Why Are There So Many Bad Bosses? (Update)

People who are good at their jobs routinely get promoted into bigger jobs they’re bad at. We explain why firms keep producing incompetent managers — and why that’s unlikely to change.

 

SOURCES:Nick Bloom, professor of economics at Stanford University.Katie Johnson, freelance data and analytics coach.Kelly Shue, professor of finance at the Yale University School of Management.Steve Tadelis, professor of economics at the University of California, Berkeley Haas School of Business.

 

RESOURCES:“People Management Skills, Employee Attrition, and Manager Rewards: An Empirical Analysis,” by Mitchell Hoffman and Steven Tadelis (Journal of Political Economy, 2021).“Promotions and the Peter Principle,” by Alan Benson, Danielle Li, and Kelly Shue (The Quarterly Journal of Economics, 2019).“Bosses Matter: The Effects of Managers on Workers’ Performance,” by Kathryn L. Shaw (IZA World of Labor, 2019).“The Value of Bosses,” by Edward P. Lazear, Kathryn L. Shaw, and Christopher T. Stanton (Journal of Labor Economics, 2015).The Peter Principle: Why Things Always Go Wrong, by Laurence J. Peter and Raymond Hull (1969).

 

EXTRAS:“The Secret Life of C.E.O.s” series by Freakonomics Radio.“What Does a C.E.O. Actually Do?” by Freakonomics Radio (2018).