Faculty of Economics and Business Administration Publications Database

Middle Managers, Personnel Turnover, and Performance: A Long‐Term Field Experiment in a Retail Chain

Zubanov, Nikolay
ISSN-Print: 0025-1909
Link External Source: Online Version
Year: 2021
Keywords: organizations; randomized controlled trial (RCT); insider econometrics; goal setting; communication; HR; personnel turnover and firm performance

In a randomized controlled trial, a large retail chain’s Chief Executive Officer (CEO) sets new goals for the managers of the treated stores by asking them to “do what they can” to reduce the employee quit rate. The treatment decreases the quit rate by a fifth to a quarter, lasting nine months before petering out, but reappearing after a reminder. There is no treatment effect on sales. Further analysis reveals that treated store managers spend more time on human resources (HR) and less on customer service. Our findings show that middle managers are instrumental in reducing personnel turnover, but they face a trade-off between investing in different activities in a multitasking environment with limited resources. The treatment does produce efficiency gains. However, these occur only at the firm level.