Female representation in boardroom needs wholehearted buy-in from all

    By Angela Tan

    The Business Times, 10 December 2019

    AT THE unveiling of the Singapore Board of Directors Survey 2019, Singapore Regulation (SGX RegCo) head of listings and compliance June Sim said "the industrial sector doesn't like women".

    The comment drew laughter from the audience, most of whom were men. Perhaps the nervous laughter belies the sad truth behind Ms Sim's observation.

    This year's survey again showed the glacial pace of gender diversification.

    While the percentage of respondent firms which reported having no female directors fell to 39 per cent, compared to 45 per cent in 2017 and 53 per cent in 2015, Singapore listed companies are nowhere near the 20 per cent aspirational target set by the government.

    The target was set by Singapore's Diversity Action Committee (DAC) in 2016 to address the under-representation of women on corporate boards here. The plan was to bring that number progressively to 30 per cent by the year 2030. DAC has been succeeded by the Council for Board Diversity in January this year.

    The latest survey also showed that the percentage of respondents with two or more female directors increased to only 23 per cent from 17 per cent in the 2017 survey.

    In terms of market capitalisation, almost half of the small cap respondent firms said they have no female directors.

    Looking into the future, 21 per cent of these respondents said they are unlikely to have any female directors. Only 47 per cent said they will have that one female representation.

    The survey found firms in the industrial sector showed stronger resistance to women on boards. This was followed by real estate and consumer discretionary.

    Another worrying trend that has been observed in the industry has been the same recurring female names on multiple boards.

    Gender diversification is something that has been debated for a long time. Yet, the progress has been disappointing, especially among the mid and smaller capitalised companies. One can only draw comfort that large capitalised firms have been champions of diversity and be encouraged that only 4 per cent of the large capitalised firms expect no female on their boards.

    Surely, Singapore corporates can do better. Are companies hiding behind the idea of a poor pipeline? Is it really that difficult to get good women on boards? Or is there truth to a study by Isabelle Solal and Kaisa Snellman at Insead business school that firms do not benefit from having females on board. Their study suggests that firms with more gender-diverse boards suffer a market penalty as a gender diverse board is interpreted by investors as a weaker commitment to shareholder value?

    Like any appointments, females on boards should be based on merits, not for the sake of diversity. There is obviously no shortage of female professionals in the industry - from bankers and finance advisers to legal eagles and other professionals found in universities or government and elsewhere.

    The argument in favour of females on boards has been repeated often enough - some degree of diversity is better than homogeneity. Diversity avoids group think, and offers another perspective from a male-dominated board.

    While many people, including women, argue that female appointments should be based on merit, perhaps initially, quotas are a good way to spearhead the diversification target until it gains a firmer foothold.

    In 2013, India adopted a quota of at least one woman on the board of all publicly-listed companies. Companies were slow to comply, but the law still had some impact. The share of women on Indian company boards has risen from 5.5 per cent in 2010 to 12.7 per cent in 2017. Malaysia also imposed a quota of 30 per cent women directors, which has resulted in the proportion of female board members at its largest companies more than doubling from 7.6 per cent in 2011 to 16.6 per cent in 2017.

    In Norway, after a shaky start to a quota adoption, the country today can boast that 42 per cent of its board members are female.

    The excuse of women "not being ready" for the boardroom has been used once too often. Instead of simply hitting diversity targets, there is a need to break barriers that prevent women from being board ready.

    Structured mentorships and opportunities to gain experience must be provided for the next generation of female leaders - and it's not just women.

    Diversity goes beyond gender. It also includes race and ethnicity as another focus area. Organisations must go beyond just hitting quotas, and implement diversification and inclusion programmes without compromising qualifications.