Women make up around half of Asia’s university graduates – but only a small fraction of them will make it into middle management, much less the boardroom. Women account for only about 6% of seats on corporate boards in the region, and 8% of those on executive committees – about half the average of the US and Europe.
Those are among the findings of a recent McKinsey study of women in corporate Asia, which analysed the boards and management committees of 745 listed companies in 10 markets (Australia, China, India, Japan, South Korea, Singapore, Malaysia, Indonesia, Hong Kong SAR and Taiwan) and surveyed more than 1,500 executives.
The numbers are striking, but when we bring up the lack of female leadership with executives in Asia, many don’t rate it as a high priority. The research confirms this impression: 70% of those surveyed said that developing female leadership talent was not a top 10 strategic priority and most said they did not anticipate making it so. Only 15% said that the CEOs of their companies even monitored the subject.
Well, perhaps they have a point. So what? Why does this matter? Maybe Asia is just different, and after all, it’s doing pretty well. Why fix something that isn’t broken?
There are three reasons. First, the recent research and many previous studies have found a notable correlation between the participation of women in executive teams and better corporate performance – in terms of organizational health, improved decision-making, corporate governance and stronger financial performance. This does not prove that it was the presence of women that made the difference, but it is certainly noteworthy. In fact, I think if such a strong correlation were discovered in almost any other area, executives would be paying far more attention.
Second, given tight labour markets and keen competition for people, why not tap the female talent pool? For example, on current projections Indonesia will lack 2 million tertiary workers and 10 million upper secondary workers by 2030. Even so, they are not utilizing their female talent to the fullest: women’s participation rate in the formal workforce is low, at around 50%. That compares with around three quarters of women in China, and 70% of women in countries such as the US and Australia. And women constitute only 5% of CEOs and 6% of board members for listed companies.
Third, greater participation by women drives economic growth: there is a significant GDP boost when more women enter the workforce. Yet in some markets, relatively few women even enter the pipeline; these countries are forgoing a significant growth dividend. In India, for example, the female labour participation rate is 29% – one of the lowest in the world. In Japan, Malaysia, South Korea and Taiwan it is 50% or less. Raising the participation rates of women in those countries could boost growth and help societies cope with their ageing populations.
Getting more women into senior levels of corporate Asia won’t just happen; it will require action from both business and government. Still, there is no magic formula. Companies have to create a system of measures, sustained over time, that foster an environment conducive to women’s participation in top management.
That means taking positive, concrete steps, such as building development programmes and career paths for promising women, establishing metrics to track progress and creating gender-neutral evaluation systems. Leadership needs to start at the top, with visible and tangible commitment from managers. CEOs need to drive this as they would any other strategic issue, dedicating time to understanding the issues and leading cultural change. This isn’t happening enough at the moment, but it could – and companies that take the lead will likely benefit by skimming the cream of the talent.
As for governments, it is encouraging that many are beginning to see this as a problem worthy of consideration. Japanese premier Shinzo Abe, for example, has promised to unleash the power of “womenomics”. The goal, he says, is to “bridge this equality gap” in order to exploit the country’s “most underutilized resource: Japanese women”.
South Korea, too, says it will take action, starting by “naming and shaming” companies with particularly low numbers of female employees. Malaysia has launched a new online portal, flexWorklife.my, that shares information on flexible work arrangements and family-friendly facilities. Moreover, some 500 Malaysian women have been trained in a special programme for directors.
All this sounds sensible and promising, but it will not be enough. There are profound cultural factors at work as well, and these will be difficult to address. As is the case everywhere, most women have “dual careers” – one at the office and one at home. The majority of those surveyed, in every country, say this is a factor in women leaving their jobs. And business as usual can be female-unfriendly. In Japan, for example, it may not be altogether surprising if women are not signing up in droves to become salarywomen, with the long hours and anywhere-anytime work mentality.
But things can and will change, for the simplest of reasons: it is in the long-term interests of Asian businesses and societies.
Author: Kevin Sneader is the Chairman, Asia Pacific, of global management consultancy McKinsey & Company
Image: A woman walks past a stock index board, June 15, 2007. REUTERS/Kim Kyung-Hoon