Another Reason to Hate Micromanagers

Last Updated Mar 23, 2011 3:48 PM EDT

No one likes to work for a micromanager. Now research shows that micromanaging is not only frustrating and bad for morale-it also hurts productivity.

The three professors from Harvard Business School and Rice University analyzed data from six MGM-Mirage Group hotel/casino properties, concentrating on the performance of casino 'hosts.' The hosts are in charge of taking care of the casinos' high rollers, giving them 'comps'-free hotel rooms, tickets to shows and other perks-to build their loyalty to a particular casino. In general, a host is allowed to comp a high-roller up to 40% of his or her 'expected win.' That's the amount that, statistically, the casino expects to make off of such a client during his or her trip, regardless of whether a client wins or loses on that particular visit.

With cooperation from the casinos, the researchers were able to review 349,887 customer trips, all of which were managed by a casino host.

Tracking High Rollers
Casinos are pretty good at tracking their big customers, either through floor monitors who walk around and keep note of how much different gamblers are wagering at different tables, or through their loyalty programs. But hosts still occasionally over-comp, especially when they're trying to cultivate a relatively new customer who, in the end, doesn't repay the investment. If a host comps too much, it triggers an 'exception report' that needs to be reviewed by the CFO.

Because the casinos used to be owned independently, they have different policies for keeping tabs on comps. At some properties, comps are monitored daily, and each host is reviewed monthly. The researchers considered this to be tight monitoring. At other properties, comps are monitored once a week and each host is reviewed once a quarter. The researchers considered this to be loose monitoring.

The findings?

  • Workers perform just fine when managers don't keep close tabs on them. The researchers found that the least experienced hosts comped the most-often 60% of a customer's expected win. But at properties with loose monitoring, hosts came up the learning curve, quickly settling in close to the 40% guideline.
  • Workers are more likely to be fearful of experimenting when their managers micromanage; as a result, the employees learn less and performance suffers. At properties where the finance departments more closely monitored the hosts, the hosts were less likely to experiment by over-comping new customers. Because the hosts didn't experiment with different customers, instead sticking close to 40% at all times, they didn't do as well learning which customers were likely to become important to the casino and should get the most attention and comps.
    "Employees in tightly monitored business units face strong implicit incentives to experiment less...and have fewer opportunities to learn," write Dennis Campbell, of Harvard Business School, Marc Epstein, of Rice University, and Asis Martinez-Jerez, also of Harvard.

    What impact have you seen micromanagers have on your workplace? Has performance been hurt or helped by having a manager keep close tabs?

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    Photo courtesy of flickr user Lazurite
    Kimberly Weisul is a freelance writer, editor, and consultant. Follow her on twitter at twitter.com/weisul.
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      Kimberly Weisul is the co-founder of One Thing New, the free email newsletter for smart, busy women. She was previously Senior Editor at BusinessWeek, responsible for all coverage of entrepreneurship and for launching BusinessWeek SmallBiz, a bimonthly magazine. She is also a freelance writer, editor and editorial consultant.