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People Management Skills, Employee Attrition, and Manager Rewards: An Empirical Analysis

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  • Mitchell Hoffman
  • Steven Tadelis

Abstract

How much do a manager’s interpersonal skills with subordinates, which we call people management skills, affect employee outcomes? Are managers rewarded for having such skills? Using personnel data from a large high-tech firm, we show that survey-measured people management skills have a strong negative relation to employee turnover. A causal interpretation is reinforced by several research designs, including those exploiting new workers joining the firm and workers switching managers. However, people management skills do not consistently improve most observed nonattrition outcomes. Better people managers themselves receive higher subjective performance ratings, higher promotion rates, and larger salary increases.

Suggested Citation

  • Mitchell Hoffman & Steven Tadelis, 2021. "People Management Skills, Employee Attrition, and Manager Rewards: An Empirical Analysis," Journal of Political Economy, University of Chicago Press, vol. 129(1), pages 243-285.
    • Handle: RePEc:ucp:jpolec:doi:10.1086/711409
    DOI: 10.1086/711409
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    More about this item

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • M50 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - General

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