MBAs Say Strong Management Is Key To Employee Retention

Posted by: Geoff Gloeckler on December 29, 2010

Performance bonuses alone are not enough to retain employees, according to essays from the mid-term exams of 800 first-year MBA students at the University of Pennsylvania’s Wharton School.

For the past 20 years, Wharton first-year MBA students have been asked to write about the jobs they had before entering B-school, focusing specifically on how they were managed - the good, the bad, and the ugly - while illustrating principles of management.

This year, many respondents complained about how companies use bonuses as a cover for lack of management within the organization. “People want more money; they’re not crazy,” says Peter Cappelli, a professor of management at Wharton, and one of four individuals who administers the exam to students. “But bonuses (alone) are not doing the trick. It’s not true that people only care about the bonus and leadership doesn’t matter.”

According to the student essays, the single biggest reason people quit their jobs was because of this lack of management. As a result of the findings, Cappelli hopes the various industries - particularly investment banking where the problem seems largest - make an effort to check in with employees, tell them how they’re doing, evaluate their work, and better explain bonuses and how to get them.

Although financial services has not been doing a good job at doling out bonuses in a well-managed way, Cappelli says, the consulting industry has been successful and could serve as an example for others. His advice: “It’s in the best interest of employers and employees to pay attention to management.”

-By Francesca Di Meglio

Reader Comments


December 30, 2010 12:07 PM

I can certainly believe this. I've worked for small startups and huge multinational firms, and the #1 rule of employee retention has always been that people don't quit companies, they quit managers.

Unfortunately, companies always reward great performers by moving them up the ladder, but being a great performer does not always translate into being a great manager. If you have one or two such managers here and there in an organization, you can usually still get by. But when it becomes an epidemic, the good people who are lower on the totem pole will rarely stick around for long.


January 8, 2011 2:45 AM

I agree that Bonuses are not enough, especially if the little things employees want or achieve are not recognized encouragingly.
For example flexible timing enhances performance especially when you have flu, its not that you don't want to come to work, you just can't handle the "official hours" or if assisting another Department to save a client over your Department time is seen as time wasted then its not fair. Management need to pull up their socks!

Post a comment



Read daily reports from BusinessWeek editors and reporters Louis Lavelle, Geoff Gloeckler, Alison Damast and Francesca Di Meglio and boost your chances of getting into your best-fit B-school.

BW Mall - Sponsored Links

Buy a link now!