Here is the promised follow-up to the earlier post about the effectiveness of sacking a manager. Remember that managerial resignations are common - as the study* by Dutch economist Bas ter Weel shows, between 1986 and 2004 in the Eredivisie, about 40-50% of managers left each season, and many of these were forced resignations. Below is a graph from the ter Weel study I mentioned in the earlier post.
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| Source: ter Weel (2011) |
So, does it help to sack the manager? A number of studies have suggested that it does, but ter Weel disagrees, in large part because prior studies have not systematically accounted for the selection bias involved in managerial sackings: teams that sack their manager aren't selected at random, sackings don't occur at random intervals but because the team's performance has been declining, and bad teams don't get to hire the very best managerial talent.
What does this mean? It means it's important to construct the comparison group - the control group, experimentally speaking - that does not receive the experimental "treatment" of a managerial sacking in a way that makes this group resemble the group that does receive the "treatment" as closely as possible. Using a so-called difference in differences statistical technique, the key is "to examine the effect of some sort of treatment by comparing the treatment group after treatment both to the treatment group before treatment and to some other control group" (Wikipedia).
Once you do this, you see some interesting results that run counter to much conventional wisdom. Here's the key graph from the published study. It shows relative performance measured as a moving average of four game results divided by the season’s average to allow for comparisons across teams. It is based on 81 forced resignations, 103 voluntary departures, and 212 performance dips that serve as a control group.
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| Source: ter Weel (2011) |
"What is clear is that performance increases after one period are significant but that the new manager performs worse compared to the control group in the next three periods he is in charge.
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| Avram, quo vadis? |
The explanations for this are not all that hard to imagine. Sure, new brooms sweep clean: changing the manager produces a (very) short-term bounce, perhaps brought on by the fact that players no longer have an easy alibi for underperforming. But: it's important to remember that teams' fortunes aren't unlike the business cycle - there is variation around the overall performance level, and times of playing well are followed by matches that aren't going so well (think of Chelsea early in the season experiencing a boom and later in the season experiencing a recession, so to speak). Since managers are typically fired during a recession, the tendency back toward a team's mean level of performance can easily fall into the first few weeks of a new manager's tenure. But of course, this may have nothing to do with the manager's work, and everything with good timing. And, as ter Weel's study shows, it may actually make things worse, compared to what could have been, had the club stuck it out.
There is an additional benefit to keeping a manager: you save severance pay. This seems to be the strategy a team like West Ham seems to be following. But as of today, the bookies have Grant as the odds-on favorite (by a mile) to be the next EPL manager to be fired (followed by David Moyes and Roberto Martinez). Honestly, I don't believe any of them deserve to get the boot, so I hope for all them that things work out in their favor.
* Bas ter Weel, "Does Manager Turnover Improve Firm Performance? Evidence from Dutch Soccer, 1986–2004." De Economist: Netherlands Economic Review 2011 (in press)
