Lack of progress in Asia Pacific board diversity a cause for worry: Study

The finding was part of a study by human resources firm Korn Ferry andNational University of Singapore Business School's Centre for Governance, Institutions and Organisations

An Asia Pacific study by human resources firm Korn Ferry and the National University of Singapore (NUS) Business School's Centre for Governance, Institutions and Organisations (CGIO), revealed that 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.

India has made significant progress in broadening female representation across companies, according to the study. 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.

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.

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.

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 per cent change in India."

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 per cent in 2012. Only three out of ten countries showed substantial improvement.

The study said that 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.

However, it said 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 per cent in 2014. This large decrease indicates that boards recognised the need for gender diversity. However, the study said that they still lag far behind Financial Times Stock Exchange (FTSE) 100 companies; there are no longer any all-male FTSE 100 boards.

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. 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.