Managerial Attention, Employee Attrition, and Productivity: Evidence from a Field Experiment

Abstract

What is the causal impact of managerial attention on employee attrition, productivity, and well-being? How should firms strategically allocate managerial attention among workers? We formulate a theory that illustrates how different attention allocation strategies influence workers’ updated beliefs about the manager’s type, and, in turn, employee performance. To test the theoretical predictions of the model, we conduct a 6-month randomized control trial at a leading multi-national spa chain with 157 stores and more than 10,000 workers in China. In the experiment, managers are given a weekly list of employees with whom they are required to have a standardized, private conversation. We compare the random allocation method, where attention allocation is uncorrelated with any employee characteristics, to the directed allocation method, where managers focus on employees with more negative emotions and therefore higher attrition probabilities. We document significant causal effects of managerial attention on employee attrition and well-being. Consistent with the theory, we find that random allocation of managerial attention is more effective than directed allocation in reducing turnover.