Empowering Bosses to Lead: an Experiment in a Large Retail Chain

Guido Friebel (Goethe U, Frankfurt)
Matthias Heinz (Cologne)
Nick Zubanov (Goethe U, Frankfurt)

Abstract: Middle managers remain the backbone of most large organizations. Little if anything is known about the role they play, and in particular, to what extent they engage in leadership activities for the benefit of firms. We conduct a large-scale field experiment in a retail chain in a country of the former soviet Union. As in many other transition economies, the company was suffering from high personnel turnover. We introduced an RCT in which the shop managers were empowered to take the actions they believed necessary to tackle the problem of personnel turnover. Employee turnover decreased by 25%, and the decrease in turnover has been persistent over 7 months. Our paper shows the large impact that middle managers have on the behaviour of their workers. In a subsequent phone survey among all treated and untreated middle managers, we find that in shops in which turnover was reduced, managers increased communication efforts und interacted more intensively with their workers.We find it particularly noteworthy that empowerment of middle managers was possible without any formal change in the organization, and in an existing command-and-control culture.