TITLE: Identifying Managerial Skill (joint with: Ben Weidmann (Harvard), Joe Vecci (Gothenburg), Farah Said (Lahore), David Deming (Harvard))

ABSTRACT: We know that managers matter but we do not know how to prospectively identify good managers. We demonstrate the potential of using repeated random assignment to identify the causal contribution managers make to teams, and the measurable skills associated with this. We randomly assign managers to multiple teams, and predict team performance based on the team’s endowment of productive skill. Some managers consistently cause their teams to exceed predicted performance. Managerial skills are roughly as important to team outcomes as worker productivity. Good managers score higher on measures of allocative skill, and there are no differences in managerial skill across gender, age and ethnicity. We experimentally evaluate different methods of manager selection. People who select into managerial roles are typically not better managers than those appointed by lottery. However, selecting managers based on allocative skill dramatically improves team performance.