Good boss, bad boss, workers’ mental health and productivity: Evidence from Japan

It is widely believed that the relationship between a supervisor and his/her employees greatly affects employees’ well-being and/or productivity. However, only a few papers in the economics literature analyze how supervisors influence employees’ well-being and enhance productivity. This paper uses longitudinal data of employees with information about their immediate bosses’ ability, management skills, and characteristics (such as competency, communication skills, and personality traits) to investigate the influence of supervisors on employees. The main findings are as follows. First, even after controlling for individual-specific fixed effects and other job characteristics, such as those proposed in the job strain model, we find that supervisors’ good communication with staff and competency in managerial tasks significantly improve employees’ mental health. Second, we find that good communication between the boss and his/her staff enhances the latter's productivity and lowers presenteeism. Third, supervisors’ bad communication and low competency increase the probability of quitting. Fourth, good communication partially depends on boss–staff compatibility, which is governed in part by their combined personality traits.