A Data-Driven Guide to Becoming an Effective Boss

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Good bosses pay attention to their employees and help them set career goals, says Stanford GSB economics professor Kathryn Shaw. | Gabriela Hasbun

Most leadership advice is based on anecdotal observation and basic common sense. Stanford Graduate School of Business professor Kathryn Shaw tried a different tack: data-driven analysis.

Through research done in collaboration with a very large, undisclosed technology-based company that has a penchant for collecting data, Shaw found that employees who work under good bosses were more productive. “There are bad bosses out there,” she says, “but what’s not talked about as much is that there are also good bosses.”

Shaw, along with fellow Stanford GSB professor Edward Lazear and Harvard Business School’s Christopher Stanton, published a 2015 paper titled “The Value of Bosses,” in which they gathered data from the tech company in an attempt to see whether they could show that bosses matter and, if so, how much. As part of their research, the authors asked company employees and managers, “What are the traits of a good boss?” They found that bosses matter substantially.

Shaw pursued this same topic separately in a Stanford GSB case study of the Royal Bank of Canada (RBC), which had developed an in-house analysis of this same question as part of a drive to develop people analytics. In addition, she examined similar research from Google, which also tried to quantify the impact of good (and bad) managers.

Shaw recently sat down with Insights to discuss her findings, and to share three keys to effective employee management.

Track Records Matter

At the unnamed technology-focused service company, workers’ performance was gauged by the number of customers they served per hour. Shaw and her coauthors found “an enormous range” of productivity levels, depending on the quality of a worker’s boss. “If you have a change in bosses and you get someone who has a history of being a good boss, you become more engaged in your work and your productivity goes up,” she says.

Shaw notes that RBC has looked at their “employee engagement” data, which is based on questions like, “Do you feel motivated on your job? Do you identify with your company?” Better managers, RBC found, have more engaged employees.

As expected, employees who were motivated and who more strongly identified with their company were also higher performers. Which led to the next logical question: “What are their bosses doing differently?”

Three Things Good Bosses Do

The first thing an effective manager does is to vividly describe the company’s vision and mission, and to explain in detail how each employee fits into that vision, Shaw says.

“The next thing they do is drive results,” she says. To ensure that individuals (and teams) are productive and have a sense that their contributions are valued, attentive bosses set aside time to coach, guide, and motivate.

The third and often overlooked aspect of strong people leadership is to help employees achieve their personal career goals. Shaw says it’s “incredibly motivating” when an employee’s long-term career vision and values are aligned with those of the organization. “A good boss will share that vision with them and give them guidance and feedback to help them along the path.”

A World Without Bosses?

Not long after Google was founded, its army of self-driven engineers bristled at the idea of even having bosses, so the company began to cut back on the number of managers. But, Shaw says, that turned out to be a burden for company leaders, who found themselves besieged by rank-and-file employees asking them to perform routine tasks. “They found out they really needed low-level managers,” she says. “So they needed to find out, ‘What makes a good manager?’”

Because Google is used to making decisions based almost exclusively on data analysis, it applied the same process in trying to identify the traits that make up a good boss. The characteristics they identified largely aligned with the traits that Shaw found among the best bosses at RBC. “You pay attention to your employees,” she says. “You give them a vision. You motivate them. And you set out career goals for them.”

An Effective Boss Has Lingering Impact

Shaw also found that high-performing workers who have been trained well by a good boss continue being productive even if they start working for someone who’s measurably less effective.

It turns out that a willingness to serve as a teacher is one of a good boss’s most important characteristics, because once a worker has learned something, she carries it into her future work. “The lesson could be how to do your job correctly, or it could be something like how to be motivated about your career goals,” Shaw says. “One way or another, a good boss teaches something that lingers.”