Want more women CEOs? Start with company structure, research finds
Women managers are significantly more likely to be promoted to CEO at companies organized into separate business units—each with its own revenues, costs and bottom line—than at companies that operate as a single, stand-alone entity, a new study led by the University of Massachusetts Amherst finds.
A study led by the University of Massachusetts Amherst reveals that women managers are significantly more likely to become CEOs at companies organized into separate business units compared to those in standalone entities. Women make up less than 10% of CEO positions in S&P 500 companies, despite recent progress. Associate Professor Ulya Tsolmon, who led the research published in the Strategic Management Journal, emphasizes that divisionalization's impact on gender equity stems from accounting practices.
Managers with their own profit-and-loss statements (P&L) have more measurable and comparable results, making it easier to attribute success to them personally. This reduces the potential for bias in performance evaluation, which often favors women. The study analyzed 25 years of personnel records from 49,135 U.S. companies, finding that women in multi-unit firms had a 37% higher chance of internal promotion to CEO than those in standalone firms.
While the findings suggest associations rather than causation, the researchers caution that restructuring a company into divisions does not guarantee women will attain CEO positions. They also note that the issue extends beyond structure, as companies often select their organizational structures based on various factors, each with its trade-offs.
Divisionalized firms delegate more, potentially providing better mentoring opportunities and performance visibility for women, while centralized firms rely on hierarchical control that could disadvantage women.
Written by urgent.news from Phys.org's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
