What happens when workers get a say in evaluating their managers? At one Chinese carmaker, the results speak for themselves: happier teams, better leadership, and a noticeable boost in productivity—without a single downside. Those are key findings of a recent study by Wharton associate professor of business economics and public policy Shing-Yi Wang, and Jing Cai from the University of Maryland.

Their research, published in The Quarterly Journal of Economics, shows that worker feedback didn’t just lift morale—it cut turnover by half and made teams run more effectively, a big result in an industry like manufacturing, where high turnover is a persistent challenge for companies.

Bottom-up worker evaluations help decrease turnover

At the heart of the study is a carefully designed, randomized experiment. Over eight months, workers on production lines at the Chinese automaker evaluated their managers on key qualities like fairness, empathy, adaptability, and openness to suggestions.

For the first six months, these evaluations directly affected managers’ monthly performance scores, which influenced their bonuses, annual pay raises, and chances for promotion. During the final two months, the feedback continued, but it no longer affected scores or financial rewards.

The impact, however, lingered. Managers in teams receiving feedback changed their behavior: They encouraged workers more and criticized them less. The workers also performed better, with their earnings increasing.

‘Better management doesn’t need constant oversight or other costly interventions to take root.’—Shing-Yi Wang

The numbers tell the story. Workers in teams that evaluated their managers were 6.2 percentage points less likely to quit compared to those in the control group, according to the study. This translates into a 50% reduction in turnover, a big result, given the high turnover rates often found in developing economies.

In China, for example, the average turnover rate in 2016 was 20.8%, with some industries like hospitality seeing rates as high as 40%, according to separate research.

“In this context, high turnover is a productivity killer,” Wang says. “It drives up costs and slows down team performance.”

Lasting changes to team productivity and workplace culture

The study showed that although individual worker productivity didn’t change much, team-level productivity—measured through key performance indicators—increased by 2.3%. “Lower turnover made all the difference,” Wang says. “New hires need training and take time to get up to speed.” Wang adds that employees also reported increases in happiness and job satisfaction.

‘Financial incentives are costly and aren’t always needed to get the job done.’
—Shing-Yi Wang

The improvements weren’t short-lived, either. The paper shows that even workers who joined the Chinese manufacturing company after the experiment ended—without ever participating in the feedback system—reported that managers who were being evaluated by staff were more encouraging, empathetic, and supportive than those who were not.

“This lasting change points to a real shift in the norms in the workplace, and provides proof that better management doesn’t need constant oversight or other costly interventions to take root,” says Wang.

Improving managerial behavior with worker evaluations

The study also explored why employee feedback worked wonders. The answer was clear: Managers changed their behavior. They encouraged workers more, listened to their suggestions, and showed greater empathy. Stronger relationships followed, improving team dynamics and morale.

Although financial incentives initially played a role, the study showed that managers continued to perform better even after the link to rewards was removed. These findings, therefore, challenge traditional ideas about how to improve management.

Conventional wisdom suggests that companies should reward managers solely based on hard performance outcomes, like hitting production targets. Managers, it’s assumed, will naturally adjust their behavior to achieve these goals. But the research from Wang and Cai shows that softer changes in managerial behavior—such as treating workers fairly and with empathy—can lead to measurable improvements in productivity, retention, and worker well-being.

“Financial incentives are costly and aren’t always needed to get the job done,” Wang says.

The practical implications are hard to ignore. The research gives companies, especially in industries like hospitality that struggle with high turnover, a practical and affordable method to improve workplace outcomes. Ultimately, it shows that allowing workers to provide regular, structured feedback creates a loop of accountability that encourages better management, improves team morale, and keeps workers on the job longer.

For the Chinese carmaker that Wang and Cai studied, the results spoke volumes. The company scaled up the feedback system across all of its plants, covering thousands of production teams and nearly 20,000 workers.

The takeaway is simple: Better management isn’t just about numbers; it’s about people. When workers have a voice, managers listen—and when managers listen, the workplace performs better.

Published Feb. 18, 2025, by Knowledge @ Wharton.