SINGAPORE: Gender diversity in Asian boardrooms is among the lowest in the world and while there was some improvement last year, the pace of change is slow.
Those are the results of a new study by Deloitte LLP, which shows that women represent 7.8% of board directors in Asia, higher only than Latin and South America at 7.2%. Europe had the most diverse boardrooms at 22.6%.
For the region’s economies, that matters. Studies show more diverse boards are generally associated with making better decisions and profits for their companies, according to Marleen Dieleman, an associate professor of strategy and policy at the National University of Singapore.
A paper by the Asian Development Bank last year concluded the same: the appointment of female directors and a gender-diverse boardroom are, on average, positively associated with a firm’s subsequent performance.
“You need to have sufficient variety, in terms of viewpoints, experience etc., at the board level to successfully deal with the complexity of your environment,” said Dieleman. Referencing one of her own studies, she added that “despite this, many Asian companies that operate in complex environments have all-male boards.”
In the Deloitte study — which covers 64 countries and more than 7,000 companies — developed nations in Asia, like Taiwan, Japan and South Korea, rank among the bottom in the region.
Vietnam and Malaysia perform much better with women holding 17.6% and 13.7% of board seats respectively.
Singapore where women make up 10.2% of boards is also making slow progress. A report on Monday by consultancy SpencerStuart said Singapore is trailing its peers in developed markets like Australia and the U.K., and that may hurt its standing with international investors.
Simon Israel, chairman of Singapore Telecommunications Ltd. called the results “shocking” and an “embarrassment,” according to SpencerStuart. He added that “it’s quite challenging that we want to hold ourselves up as a financial center and yet on gender diversity we are so far behind our neighbors.”
Singtel, as Singapore’s largest phone company is known, has a female chief executive officer and women holding a third of board seats, according to Bloomberg data.
Having a female chief executive officer or chairwoman helps to improve board diversity, according to Deloitte. Companies with a woman leader have almost double the number of females serving on boards compared to those with a male chair, it said.
Asia’s poor performance could be due to the informal selection process for directors, where new ones come from the personal networks of existing board members, said Dieleman.
“This ‘old boys’ network unconsciously prevents board diversity and perpetuates the status quo,” she said.