What do managers do?

Abstract

10% of the US fulltime civilian workforce are managers. Why are there so many managers? Managers coordinate specialization and the division of labor within the firm. This coordination role generates a hierarchical firm structure and top down decision making. Such decision making requires upward communication of changes in market demand obtained by client facing workers. Managers choose tasks. They hire and train subordinates, and as- sign subordinates into teams to do these tasks. In addition to vertical, upward and downward, communication skills, managers also need horizontal communication skills, the ability to coordinate with peers who do not share their expertise. There is hierarchical comparative advantage where skills change in relative importance at different levels of the hierarchy.