Building a Productive Workforce: the Role of Structured Management Practices

Christopher Cornwell (University of Georgia)
Ian Schmutte (University of Georgia)
Daniela Scur (Cornell University)

Abstract : This paper examines the role of firm management practices in assembling a high quality and productive workforce. A large conceptual and theoretical literature describing ``what managers do,'' suggests management practices may have a large affect on the way firms assemble a high quality workforce. However, models of the labor market disregard management as an important feature of job matching and job mobility. To better understand whether structured management matters in labor markets, we match survey data that measures how firms manage people, measures of worker quality and job lows from linked employer-employee data. We have three key findings: first, the quality of production workers and managers fixed effects, and the use of structured management practices, are all positively correlated with firm productivity. Second, well-managed firms hire a larger share of their new recruits from the top of the worker quality distribution, and are better at retaining those workers. Third, well-managed firms fire less often, and are better at targeting low-quality workers for termination.

Management Practices and Firm Performance During the Great Recession: Evidence from Spanish Survey Data

Florian Englmaier (University of Munich)
Jose E. Galdon-Sanchez (Universidad Publica de Navarra)
Ricard Gil (Queen's University)
Michael Kaiser (University of Munich )

Abstract : Does management matter for how plants weather times of economic crisis? Using firm survey data that was collected in Spain just prior to the Great Recession in 2006, we estimate the latent structure of management practices and describe two distinct styles. One style emphasizes - among others - flexibility and flatter hierarchies while the other contains more levels of hierarchy and incentive pay. We show that firm size and other observables do not accurately predict styles. By linking the firm survey to independently collected financial performance data we show that - conditional on having survived - the former firms performed significantly better during the Great Recession. The results are robust to a variety of specifications. Finally, we do not find a relationship between management styles and firm survival during this economic crisis.

Employee-oriented Management in the Competition for Skilled Labor: the Impact of Hr Measures on Perceived Work Quality and Turnover

Philipp Grunau (Institute for Employment Research)
Stefanie Wolter (Institute for Employment Research)

Abstract : Given the developments associated with demographic change and digitalization, firms encounter serious challenges to meet their demand for qualified workers. An employee-oriented human resource management is often regarded as one cornerstone in the increasingly fierce competition for skilled labor. International analyses based on cross-sections provide evidence that a professionalized HR management is positively correlated not only with measures of economic success like value added, sales, and profit (Bloom und van Reenen, 2007) but also with work quality like work-life balance and affective commitment (e.g. Bloom et al. 2009, Alfes et al. 2013). Our analyses go beyond this approach by applying panel data and fixed effects estimation. Moreover, we address the link of HR measures not only with work quality but also with actual turnover of establishments. For this, we employ the Linked Personnel Panel (LPP), a unique biennial panel dataset comprising survey information on both employers and their employees from 2012 to 2016. We show that HR measures are positive correlated with job satisfaction, commitment, engagement and turnover intention. Regarding actual turnover on the establishment level, however, our results offer a more differentiated picture: Both performance-related measures for managers and perfor-mance-unrelated measures reduce subsequent turnover, whereas performance-related HR measures for employees without managerial responsibilities increase actual turnover.

Measuring and Explaining Management in Schools: New Approaches Using Public Data

Clare Leaver (Blavatnik School of Government)
Renata Lemos (World Bank)
Daniela Scur (Cornell University)

Abstract : Learning in schools across the world has stagnated: children are in school, but often not learning. A shift in thinking about how to improve learning is emphasizing ''system-level'' reform. Management practices can be an important link in education systems, with evidence from the small set of countries sampled in the World Management Survey pointing to a strong positive relationship between measures of management and student outcomes. Yet the mechanisms behind this finding remain a black box. In this paper, we develop a simple theoretical framework that shows how management practices can affect school performance through channels traditionally examined in the personnel economics literature---the selection and incentive margins of agents. We then take the predictions of this framework to the data. Specifically, we build a new cross-country measure of management structures using the Programme for International Student Assessment (PISA), the largest education dataset currently available. We find that the positive relationship between management and student outcomes holds in 5 of the 6 PISA regions, and present evidence that is consistent with both the selection and incentive mechanisms proposed in the theory.