Firms make extensive investments in their employees: they invest in the hiring of workers that match the firm’s needs, and they invest in workers’ human capital once they are employed.
New research suggests that the hiring and training of good managers may carry substantial weight when it comes to workers’ performance. Kathryn L. Shaw from Stanford University and the US National Bureau of Economic Research also says that a good boss can have a substantial positive effect on the productivity of a typical worker.
While much has been written about the effects of working with good peers, the effects of working with good supervisors appear much more substantial.
Here are a few positive effects good managers have on workers' performance:
Being assigned to a good boss increases personal productivity relative to being assigned to a bad boss and the effects are large.
Good managers have some universal traits: they coach and teach and offer insight into the strategy of the firm and the worker’s career goals in light of that strategy.
The effects of good bosses dominate the effects of good peers.
Workers quit bad managers and bad managers are more likely to leave the firm.
Shaw adds that: "Research also shows workers are happier with a good boss." IZA World of Labor author Jo Ritzen has also discovered that happiness is key to a productive economy. In his article, he writes: "Happiness of the working population in turn contributes toward a more productive economy."