the corporate CEO, operating with a limited information set that arrives indirectly, must use more abstract thinking. We may think of the CEO as trying to navigate in a confusing forest using only little scraps of a map. The CEO operates with a theory of the business and fits those little map scraps into the theory.
. . .What Baron-Cohen calls systemising may correspond to a propensity for abstract thinking in business. In that case, that could explain the predominance of males as CEOs.
Read the whole essay before commenting.
Most large corporations are in a value chain and their org charts will have skew. The skew implies that the CEO has fewer, but more important staff then would appear if the corporation were in complete markets.
The standard basic, balanced org chart has each manager and N staff, at each level. The chart looks like a balanced distribution, a symmetric org chart of minimum rank. That corporation assumes a smooth distribution of inputs and outputs. Every staff will have the same relative uncertainty about production flow.
Once the value chain assumption is imposed, that org chart will increase in height and get sparse at the top, the CEO having fewer staff and greater ratios down in production. The CEO has the more difficult job, his inputs and outputs do not have liquidity in substitution, there is a lack of commutative property at the top relative to the bottom.
Skew in the org chart explains mass layoffs. The staff ratio at the bottom is high, relative to the top. Mass layoffs being a result of value chains amplifying the shock. The skew is sustainable, but the corporation needs labor set asides to smooth the mass layoffs and hirings.
Perusing the 2019 list of the 33 female CEOs of Fortune 500 companies in Wikipedia, and reading their biographies and career histories, one can find support for some of the contentions made in the article.
Most of these women worked their way up the ladder, often moving around between divisions, and had extensive experience within the firm in which they achieved CEO. This would tend to support the notion that “When the business environment rewards accumulated cultural capital, expect large corporations to do relatively well.”
And it appeared like a good many were in companies in which operating units were relatively homogenous, rather than conglomerates with multiple lines of business. If indeed women are at a comparative disadvantage in high level abstract theorizing, wouldn’t they likely be less so in a corporate environment in which operating units are very similar. Women lead Best Buy, Ross, Kohl’s, JC Penney, Williams and Sonoma, Hertz, Edward Jones, Bed Bath and Beyond, Ulta Beauty, Progressive, and Hertz. Perhaps the level of abstract theorizing ability is not as great when each storefront is pretty much a cookie cutter pattern, and therefore much more like the restaurant example.
Another possibly related data point, there is a 22 Oct 2018 Washington Post article about how more top-performing CEOs have engineering degrees than MBAs. This may support the notion that CEOs require higher order abstract thinking skills. Also, since engineering is one of the last few areas of study in which men are not substantially outnumbered by women, this may explain some portion of the disparity in numbers by sex.
And another supportive data point.
A 16 June 2017 Chronicle of Higher Education piece by Rick Seltzer entitled “Colleges and universities turn to experienced presidents in times of pressure, curtailing gains in diversity, study finds” would appear to indicate that deep knowledge of higher organizational culture and higher order thinking skills are at a premium in struggling colleges and universities.
Institutions with enormous coffers like Harvard and the public universities that enjoy huge public subsidies, can afford more “diversity.” The article states “Public institutions had a higher percentage of women presidents than private nonprofit institutions. Almost 33 percent of public colleges and universities had women presidents in 2016, compared to 27.3 percent of private nonprofits. Community colleges were the most likely to have women presidents, with about 36 percent headed by women.” In other words, in institutions where the quality of leadership is of the least consequence, women are more likely to get the top job.
I would put it differently. Modularity, uniformity, interchangeability, hierarchy with specialization, and limited amounts of delegation of authority are imposed by leaders of organizations precisely in order to enable greater abstraction, narrower ranges of aggregate statistical properties, and distance from the messy, personal details on the ground, and to decrease required information flows down to the cognitively digestible bandwidth. The military is an obvious example and such a set-up favors leaders gifted with high abstraction ability.
On the other hand, life at the top of many organizations – especially those with high levels of stability and low levels of turnover is a soap opera which requires keen assessment and manipulation of social dynamics. In other words, things at the top can be very small-business like. Personnel is policy because it’s impossible to micromanage everythings, and in many organizations (in my experience, especially in the government) hiring, firing, and promoting top staff and subordinates is often what distinguishes the best leaders from the worst and has a greatly under-rated impact on mission success.
