Diversity Key Factor in Determining Future Winners in Asia Pacific

singapore

singapore (Photo credit: Kenny Teo (zoompict))

Findings in the latest board diversity study has found that while there has been incremental progress in improving gender diversity on boards in most Asia Pacific countries/regions, the female representation on boards remains low.

The study’s findings underscore an urgent need for Asia’s boards to recruit more diverse directors, as markets across Asia Pacific confront obstacles such as increasing regional competition, consumer shifts, regulatory uncertainty, and in many locales a shortage of key talent. Female directors account for less than 10 percent of boards in all countries/regions examined, expect in Australia, in which 16.7 percent of directors are female. More than 50 percent of boards in five countries/regions — India, Japan, New Zealand, Singapore and South Korea — have no female directors and only six of the 900 boards examined have more than three female directors.

The study is the second comprehensive survey of corporate boards at the 100 largest listed companies in key markets across Asia Pacific by Korn/Ferry. The report builds on the findings from the inaugural report in 2011 and includes the addition of Japan and South Korea to the original seven countries/regions surveyed – Australia, Mainland China, Hong Kong, India, Malaysia, New Zealand, and Singapore. A total of 7,508 directors holding a total of 8,521 directorships across the nine countries/regions were included in the study.

The study also found a number of differences between the demographic characteristics of female and male directors, including:

— Female directors are younger than male directors across all countries/regions, by about three years on average;

— Female directors are more likely than male directors to have a law or accounting educational background, while male directors are more likely to have engineering specialization;

— Female directors have shorter average tenures than male directors; and

— Female directors are more likely than male directors to have public sector or not-for-profit sector experience.

Other aspects of diversity revealed that:

— Mainland China had the youngest directors while Japan had the oldest;

— Japan had the highest percentage of boards comprising directors from a single generation;

— Mainland China and Hong Kong have the highest percentage of companies with directors from two or more generations; and

— The majority of boards consist of a single ethic group, except in Hong Kong, Malaysia and Singapore.

Comparing the board structure and diversity of companies in seven Asia Pacific countries/regions — absent Japan and South Korea — to the previous study in 2011, the following incremental progress in gender inclusion on boards were made:

— All the countries/regions, except Hong Kong, now have a higher percentage of female directors;

— Australia has shown the most advancement across a number of indicators such as a higher percentage of female directors, fewer all-male boards, more boards with multiple female directors, and more female directors holding leadership positions;

— All-male boards have decreased in all countries/regions, except in New Zealand, where there has been no change;

— The number of companies with at least one female independent director has increased across all seven countries/regions; and

— All countries/regions now have a higher percentage of female directors holding key leadership positions, except for Mainland China, which has seen a small decline.

Implications:

Diversity will be an important factor determining future winners in Asia Pacific. The real question is how well boards and senior leadership are prepared to guide companies in this dynamic and complex business environment and to take Asia Pacific enterprises to the next level. Companies across the globe are starting to recognize that successful boards should reflect the markets they serve and that homogenous leadership teams will be less equipped to meet the challenges of fast-changing markets. By ensuring sufficient diversity, high-performing boards can be assured that board decisions will be vigorously debated by individuals with different perspectives leading to improved board monitoring, better board meeting attendance rates, and causes boards to be more stakeholder focused.

From: Korn/Ferry International

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