Does the ‘Old Boys Club’ Still Exist?

Is there still a so-called “old boy’s club” that gives men an edge in getting promotions? A new National Bureau of Economic Research study, “The Old Boys’ Club: Schmoozing and the Gender Gap” by Zoe Cullen of Harvard University’s Business School and Ricardo Perez-Truglia of University of California-Los Angeles, finds that while some things remain the same, others can surprise you.

According to a 2019 study by McKinsey & Co., 48% of all entry level employees at U.S. corporations are filled by women. (The Department of Labor’s December jobs report says  women hold 50.04% of all U.S. jobs, excluding farm workers and the self-employed.)

Also, only 38% of females fall into middle-management category, 22% are at C-suite level and 5% at the CEO level, McKinsey found.

As Cullen and Perez-Truglia noted in their paper, “Not only is this unfair, it is inefficient; the economy is missing out on women who would make great managers.” (The National Bureau of Economic Research published the report last month.)

The main question the researchers wanted to answer is do men have a so-called schmooze network — not accessible to women — that allows them to interact more with powerful men to get more promotions? The two decided to build on the anecdotal evidence for this idea and determine how to measure it quantitatively.

First, the researchers worked with a large commercial bank in Asia and decided to use a variation in manager assignment “generated by the rotation of managers within an organization.”

Thus, it measured teams that switched from a female to a male manager, while another team did the reverse. Further, it measured how males did with male managers vs. female managers regarding promotions, as well as how females did with both types of managers.

The researchers examined four years of data, from 2015 to 2018, and 14,736 unique employees, of which 1,269 were in a managerial role at some point.

Some of the key findings are:

• Male employees were promoted faster after they transitioned from a female to a male manager; further, eventually their pay grade went up about 13% more than men who went from one female manager to another female manager.

• Contrarily, female employees had the same career progress regardless of whether they went from a female to a male manager or a female to another female manager.

• The difference in pay grade changes was statistically significant and “also economically large: Removing this advantage would reduce the gender gap in pay grades by 38%.”

• There was no male-to-male advantage in any of the measures for effort or output.

Regarding socialization that develops affinities through spending time during breaks or other activities (ie. old boys club), the academics say:

• Male managers and employees who worked in close proximity was an advantage for the employee, but there was no advantage if they worked far apart.
• Men who had a male manager benefited from having increased breaks together.
• Men who smoked and had a smoking manager actually had higher promotion rates than those non-smoking employees.

Thus, there does appear to be a bias toward that old boys’ club.

The study concludes that “companies can reduce favoritism by changing their promotion review systems. For example, involving multiple managers in promotion decisions may make it more difficult for employees, male or female, to schmooze their way into promotions.

“Companies also could standardize the review process to use objective indicators, such as sales revenues and hours worked,” the researchers explained. “Another strategy to curb these gender gaps is to level the opportunities for employees to socialize and connect with their managers. For example, companies could promote gender-neutral social activities.”