Front-line managers are expected to respond when something unexpected happens—an urgent customer request, a last-minute deadline, a breakdown on the floor, or a promising idea that needs an extra push. Yet, most often, they cannot adjust pay.
Instead, managers motivate and reward workers with “micro-incentives” they control locally: task assignments, schedules, flexible hours, remote work days, coaching time, development opportunities, and recognition.
In Barcelona School of Economics Working Paper 1537, “A Theory of Front-Line Management,” Daniel Bird and Alexander Frug think through a variety of commonly observed managerial practices.
Time Horizon and Information Shape Managerial Style
The model considers a front-line manager who aims to incentivize workers on unforeseeable occasions. She can offer small and perishable per-period compensation (which is lost if not used, such as the possibility to work remotely on a given day). She has only a small, use-it-or-lose-it budget of perks each period, so she cannot always compensate for effort immediately.
This creates a dynamic problem: rewards and promises made today affect what is feasible tomorrow, and in the extreme, managers can “use up” their incentives when today’s promises define tomorrow’s standard.
The theory links everyday managerial “styles” to two forces:
- Time horizons: Who cares more about the future of the relationship? The manager or the worker?
- Information: Who observes when high-value opportunities appear? The manager (e.g., urgent tasks from superiors) or the worker (e.g., creative ideas)?
When the manager has a longer horizon, she tends to manage with more consistent, even-handed treatment.
With observable opportunities, she makes “conditional” time-limited promises: after an extra push by the worker, she grants perks for a while, but each new opportunity resets the promise, so commitments do not accumulate, and the manager will have flexibility for the next shock.
If a worker’s effort is concealable, she must practice “perfect bookkeeping” and she will provide more immediate rewards and accumulate future promises.
If the manager is relatively impatient, status tiers will emerge.
With observable opportunities, the tiers resemble tenure-based seniority (junior: work with no perks → intermediate: work with full perks → senior: full perks with no extra effort), and status transitions will be time-based.
With concealable opportunities, perfect bookkeeping leads to tiers that are performance-based: advancement depends on realized effort, and intermediate workers get a partial baseline of perks plus temporary increases right after each extra push.
| Opportunities | Patient Manager | Impatient Manager |
| Observable | Conditional promises (finite) | Tenure-based seniority system |
| Concealable | Accumulating promises (finite) | Performance-based seniority system |
What Shapes Relative Patience in Practice?
In the model, relative patience is best thought of as each side’s effective horizon in the relationship, not just a personality trait. That horizon can shift with expectations about how long the match will last (e.g., whether workers anticipate staying, or believe they can leave easily) and with the incentives managers face inside the firm. Promotion rules, lateral moves, and evaluation windows can prompt managers to prioritize short-term output, while longer tenures in a role or reward schemes tied to team outcomes can encourage them to behave more patiently.
When managers cannot adjust pay and rely on perishable perks, differences in turnover risk across teams or worker types can therefore tilt managerial style and help explain when workplaces rely on uniform treatment versus seniority systems, sometimes based on tenure, sometimes on performance.
Key Findings
Beyond explaining why two managers operating under the same formal pay policies can behave very differently, the model highlights the following practical implications:
- In more volatile environments, organizations may need to give front-line managers more discretion over time-sensitive, non-monetary rewards
- HR policies that change managers’ horizons (rotations, promotion timing, fixed-term appointments) can systematically change how they will incentivize their employees to exert effort
- The action of front-line managers can impact the firm’s longer-term performance
