Who's the Boss? The Effect of Strong Leadership on Employee Turnover

Abstract

Despite the importance placed on supervision in the workplace, little is known about the effects of a boss’ leadership quality on labor market outcomes such as employee job retention. Using plausibly exogenous assignment of junior officers to bosses in the U.S. Army, we find positive retention effects for those assigned to immediate and senior bosses who are good leaders. These effects are strongest for officers with high SAT scores. Junior officers who share the same home geographic region, high SAT, and undergraduate institution as their bosses who also have strong leadership qualities retain at the highest rates.