I haven’t read these papers carefully yet to see if they can control for this, but wouldn’t it also be true that promotion is very often into managerial roles where marginal value product is less measurable to begin with—which would make it easy to under estimate productivity?
Generally yes, which is precisely what makes their paper awesome. They're able to calculate the value-add from having someone be the manager of a salesteam, and since the output is very precise their value add can be very precise too.
On the other hand promoting your best salesperson to sales manager, or best engineer to engineering manager, might not work because someone might be exceptional in their former position and mediocre in their promoted position since it's a different skillset.
"easier to win a suit alleging discrimination by race or by gender" or the firm simply avoids hiring anyone of a protected class. The other alternative is to have commissions. This can get tricky when teams are winning accounts (basically the norm almost everywhere). I think the larger problem is when a quality employee is promoted as a reward, and sucks in that position. The typical quality salesman is a garbage manager. Now Siddarth in accounting, he would be awesome. A well-run firm will pay the star salesman $800k and make the accountant the sales manager for $200k, and everyone is happy. The worst policies require promotion for wage growth. That is a terrible policy. Good salesmen should be selling. The best engineers should be designing new products. That star in treasury who turned it into a profit-center, he should be paid more than the CEO. Unfortunately, few legacy firms are willing to do this, and many end up dying as a result.
America's greatest advantage is that we let old, terribly-run firms die, so long as they are not General Motors. In general though, it is hugely advantageous to let old, no longer functioning organizations die.
Nice.
I haven’t read these papers carefully yet to see if they can control for this, but wouldn’t it also be true that promotion is very often into managerial roles where marginal value product is less measurable to begin with—which would make it easy to under estimate productivity?
Generally yes, which is precisely what makes their paper awesome. They're able to calculate the value-add from having someone be the manager of a salesteam, and since the output is very precise their value add can be very precise too.
On the other hand promoting your best salesperson to sales manager, or best engineer to engineering manager, might not work because someone might be exceptional in their former position and mediocre in their promoted position since it's a different skillset.
"easier to win a suit alleging discrimination by race or by gender" or the firm simply avoids hiring anyone of a protected class. The other alternative is to have commissions. This can get tricky when teams are winning accounts (basically the norm almost everywhere). I think the larger problem is when a quality employee is promoted as a reward, and sucks in that position. The typical quality salesman is a garbage manager. Now Siddarth in accounting, he would be awesome. A well-run firm will pay the star salesman $800k and make the accountant the sales manager for $200k, and everyone is happy. The worst policies require promotion for wage growth. That is a terrible policy. Good salesmen should be selling. The best engineers should be designing new products. That star in treasury who turned it into a profit-center, he should be paid more than the CEO. Unfortunately, few legacy firms are willing to do this, and many end up dying as a result.
America's greatest advantage is that we let old, terribly-run firms die, so long as they are not General Motors. In general though, it is hugely advantageous to let old, no longer functioning organizations die.