Companies spend heavily trying to improve employee performance without necessarily questioning one of the most basic decisions inside the organisation: whether the employee is doing the right job in the first place.
Performance reviews focus on targets. Training programmes attempt to close skill gaps. Incentive schemes reward stronger results, while struggling employees are often coached to perform better in their existing roles.
But an employee can be capable, motivated and well managed while still being badly matched to the work they have been given.
New research suggests that better managers create part of their value by recognising that mismatch — and moving people.
Researchers followed more than 200,000 workers
A study published in The Quarterly Journal of Economics analysed the internal employment records of a large multinational consumer-goods company operating across more than 100 countries.
The dataset covered 224,117 white-collar employees, 32,473 managers and more than 10 million worker-month observations between 2011 and 2021.
Rather than identifying good managers according to how their teams subsequently performed, researcher Virginia Minni used how quickly managers themselves had previously been promoted.
Managers who reached the company’s managerial level relatively early were classified as “high flyers”. They represented about 26% of managers in the study.
The analysis then took advantage of routine manager rotations inside the multinational to examine what happened when employees moved from working under one type of manager to another.
The effects continued long after that change.
Better managers moved employees sideways
Employees who gained a high-performing manager became substantially more likely to change jobs within the company.
Seven years after the manager transition, their rate of lateral movement was about 40% higher.
These were not simply administrative changes between similar positions.
Employees moved between jobs with meaningfully different tasks — sometimes between functions such as customer service and logistics, merchandising and sales, or product development and quality.
That matters because organisations often treat promotion as the primary evidence of career progression.
The study suggests a sideways move can be equally important when it places an employee in work that makes better use of their particular abilities.
Good managers appeared better at discovering where those abilities fitted.
The benefits lasted for years
Employees exposed to better managers did not merely change jobs more frequently.
Their subsequent careers improved.
Seven years after the manager change, workers who had gained a high-performing manager earned salaries approximately 13% higher than comparable employees.
Among sales employees, where the researchers could measure actual output, performance increased by 0.347 standard deviations three years after gaining one of these managers.
The researchers found that lateral job changes could explain about 64% of the subsequent salary advantage.
That is particularly important for the interpretation of the study.
If the main benefit came from motivation, closer supervision or better coaching, the advantage might be expected to fade once the employee stopped working for that manager.
Instead, much of it persisted.
The employee had been moved into a better position.
The manager eventually left.
The match remained.
This changes what companies should look for in managers
Management development frequently focuses on how managers lead people once a team has already been assembled.
Communication matters. Coaching matters. Performance management matters.
But the new research suggests another capability deserves more attention: talent allocation.
A strong manager may notice that someone working in operations has unusually strong commercial judgement. Another employee may be technically competent but better suited to client-facing work. Someone struggling in one function may not need more pressure or another training course; they may need a different role.
Large companies theoretically have an advantage here because they contain many different jobs under the same organisational roof.
The difficulty is discovering the match.
Internal mobility systems often depend on employees finding vacancies themselves, applying through formal recruitment processes and persuading another manager to take them.
The study suggests managers can play a much more active role.
South African companies face a similar allocation problem
The finding is particularly relevant in a labour market where unemployment and skills shortages can exist at the same time.
South Africa’s Department of Employment and Labour has identified a widening mismatch between available skills and labour-market demand as one of the country’s structural employment challenges. The official unemployment rate stood at 32.7% in the first quarter of 2026.
Better internal allocation will clearly not solve unemployment.
But inside companies that already employ skilled people, it raises a different question: how much scarce capability is being underused because the person possessing it sits in the wrong part of the organisation?
That becomes more important when businesses restructure around new technologies, automate tasks or create entirely new functions.
Hiring externally is not always the only answer to a changing skills requirement.
Sometimes the capability may already be on the payroll.
One company’s experience is not every company’s experience
The study has an important limitation.
Although its dataset is unusually large and international, all of the employees ultimately came from one multinational company.
The organisation also had a well-developed internal labour market and a management-rotation system that allowed the researcher to isolate managerial effects more convincingly than would be possible in many firms.
Smaller companies may have fewer alternative positions into which employees can move.
The definition of a high-performing manager also deserves care. Fast promotion was used as a measurable indicator of which managers the company itself appeared to value; it does not mean that being promoted young automatically makes someone a better manager.
The research instead uses that measure to identify a broader difference in managerial quality.
The value of management may sit between the boxes
Organisational charts make companies appear orderly.
Jobs sit inside functions. Employees sit inside jobs. Managers sit above them.
Real capability is less neatly distributed.
People develop skills that extend beyond their job descriptions, and companies frequently discover those abilities only when an employee leaves, changes departments or is finally given a different problem to solve.
The new research suggests good managers help companies make those discoveries earlier.
That has a different implication from simply demanding better performance from managers.
Companies may also need to ask whether their managers have enough visibility, authority and incentive to move talented people away from the teams they currently control.
After all, a manager who finds the perfect next role for a strong employee may make their own team temporarily weaker.
The organisation becomes stronger.
That difference is where the business case becomes interesting.
Source Information
Study Title: Making the Invisible Hand Visible: Managers and the Allocation of Workers to Jobs
Author: Virginia Minni
Journal: The Quarterly Journal of Economics
Published: 23 March 2026
DOI: 10.1093/qje/qjag017
