Adam Smith’s “invisible hand” describes how resources in an economy are allocated to their best uses without anyone’s guidance, through prices and incentives. Inside companies, however, allocation is more directed: research by Chicago Booth’s Virginia Minni finds that good managers match workers to roles where they are most productive.
Using ten years of personnel data from a multinational company, covering 200,000 white-collar employees and 30,000 managers, Minni finds that the best managers actively reassign workers to roles that better fit their skills, making moves that later translate for the workers into higher pay and a greater likelihood of promotion. The results suggest that even a single stint under a “highflyer” manager can have a long-term effect on an employee’s career.
