New Research on How the Best Managers Shape Employees’ Careers

What makes some managers more valuable than others? Organizations tend to assume the answer lies in motivation and control: good managers are those who inspire effort, build team morale, or enforce incentives effectively. But, perhaps, the secret sauce isn’t how hard managers push; it’s how well they place. In new research spanning 200,000 employees and 30,000 managers in nearly 100 countries, I find that managers create value—for both their organizations and those they manage—by matching people to roles where they fit best. Think of the firm’s human resources as an internal labor market. Within it, a critical responsibility of managers is allocating and delegating workers to tasks: deciding who works on what. Nearly 250 years ago, Adam Smith offered the “invisible hand” to explain how markets coordinate activity without a central planner: prices move, people respond, and resources flow to their best uses. About 100 years ago, Ronald Coase argued that modern economies also rely on a different force—the “visible hand” of managers inside firms who make these key allocation calls. The economy runs on both systems at once—markets outside, management inside. Using large-scale administrative company data , I show that good managers shape workers’ long-term careers by helping them find the right roles. In turn, this leaves a lasting imprint on both wages and productivity—not only while workers are on their team, but even after they move elsewhere. Understanding these findings can help companies and executives utilize their internal talent’s potential to their fullest. If managers can uncover hidden strengths and redirect workers toward more productive roles, firms can boost performance without adding headcount. For workers, being matched to the right job early in their career can have compounding effects on income and talent development. For companies, it can mean higher firm productivity and higher returns on managerial investment. Identifying a Good Manager In my working paper, I analyze 10 years of personnel records from a large multinational consumer-goods company. The data track both manager and worker pay, promotions, internal transfers, as well as sales performance (for those workers who work in sales). To identify “good” managers, I used a simple marker: early promotion into middle management. In practice, those promoted before age 30 were classified as “high-flyers”—this represented roughly 26% of middle managers in the firm. Early promotion can be an intuitive indication of a manager’s success within the firm, and I found that it goes hand in hand with other markers of managers’ success, such as salary growth and performance ratings. To understand the impact of both high-flyer managers and less high-performing managers (“low-flyer”) on workers over time, I looked at a common practice within firms: manager rotations. The company studied regularly rotates managers across teams to expand the breadth of their skills, but I was curious: what impact do these rotations have on workers? Does working with a great manager impact their trajectory? What if they then cycle over to a lower-performing or even bad manager? The Impact of Good Managers on Workers’ Careers The results were clear: good managers don’t just inspire or monitor workers—they reallocate them into roles where they can succeed. See more HBR charts in Data & Visuals Here’s what changes when workers overlap with a high-flyer: More lateral mobility. Workers who had worked under a great manager were about 40% more likely to make lateral job moves inside the firm over the following seven years (this includes transfers, such as from customer service to logistics, from merchandising to sales, or from product development to quality). Tasks change. These moves were not just cosmetic changes—they involved different tasks, departments, or functions. Workers exposed to a high-flyer manager were more likely to move occupations across task groups (for example, from cognitive to routine, and vice versa) and to make task-distant changes, for example, from computer service representative to manufacturing engineer, or from logistician to customer service representative). Better performance and higher wages. Workers who were managed by a great manager earned about 13% more than workers with no exposure to a great manager, after seven years. Direct performance measures—such as sales per worker—improved by a similar magnitude. Workers who get a high-flyer manager are also more likely to move up and be promoted from a front-line role to a managerial one. Perhaps intuitively, younger workers benefit the most, since they have the most to learn and are likely more flexible in their response to feedback and suggestions. What feels more counterintuitive is that these gains to workers are not limited to high performers. All workers, even low performers (as measured by their levels of baseline pay growth), benefit from working with a high-flyer, consistent with the idea that high-flyers uncover and deploy hidden talent. Persistent benefits. Workers retain these advantages even after they leave the high-flyer’s team. Exposing each worker to a high-flyer just once will continue to pay dividends, as I found that low-flyers cannot spoil away those benefits. In other words, a single exposure to a high-flyer is enough to set workers on a better career path, regardless of who manages them later. The firm also gains. From the firm’s perspective, the payoff is clear: I found that for every extra dollar of compensation spent on high-flyer managers, the company sees roughly five dollars of value in higher worker productivity. What Sets Good Managers Apart? I wondered whether the managers I identified as high-flyers actually worked differently. So I dug into additional data—self-assessed skills, time-use, and worker behavior on internal talent platforms—and found consistent patterns that set them apart. 1. Different skills. High-flyers are more likely to self-report strengths in strategy and talent management, as opposed to project management. This suggests that senior leaders may need to evaluate their managers closely, distinguishing among leadership skills and not overly focusing on measurable outcomes, like project deliverables. 2. Different calendars. High-flyer managers spend nearly 20% more time in one-on-one meetings with subordinates and engage in more communications. They appear to serve as mentors, engaging with their workers about their interests and aspirations. For example, a worker described how their manager recognized the worker’s interest in graphic design during a routine project presentation. This led to the manager assigning the worker to lead the design of a particular component of a future campaign, an opportunity that aligned closely with the worker’s skills and long-term goals. 3. Workers’ job exploration. Workers exposed to high-flyers also behave differently. They are more inclined to explore new roles, teams, and skill sets. In particular, I find that workers supervised by high-flyers participate more in flexible, short-term projects outside their core teams, which offer a low-risk opportunity to experiment with different jobs and tasks. Putting the Research into Practice These results highlight how effectively allocating talent within an internal market offers firms a resource-neutral way to raise productivity. Instead of defaulting to costly levers—external hiring, layoffs, or large training programs—senior leaders should treat internal matching as core managerial work that turns latent skills into output. To harness these findings, three practical takeaways merit consideration: 1. Make matching a manager’s job. Build systems that reward managers for developing talent via job allocation, not just for hitting output targets. A key responsibility of managers should be to notice worker unique skills and delegate certain workers to certain tasks; that is, match workers to better job fits within the firm. Don’t leave this solely to HR. 2. Keep internal labor markets fluid. Maintain a flexible internal labor market, open roles and short-term projects across functions, and allow managers to play an active role in shifting and reassigning workers. 3. Implement managerial rotation programs. Design short, structured manager rotations to broaden worker exposure to high-quality leaders. In particular, workers reap just as many benefits in development from within-firm manager rotations as the managers themselves. Even if this time is brief, it leads to benefits and increased productivity still enjoyed years and years down the road. Many leading companies already use such methods: AT&T and General Electric promote lateral mobility through rotations, and PepsiCo develops leaders through cross-functional moves. Further, LinkedIn’s internal talent marketplace and Amazon’s Upskilling 2025 (which offers workers trainings and opportunities to change roles and learn new skills) show how organizations can systematize mobility and career growth. . . . Managers act as the “visible hands” of the internal labor market within the firm. When this allocative power is used effectively, everyone benefits: the worker, the manager, and the company. High-flyer managers boost worker wages, raise worker productivity, and create lasting benefits that outlive their tenure. For firms, this managerial quality pays for itself many times over, not just in immediate output but in better long-term careers for employees. This is especially important today amid technological innovations such as digitalization and AI, and disruptions such as pandemics or climate change. These events can force widespread firm restructuring and require the reallocation of existing workers to new jobs, or their replacement with workers featuring new skills. In such moments, the allocative power of managers might be the most valuable return of all.

New Research on How the Best Managers Shape Employees’ Careers

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