathryn Shaw of Sanford University and Christopher Stanton of the University of Utah wanted to find out if bosses improved the productivity of the people they supervised. So they examined work records of a large service company over four years (spanning 23,878 unique workers and 1,940 bosses) in an attempt to get an answer.
No surprise, they found that bosses themselves vary dramatically in productivity. If you replaced a bad-performing boss with one who is in the upper 10% of "boss quality," the effect is akin to adding an additional team member to a team of nine. And they found that a boss who is good for older workers is probably just as good for younger workers. Similarly, good bosses increase the productivity of all both good and bad workers. But if there is a choice, good bosses should be paired with good workers rather than bad ones, they say, because such a pairing will maximize the firm's overall productivity.
Perhaps most interestingly, the economists found that bosses are worth the extra money they get paid. As the economists put it, "The marginal product of a boss is about 60% greater than the marginal product of a typical worker. The ratio is consistent with differences in compensation levels."
You may be wondering whether there is a catch to all these conclusions. There is: The economists' definition of "boss quality" is quite limited. The relevance of their findings isn’t clear for engineering firms. The firm they studied, unfortunately, doesn't operate like an engineering company. Engineers, of course, tend to have a work schedule prioritized on the basis of projects and product development plans.
In contrast, the workers the economists studied largely handled such customer service transactions as you might find in jobs like insurance claims processing, computer-based test grading, technical call centers, and so forth. Bosses who work with these people have three main roles: as coaches, teachers, and motivators. So the economists confined their calculations to how bosses performed in these functions.
That narrow definition of "boss quality" certainly leaves out a lot of management skills that can prove crucial, particularly in engineering projects. I learned that first hand early in my career. In my own case, I once had a boss who, unbeknown to me, kept another internal department off my back while I was trying to meet a deadline on an important, and politically sensitive, testing schedule. I only found out about his efforts -- which for him, could have been career ending -- long after I'd finished the project and written the report.
That's the sort of boss behavior that is strategic but hard to quantify, especially for economists.
So I’m curious about what readers think: Did these economists measure the right “boss qualities?” And what kinds of boss behavior have you observed that have affected your own productivity?