The effect of frequent managerial turnover on organizational performance: A study of professional baseball managers

Abstract

This analysis is designed to study the question of a manager's contribution to the organization, particularly in terms of uncertainty related to managerial succession. The theory of managerial succession, which is the replacement of one public manager with another, suggests a negative relationship between change and organizational performance. Organizations’ decision to change managers more often exacerbates the negative effect on performance. The hypotheses are tested using baseball managers as proxies for public managers, as they perform similar duties, have similar goals, and operate under similar constraints. The results suggest that managerial succession has a negative effect on organizational performance. Frequent succession events also have a negative effect on performance, although the relationship is non-linear in nature.

Notes

1 Protection was started, at least, with the Pendleton Civil Service Reform Act of 1883. This is roughly the same time period (1871) in which baseball became mainstream and starting keeping statistics (James, 2001). James reports one of the first baseball statistics interestingly, was the batting average (.295) of the Boston Red Stockings.

2 The assumption of internal management is based upon the extant literature which argues that there are two components to managing an organization; internal and external (Meier & O’Toole, 2002a, b). Internal management is understood to mean hierarchical relationships, and external management is relations outside the direct authoritative control of the manager, often referred to as network.

3 This is why the Yankees and Cubs can assemble the very best players, while the Pirates and Brewers are left with players who have yet to show statistical prowess. Thus, if one of the manager's responsibilities is to, in fact, retain peace in the clubhouse as well manage the day-to-day strategies of the team, as Horowitz asserts, then the fungible manager argument deserves some expansion of statistical analysis.

4 As the primary focus of this analysis is Major League Baseball, the presentation of the literature on sports and performance is constrained to baseball literature. To be sure, other sports are fairly represented in this field of study. See Koning, 2003 as a sample of management/performance in the world of soccer.

5 Horowitz and Ruggiero et al. exchange in a lively debate as to the merits of the Pythagorean Theorem. To determine the merits of each, we would direct the reader to the cited literature.

6 In fact, Bill James himself (1988) agrees that using the Runs Created model he develops is a more appropriate technique when determining the influence of aggregated individual performances.

7 The data have been scrutinized by standard diagnostic tests for heteroskedasticity and autocorrelation. The data were run using dummy variables for each year, as well as testing for robust standard errors.

8 The assumption with this statement is that owners have a presumptive objective to win, and that wins correlate to profit maximization. Others have pointed out clearly that this is not necessarily the case. For example, the Cubs fill Wrigley Field irrespective of win total, and George Steinbrenner fires managers irrespective of, well, anything. While this point is of importance to causes of managerial succession, it is less germane to an analysis of the effects of succession.

9 Only five times out of 48 awards did the Manager of the Year not manage that team in the previous year. They were Billy Martin (Oakland, 1980), Hal Lanier (Houston, 1986), and Dusty Baker (San Francisco, 1993) and Joe Torre (New York Yankees, 1996) and Tony Perez (2003).

10 However, not all of the variance is predicted by the OWP term. There may be other factors that were not within the scope of this study. These factors could be, but are not limited to the fact that some games are blowouts while others are one-run affairs, and if a particular team loses the one-run games but wins the blowouts, it is possible to have a negative MQ score and still have a winning record. For example the 1979 Cleveland Indians gave up 51 more runs than they scored yet they still finished a game over .500.

11 I agree, however, with Paul DePodesta, general manager for the Los Angeles Dodgers, when he said, “chemistry is a three-game win streak” when asked why he traded clubhouse and fan favorite Paul LoDuca to the Florida Marlins for Hee Sop Choi, Brad Penny and cash, which would allegedly disrupt the clubhouse chemistry at the time. Chemistry may not be measurable because chemistry may not exist.