March 8, 2018 / 3:01 AM / 9 months ago

Breakingviews - Asia's boardrooms require critical mass of women

A woman walks past a panel displaying stock indices of Hong Kong, U.S. and China markets, outside a bank in Hong Kong June 7, 2016. REUTERS/Bobby Yip

HONG KONG (Reuters Breakingviews) - Women are creeping into Asia’s boardrooms. Although one fifth of firms in Hong Kong’s Hang Seng Index still have all-male boards, new appointments of women directors are rising. The next task, in the city and elsewhere in the region, is to ensure women are present in sufficient numbers for companies to reap the full rewards of diversity. 

Females accounted for almost 19 percent of appointments to the boards of HIS companies in the past year, according to a report released on Tuesday by Community Business. That’s an improvement of seven percentage points on the previous twelve months. Yet there are still fewer than two female directors for each of the 51 constituents – and three companies, including Chinese technology giant Tencent, have shamefully never had a woman on the board.  

The challenge, for those firms keeping with the times, is acquiring critical mass. One woman risks becoming a token presence. Two women can help make one another’s voices heard. But studies based on the work of Harvard Business School professor Rosabeth Moss Kanter suggest that at least three are needed to secure benefits widely attributed to women, such as a better understanding of customers and employees, and a more collaborative leadership style.

These are valuable traits: a 2018 McKinsey survey of more than 1,000 firms in 12 countries found that companies boasting better gender balance were 21 percent more likely to outperform on profitability, as measured by earnings before interest and tax as a proportion of sales. That’s why, even in countries like India where there is a mandatory female board quota, there is debate on whether to increase it. 

Either way, ensuring a larger female presence at the top requires a stable supply of talent. Happily, many companies already have the raw resources. Though they are haemorrhaging women in senior ranks, at entry level the gender balance tends to be more even. 

Tracking men and women’s different performance, pay, and departures helps employers to understand what needs to be done. Keeping an open dialogue is crucial too. Such measures make it more likely employers will notice and negotiate stress points – whether that’s harassment, or the challenges of caring for children and elderly relatives, responsibilities typically shouldered by Asian women. 

Women are slowly on the rise but the multiplier effect applies to girl power too.   

Breakingviews

Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.


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