Thirty years ago, a hardworking female executive in Japan had to hide in the washroom until all the men in her company had left before she could return to her desk to finish her work. It was deemed unacceptable for female employees to stay in the office after 5pm. Today, the percentage of women in leadership positions in companies such as Shiseido’s Japanese operations have increased from 5 percent in 2000 to 22 percent in 2011. More women in Asia have also joined the workforce.
It has been found that in Asia Pacific, companies with at least one woman on the Board of directors (“Board”) had compound excess return of 55 percent. Companies with female representation were found to have outperformed companies with no women on the Board in terms of share price performance.
However, despite a significant increase in workforce participation by the fairer sex, women only occupy a mere 6 percent of seats on corporate Boards in Asia. In Singapore, only half of the companies listed on the Straits Times Index have one female director each.
Women in Asia form half of the graduate cohort. Whilst there is no lack of female talent in the workforce, a study by McKinsey & Company has found that an increase in female graduates had only marginal effect for increasing Board participation. This is despite stronger efforts by companies and governmental bodies. The elephant in the room is whether efforts by companies and regulatory bodies are sufficient to increase and sustain long term female Board participation. The current low Board participation rate is a clear sign that even when policies have been put in place and campaigns have been organised to increase female executive participation, women continue to be under-represented in top positions.
Companies have introduced a myriad of programmes to encourage female top performers. For instance, Goldman Sachs Asia Pacific introduced a sponsorship scheme assigning female executive directors two managing directors as sponsors. Deloitte launched the Business Woman of the Year program to identify and create exposure for women leaders. Qantas launched The Joey Clubs, a series of onsite childcare centres.
Private organisations have also been set up to boost female representation. In the UK, the 30% Club was launched and comprises of chairs, CEOs or equivalent executives who support greater female Board participation. Similar clubs have opened in Hong Kong and New Zealand.
Government and regulatory bodies have also stepped up their efforts in a bid to increase greater female Board participation with the introduction of “comply-or-explain” rules. For instance, the Hong Kong Stock Exchange introduced a code which directed listed companies to report on their Board diversity policy. Despite such efforts, women only represent 11.3% of all directors in Hong Kong. In Norway, legislation has been passed requiring all companies to have at least two women on the Boards. Norway now has the largest number of female Board members. It is clear that policy implementation will not be effective especially if no mandatory regulations are put in place.
More recently in 2013, the Indian Parliament introduced a new Companies Act, requiring at least one woman on the Board of directors of all listed companies by October 2014. In Japan, the government announced the goal of increasing the percentage of women in executive positions to 30% by 2020. Malaysia has the objective of achieving more than 30% female representation in decision-making positions in the private sector by 2016. In 2014, the Diversity Task Force regarding Women on Boards was set up by the Singapore government to examine the state of gender diversity on Boards. Unfortunately, the Task Force avoided recommending quotas for women on Boards. As these measures have only been recently introduced, the effectiveness of these measures remains uncertain especially if they are not mandatory.
The Inherent Issue
Evidently, despite efforts by policy makers and companies, the outlook remains negative for female Board participation. A 2011 report found that even if it is possible to increase the proportion of women in Boards right now, it may not be sustainable in the long run as there is a lack of female executives to be pipelined. Ultimately, it requires two hands to clap. Efforts by the companies may not be effective if they do not receive positive response from their target audience.
Many female professionals have cited various reasons for their lack of participation. In particular, the double burden of working women – holding a job and looking after their families – is the biggest put off for working women. This is a key concern in Asia where many women are expected to be solely responsible for family and household chores.
“The biggest concern is usually for working mothers. Many senior female candidates I have spoken to want to return to their work force after having children, but the challenge is finding working environments and cultures that support them in balancing a long and successful professional career alongside family life. If companies can get that right – they will retain a lot of excellent senior female talent,” said Lucy Allard, Head of the Human Resources Practice at Space Executive.
It remains for us to see the effect of recent HR measures in the near future. Companies need to include pipelining in planning their measures or the goal of increasing female Board participation will never be sustainable.
McKinsey & Company, Women Matter Asia, June 2012.
Our experiences in elevating the representation of women in leadership: A letter from business leaders: https://www.humanrights.gov.au/our-work/sex-discrimination/publications/our-experiences-elevating-representation-women-leadership