From that perspective, it wouldn’t surprise me that certain social skills would have an advantage at the top executive levels, and that people with the rare combination of social and abstract skills would do even better.
Also, my impression is that leaders also try to design organizations and corporate governance structures to minimize the “social dynamics at the top” management burden, in the same way they design them to minimize the “messy details at the bottom” management burden. These are “social technologies” that are analogous to actual “labor-saving” physical technologies, that create structures that require less ‘maintenance’ and scarce capacities for high-level decision-making and supervision.
Well, there goes your chance to become the president of Harvard.
Compare Edward Lazear’s theory of leadership:
http://www.waysinternational.com/leadership_paper.pdf
Here is the abstract:
“A theory of leadership is proposed and tested. Leaders are characterized as those who have the ability to choose the right direction more frequently than their peers.
The theory implies that leaders tend to be more able, place themselves in visible decision making situations more frequently, and are generalists. Also, the most able leaders should be found in the highest variance industries, where decision making has the greatest payoff. The theory is tested using data on Stanford business school alumni and is confirmed. Leaders are generalists rather than specialists, both innately and in their pattern of skill acquisition.”—Edward P. Lazear, “Leadership,” Working Paper 15918 (National Bureau of Economic Research, April 2010).
My intuition is that imagination might be a crucial quality for CEOs where creativity, entrepreneurship, disruption, or simply Coase’s problem of ‘the boundaries of the firm’ are in play. Imagination is rarer than intelligence.
Marianne Bertrand, Claudia Goldin, and Lawrence Katz find that corporate careers have a gender dynamic shaped partly by a trade-off between long hours at work and gender division of labor in child-rearing:
“The careers of MBAs from a top US business school are studied to understand how career dynamics differ by gender. Although male and female MBAs have nearly identical earnings at the outset of their careers, their earnings soon diverge, with the male earnings advantage reaching almost 60 log points a decade after MBA completion. Three proximate factors account for the large and rising gender gap in earnings: differences in training prior to MBA graduation, differences in career interruptions, and differences in weekly hours. The greater career discontinuity and shorter work hours for female MBAs are largely associated with motherhood.”
The authors offer interesting speculations about why gender dynamics differ between corporate careers and the professions:
“Inherent differences in production technologies, and in the organization of work, may make the productivity costs to discontinuous experience and [to] more flexible hours greater in the business and corporate sectors. The tournament nature of corporate and financial firm hierarchies, and the up-or-out nature of major law firms and academic institutions, may also contribute to their large costs of career interruptions relative to medicine. The economic benefits of re-organizing work to reduce the productivity costs of career interruptions, and more flexible work options, may be greater in professions where there is a larger share (or critical mass) of women in the talent pool. A tipping point may have been reached in fields where women have become a majority (or nearly the majority) of the young talent (such as medicine, veterinary medicine, optometry, pharmacy, and accounting), but not yet for MBAs and the business and financial sectors. It is also possible that there is more career commitment in those professions, requiring greater upfront time investment, such as a PhD or an MD, as opposed to an MBA. Additionally, female MBAs often have husbands with higher earnings than female PhDs and MDs, allowing them the luxury to slow down in the market and spend more time with their children. The career costs of that decision may not be evident until much later.”
See Marianne Bertrand, Claudia Goldin, and Lawrence Katz, “Dynamics of the Gender Gap for Young Professionals in the Financial and Corporate Sectors,” American Economic Journal: Applied Economics 2 (July 2010): 228–255, at pp. 228 and 253-54.
Ungated at the link below:
https://scholar.harvard.edu/files/goldin/files/dynamics_of_the_gender_gap_for_young_professionals_in_the_financial_and_corporate_sectors.pdf
A recent WSJ article offers another factor: Only about 6 percent of CEOs on S&P 500 companies are under the age of 50. So this might still just be a generational quirk and we’ll see more female CEOs as the current group retires.