DP13908 Building a productive workforce: the role of structured management

Author(s): Christopher Cornwell, Ian M. Schmutte, Daniela Scur
Publication Date: August 2019
Keyword(s): labor allocation, Management Practices, Managers, productivity
JEL(s): D22, J31, M11
Programme Areas: Labour Economics, Macroeconomics and Growth
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=13908

Firms' hiring and firing decisions affect the entire labor market. Managers often make these decisions, yet the effects of management on labor allocation remains largely unexplored. To study the relationship between a firm's management practices and how it recruits, retains and dismisses its employees, we link a survey of firm-level management practices to production and employee records from Brazil. We find that firms using structured management practices consistently hire and retain better workers, and fire more selectively. Good production workers match with firms using structured personnel management practices. By contrast, better managers match with firms using structured operations management practices.