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The Value of 'Useless' Bosses

76 Pages Posted: 17 Apr 2014 Last revised: 27 Apr 2014

Omar A Nayeem

Deloitte Tax LLP

Date Written: April 18, 2014

Abstract

According to conventional wisdom, a middle manager is useless to a principal that has enough time, attention, and technical expertise to oversee all organizational activities. This paper argues that such a principal can benefit from a manager's services, and that her optimal choice of manager may be one whose vision differs from hers. The reason is that a principal can strengthen a worker's incentives to acquire information for a decision by delegating control to a "biased" manager. Since cursory observation erroneously suggests that the manager is useless, the analysis helps to reconcile middle management's prevalence with its widespread lamentation.

Keywords: delegation, middle management, information acquisition, organizations

JEL Classification: D23, D83, M12, M51

Suggested Citation

Nayeem, Omar A, The Value of 'Useless' Bosses (April 18, 2014). Available at SSRN: https://ssrn.com/abstract=2424029 or http://dx.doi.org/10.2139/ssrn.2424029

Omar Nayeem (Contact Author)

Deloitte Tax LLP

7900 Tysons One Place
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McLean, VA 22101
United States

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