How Do Managers Matter? Evidence from Performance Metrics and Employee Surveys in a Firm∗

Many companies survey employees about their managers yet it is unclear whether this information is, or should be used to evaluate and compensate managers. Data from a high-tech firm reveals that survey measures are associated with employees’ lower attrition, higher promotions, higher salary increases, and higher engagement, but have only a limited relation to subjective performance scores. The strongest results are on attrition, and different research designs (exploiting new workers joining the firm or exploiting manager moves) support a causal relation of survey-based manager quality to employee attrition. However, managers with better survey scores receive limited benefits in terms of compensation and other rewards. JEL Classifications : D23, J24, L23, M53