India Makes Significant Progress in Representing Women in Corporate Board Rooms – Some Questions

Malaysia and Australia are the other two countries in giving representation to women in their corporate board rooms. However, the real questions are – how much leverage do these women leader command in being the final decision makers and making an overall impact in favour of their country’s economy?

Mumbai/New Delhi, April 19, 2016

Findings

Companies with greater female representation in the boardroom tend to be more profitable, but women still remain under-represented across Asia Pacific boards, with most countries showing little or no progress. This is the result derived from a comprehensive Asia Pacific study by Korn Ferry (NYSE:KFY), the preeminent global people and organisational advisory firm and the National University of Singapore (NUS) Business School’s Centre for Governance, Institutions and Organisations (CGIO).

According to the findings, three countries in the Asia Pacific region, namely Australia, India and Malaysia, showed significant improvement in broadening women representation on boards across the companies.

The study, Building Diversity in Asia Pacific Boardrooms, is the fourth in the Korn Ferry Diversity Scorecard series and examined the largest 100 publicly listed companies’ 2014 annual reports in ten Asia Pacific economies: Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, Singapore and South Korea. Based on the findings, firms with at least 10 per cent of female board members delivered a 14.9 per cent return on equity (ROE) in 2014 compared to just 12.6 per cent for those without.
Despite a compelling business case for board diversity, the increase in gender board diversity continues at a slow pace. Women make up 10.2 per cent of all directors in this latest study, up from 9.4 per cent in 2013 and 8.0 per cent in 2012. Only three out of ten countries showed substantial improvement.

Navnit Singh, Chairman and Managing Director of India for Korn Ferry International explained, “When we speak of board diversity and steps to improve the landscape, there is no doubt that the Government has a very crucial role to play in this scheme of things. Most countries reviewed in this study showed little or no improvement. However, India, Australia and Malaysia have recently seen regulatory action or governmental support for promoting board diversity. This is why you can see a +1.3% change in India.”

Asia Pacific still lags substantially behind major economies. Asia Pacific falls far behind benchmark global economies such as the United States, the United Kingdom and the European Union. For the region to reach parity with these markets, it would require another decade of growth at the current pace. It is encouraging to note that all-male boards are no longer a majority in the region with a significant drop from 53.2 per cent in 2012 to 39.0 per cent in 2014. This large decrease indicates that boards recognise the need for gender diversity. However, they still lag far behind Financial Times Stock Exchange (FTSE) 100 companies; there are no longer any all-male FTSE 100 boards.

Improvements in just three countries

Most of the countries reviewed showed little or no improvement in gender diversity, with the exception of Australia, Malaysia and India. These three countries also saw regulatory action or governmental support for promoting board diversity.

• Australia continues to be the best performing country in the region. With 21.9 per cent female board members among the Australian Securities Exchange (ASX)-listed companies, it is the only economy in this survey with over 20 per cent of women on boards. This figure is nearly double what it used to be in 2011, reflecting the ASX’s inclusion of gender diversity policies in its corporate governance council reporting rules.

• Malaysia saw the largest year-on-year increase in female representation, from 8.3 per cent to 12.5 per cent, reflecting the success of its governmental programmes to increase gender diversity. Although it fell short of its target of 30 per cent female representation by 2016, Malaysia is the only country in the study to have implemented such a target and provided active support for companies to reach the goal.

• India has made significant progress in broadening female representation across companies. Companies there reported an increase in female board representation from 7.3 per cent to 8.6 per cent in 2014. The Company Act, which required all listed companies to have at least one woman on the board, has helped enable this broadening female representation.

At the bottom of the gender diversity rankings are South Korea and Japan with 2.6 per cent and 3.3 per cent female board members respectively, followed by Singapore at 7.7 per cent.

Perspective

It’s a welcome change that women are being represented in the corporate board rooms of at least three countries, two of which are Third World countries, while developed eonomies such as Japan and South Korea lag behind. However, when we read such news, we need to take it in its proper context. The real question of importance is not how many women sit on the board of corporate companies. The more important question is, do these women have enough power to make final decisions about the business strategies of their companies? Further, do they have the power to make strategies about their companies in consonance with their thinking, or do they have to go by the rules and regulations made by the policy makers? In short, how much independence and autonmy do these women leaders really have? Above all, business rules are regulated by the global economic policies where women have very little leverage of power. In such a scenario, do these women leaders really make a difference in the overall economic growth of their countries or do they become an agency to further the overarching policies of global dominance, which have not much to do with men or women, but more to do with specific political and geographical regions? Unless these questions are directly addressed, it won’t really matter how many women the countries like the US and UK have in their companies’ boards, in comparison to India, Malaysia and Singapore or Japan or even Ethiopia for that matter.

The real question is, are we deciding for ourselves, or are we there to carry orders to further others’ interests?

 

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