By Aimee Hansen
During the month of August, The Glass Hammer will be focusing on Asia, featuring profiles of senior level women who are showing up to challenge the gender gap in Asia with their own journeys to leadership.
Here, we take a wider look at gender dynamics in business in Asia, where the picture painted is both paradox and progress. When it comes to women representation in business leadership, Asia is at once behind and ahead. For all the societal factors holding women back, marketplace and cultural dynamics are also pulling women into leadership and the C-Suite.
Behind in The Boardroom
A recent Korn Ferry Diversity Scorecard study tracked board composition in the largest 100 publicly listed companies in ten Asia Pacific economies, and found that on average 10.2% of board members in Asia Pacific are women (9.2% if exclude Australia), compared to the United Kingdom (26.1%), the European Union (20.8%) and the United States (18.7%).
All-male boards in Asia Pacific decreased significantly from 53.2% (2012) to 39.0% (2014), but it will take ten years of growth at current pace to be on par with benchmark Western economies.
From the perspective of boardroom representation, Asia is behind, and gender gaps are often costly. The World Economic Forum has reported that failing to rectify the gender gap in the workforce costs Asia $42 to $47 billion a year.
On the other hand, bringing women into the boardroom is financially advantageous. The Korn Ferry study found that Asia Pacific companies with at least 10% female board members delivered a return on equity (ROE) of 14.9% compared to 12.6% for those with fewer or none.
When it comes to boardroom gaps, the gap is often attributed to a limited supply of top level candidates related to inequality in access to education (eg. rural China), lower wages, infant survival rates, and sweeping societal disadvantages for girls and women. According to female leaders in China, this includes being seen as the sole caretakers and the deeply ingrained belief in the Asia psyche that women are used to “taking instructions,” especially in countries like Japan.
Korn Ferry’s report stated, “Beyond the statistical gap, we also observed that Asian boards seem to adopt a more systemic and collective ‘blindness’ to the value of diversity based on a more traditional patriarchal approach. Without a fundamental change in attitude, the diversity agenda will continue to be hampered and discourage qualified women at the leadership and board level.”
Leading at Executive Level
Here’s the paradox. When it comes to executive leadership, the picture reverses, and female representation is ahead in many countries in Asia.
A 2014 global study by Grant Thornton showed that the proportion of women in senior management was much greater in China (38%) and Indonesia (41%) as well as Southeast Asia, than in the US (22%) and European markets like the UK (20%) and Germany (14%).
According to Fortune, “though 126 of the top 300 companies in China lacked female board members (42%), only 31 of those companies lacked a female senior executive (10.3%)” in early 2015.
An IRC study found that as a percentage of total CEOS, Asia and Australia have more women CEOs (11.8%) than Europe and Americas (7.8%), and one study has shown that China has a greater proportion of female CEOS than the US. China has the most female self-made billionaires in the world. Looking at China alone, boardroom representation is 12.9%.
Women are not represented at executive level in all countries or business areas. For example, India has only 14% women executives, and Japan has only 9% (as well as only 3.3% boardroom representation).
When it comes to finance, Oliver Wyman found that 13% of execs and 14% of board members in finance are women in Asia, compared to 21% and 23% respectively in North America, and 16% and 24% in Europe.
But there is an increasing women executive presence in Asia. Even when the boardroom is considered, the recent two year momentum in getting at least one women on boards is impressive when compared to pithy gender diversity advancement on boards in the US.
Momentum towards Leadership
Many factors are allowing women to advance into management in Asia.
In Southeast Asia, 35% of senior executive positions are held by women. The Grant Thornton report states that free, in-built childcare as a result of tight-knit family units is partly responsible.
In China, radical urbanization and increased opportunities to further education have empowered women, while the defunct one-child policy has encouraged access to education for girls and entry into the workforce. The ratio of females to males in tertiary education is now at a 111 index in China and 107 in East Asia.
One of the most powerful factors in women’s advancement is rapid economic development of the private sector.
A study out of the Chinese University of Hong Kong Business found a direct correlation between emerging private companies and increasing recruitment of women and hiring women as CEOs.
During a nine year tracking period from 2000-2008, the researchers found that women CEO participation rose from 4% to over 8% in the private sector, increasing over time and at a faster rate, while remaining flat in state-controlled firms.
The researchers compared the marketplace to government initiatives in driving change: “Studies have shown that competitive forces are generally more effective in bringing women managers into companies, because market mechanisms may be better at identifying and rewarding strong performers. When you face competition, you have to remove bias and focus more on bottom-line issues.”
The researchers speculated that competition may be driving a more gender-neutral approach to top management, making traditional networks less relevant and leadership skills more appreciated in private firms.
“As the Chinese economy becomes more balanced in terms of state-owned and private firms, and as state-owned enterprise reforms deepen, more and more female business leaders are likely to emerge,” stated the researchers.
With a wider pool of women in executive roles in Asia, it seems the case that boards lack top-level talent to choose from has an expiration date.
The underlying psyche of inequality will need to catch up with a changing reality in Asia, and boards will need to mix up their selection process.
While the market and changing cultural dynamics may be putting women into leadership, the next step are seats in the boardroom, while more fundamental inequalities still seek to be addressed in many regions including rural China and countries like India and Japan.
But changes are happening. Increased boardroom representation in Australia, India, and Malaysia were aided by government initiatives, while pressure in Japan has been increasing the presence of female directors.
According to the FT, some prestigious business schools in Hong Kong and China are looking at how to move advanced education from gender blind to gender sensitive, exploring options such as early-career masters programs that gain more female enrollment. Research shows that 72% of women graduates in China hope to become C-level executives.
Over the next few years, we stand to witness a fascinating phenomenon in gender equality where Asia is both catching up…and leading.