Does organizational structure affect the likelihood that women will climb to C-suite positions? Indeed, it seems that structure has a substantial impact. Women tend to do better in decentralized organizations. That finding emerges from new research by Tingyu Du and Ulya Tsolmon. They assembled a dataset of over 15,200 companies with nearly 600,000 managers. The scholars state that, "Our findings suggest that decentralized organizational structure seems more conducive to reducing the gender gap than centralized structures."
The scholars explain their finding by focusing on the skills that are needed in centralized vs. decentralized organizations, as well as the differences in the way that performance is measured and evaluated. The scholars argue that decentralized firms with leaders of separate units, each with their own P&L, tend to have clearer performance metrics than managers in highly centralized firms. The scholars conclude, "“In decentralized organizations, managers often have clearer accountability for their units’ performance, making their achievements more recognizable both internally and externally." Women achieve promotions in those firms based on their abilities without confronting as much bias. In the firms with a high degree of power centralization, performance is often harder to measure, and social networks, political capital, and relationships play a much larger role in the promotion process. Bias may be more prevalent in that setting, thereby limiting the likelihood that women will rise to the C-suite.
I'm struck by this finding because it makes sense intuitively, and I'm also intrigued because I don't think people have considered this relationship between structure and female advancement in the past. It seems that these scholars have discovered one more very important reason for reducing power centralization in organizations.
