Urgent Need for Boards to Diversify Across Asia According to Korn Ferry Board Diversity Study
Singapore. February 6, 2012
-Over 70 percent of boards across Asia have no independent women directors
-Demographic characteristics of female directors found to be markedly different from male directors
SINGAPORE, FEB 6, 2012 – Findings in an inaugural board diversity study by Korn/Ferry International, The Diversity Scorecard: Measuring Board Composition in Asia Pacific, has found that female representation on boards of directors in the Asia Pacific region remains low and that female directors have different demographic characteristics compared to male directors.
The study’s findings underscore an urgent need for Asia’s boards to recruit more diverse directors, especially now when so many companies are at a turning point in the global economy. More than 70 percent of boards in five countries—Hong Kong, India, Malaysia, New Zealand and Singapore—have no female independent directors. Boards with two or more female directors were rare, while boards with three or more female independent directors were almost non-existent.
The study, the first in Asia Pacific focusing on board diversity, covers the largest 100 domestic companies by market capitalization in Australia, China, Hong Kong, India, Malaysia, New Zealand, and Singapore. The study compares the extent to which female and male directors hold key leadership positions on boards, as well as the profiles of female and male directors in these countries. A total of 6,538 directors holding a total of 5,793 directorships in these companies were included in the study.
The study was conducted in partnership with Associate Professor Mak Yuen Teen of the NUS Business School at the National University of Singapore, who is a recognized authority on corporate governance in Asia.
“As Asia’s growth trajectory propels it to a central spot in the global economy, the most effective boards will be the ones that are international—with functional, sector and gender diversity,” said Alicia Yi, managing director, Global Consumer Market of Korn/Ferry Asia Pacific, and member of the Board & CEO Services Practice.
“The world is taking notice of the potential and power of women—as consumers, as leaders, and as a growing majority of the talent pool. Companies have started to recognize that successful boards should reflect the markets they serve and that homogenous leadership teams can be less equipped to do business in an increasing complex business environment,” she added.
The study also found a key number of differences between the demographic characteristics of female and male directors, including:
- Female directors are younger than male directors across all countries, by about three years on average.
- Female directors were more likely than male directors to have law or accounting educational backgrounds, while male directors were more likely to have engineering and science backgrounds.
- The average tenure of female independent directors is shorter than male directors across all countries.
- Female directors are more likely than male directors to have public sector or not-for-profit sector experience.
- Female directors are generally underrepresented in board leadership positions such as board chairs and board committee chairs.
Other aspects of diversity revealed that:
- On average, China had the youngest directors.
- Hong Kong companies, followed closely by China companies, are most likely to have directors from two or more generations.
- The majority of boards, other than those in Malaysia and Singapore, come from a single ethnic group.
“A lot of leading companies are now taking diversity, including gender diversity, issues quite seriously—setting employee targets, tracking and looking for ways to improve—as increasing evidence suggests that more diverse boards and management teams can be more effective and linked to better corporate performance,” said Yi.
“I have no doubt that the diversity issue will accelerate in years to come. Only by having a diverse pool of independent, talented, and committed directors will companies be able to connect with and capitalize on the engine of Asia’s consumption. Investors are also demanding diverse boards to promote good governance and sustainability and better navigate uncertain and challenging global economies,” she added.
An electronic version of the report is available to read and download from the Korn/Ferry Institute here: http://www.kornferryinstitute.com/about_us/thought_leadership_library/publication/3188/diversity_scorecard
Korn/Ferry Board & CEO Services Practice
Korn/Ferry International’s Board & CEO Services Practice assists clients with board director search and selection, CEO Search and selection, CEO Succession Planning and assessment, board effectiveness, and director/executive compensation consulting.
About Korn/Ferry International Asia Pacific
Korn/Ferry International, with a presence throughout the Americas, Asia Pacific, Europe, the Middle East and Africa, is a premier global provider of talent management solutions. Korn/Ferry, based in Los Angeles, was the first major global executive search firm to operate in Asia Pacific when it opened its doors in Tokyo in 1973. Today it has eighteen offices in key business centers throughout the region. Korn/Ferry delivers an array of solutions that help clients to attract, engage, develop, and retain their talent.
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