What's Your Management Effect?

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What's Your Management Effect?

A new study suggests a decline in qualified managers is detectable in productivity figures.

Using "a bit of theory and a bit of data," Dartmouth economics professor James Feyrer looked anew at the drop in productivity growth from the 1970s to the mid-1990s--a time when U.S. output per hour grew roughly 1.5% a year, vs. 3% in the 1960s (and now).

One idea about the falloff is that it coincided with a flood of novice employees, as Baby Boomers went to work. Believing this alone wouldn't explain it, Feyrer searched for a "spillover effect"--and found it in management. Census data from the period showed a rise in workers classified as managers and a dip in managers' median age--from 43 in 1970 to 38 by 1980.

Feyrer hypothesizes that the need for more managers, given the boomer influx, had businesses tapping some who weren't ready....just like today as boomer managers retire in mass and Gen Y enters the work world. Managers' median age was back up by 2000 (to 42), he notes, along with productivity growth. The "management effect," he says, accounts for about 20% of the observed slowdown.

Are you and your managers qualified to lead?

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