December 1, 2016 10:00 am JST

Tata crisis puts spotlight on Asian business gender diversity

More women being appointed to management roles, but progress is painfully slow

NICKY BURRIDGE, Contributing writer

HONG KONG -- Amid the management turmoil that has engulfed India's Tata Group, Indra Nooyi, chief executive of PepsiCo, the U.S.-based food and beverages group, has emerged as a contender to take over as chairwoman following the sacking of Cyrus Mistry.

If Nooyi does accede to the position, she will become the first female to hold the post at Tata, and one of only a handful of women appointed to chair Indian companies. But speculation about her appointment has already focused attention on the issue of boardroom diversity in Asia.

Several countries in the region have introduced policies aimed at boosting the presence of women at the top level, from setting minimum quotas to putting in place training programs and networking initiatives.

Japan introduced a law in April under which companies with more than 300 employees must publish data on the number of women they employ and how many hold management positions.

Japan set a goal in 2003 for 30% of leadership positions to be filled by women by 2020 -- later revised down to 15%. But the proportion of female directors has remained stubbornly low, accounting for just 3.4% in 2015, according to a study by MSCI, an index publisher.

Malaysia has also fallen well short of a target for 30% of board and senior management positions of listed companies to be occupied by women by 2016. Women currently account for 10.7% of directors across all public listed companies and 14% for the top 100 companies by market capitalization, according to Bursa Malaysia, which runs the Kuala Lumpur stock exchange.

However, the introduction of targets has raised the profile of the issue. "We started out at a base of about 7% to 8%, so moving to 30% within a span of under four years was ambitious to begin with," said Pauline Ho, people and assurance partner at PwC Malaysia, a professional services company. "However, it did give corporate Malaysia and associated bodies a goal to achieve, which I believe played a big part in accelerating this figure."

Policy initiatives to encourage the promotion of women were introduced at the same time. These include the setting up of the a Women Directors Programme, which offers training, and the founding of a Malaysian branch of the international 30% Club, which campaigns for the representation of women on boards.

India has had more success with a mandatory quota, although it has also recognized the importance of training. The Companies Act 2013 required all listed companies of a certain size to have at least one female director on their boards within one year.

Those that failed to comply faced cumulative fines of up to 1.1 million rupees ($16,066) and the threat of further punitive measures. As of April 2016, 191 companies listed on the National Stock Exchange had been fined for non-compliance.

Abhay Gupte, a partner at Deloitte Touche Tohmatsu India, a professional services company, said that nearly 90% of listed companies had at least one woman on each of their executive and non-executive boards.

But he added that a "sizeable proportion" of the new appointments have come from the "promoter group," such as the family that owns or controls the business. The implication is that a large number of women holding these positions are promoted without consideration of merit, skills or experience.

Despite its flaws, Gupte said the legislation has been successful. Figures from India's National Stock Exchange show that women now hold 14% of directorships, up from 4% when it was introduced.

"Women would prefer to be on boards because of their own merits, but culturally you may only start moving in that direction when the law requires it," he said.

Family matters

Companies have been most successful in boosting gender diversity when they have addressed the factors holding women back.

A recent study by Robert Walters, an international recruitment company, found that 50% of female professionals in the Asia-Pacific region said family pressures and commitments prevented them from occupying leadership positions, while 36% said it was difficult to return to work after having children.

PwC Malaysia has tackled this issue through its Back2Work Programme, which provides women who have been out of the workforce for less than three years with the training and flexible working arrangements they may need to return.

Back2Work is coupled with the group's Work Life Plus Programme, which allows employees to opt for a shorter working week, or to take an unpaid career break of one to three months per year. "Women should not have to choose between having a career or a family," said Ho. "Too often we hear these types of stories -- promising female talent giving up on their aspirations, simply because they feel they have no other choice."

The programs have been successful, with women currently accounting for 40% of partners and directors and 58% of managers at PwC Malaysia. Two-thirds of staff who took advantage of the flexible working arrangements said they would have left the workforce otherwise. The company claims it saves 518,600 ringgit ($118,000) a year that would have been spent on hiring and training new staff.

Ho said that a crucial factor in the success of the programs has been support from the company's leadership, with some senior managers taking part. "This is important, as some of the younger women, and men, in the firm might not want to join the programs out of fear that it will hinder their career progression," she said.

HSBC, a U.K.-based multinational bank with a significant presence in Hong Kong, has also seen the benefits of senior managers taking part in the drive for gender diversity. The company sets group-wide public targets and timelines for female representation at both board and senior management levels.

It provided support for the initiative by putting in place networks to promote diversity, as well as education programs and mentoring initiatives to help managers address bias in hiring and talent identification.

Like PwC Malaysia, HSBC also offers flexible working hours for parents. The group has already surpassed its target of having 30% of board positions occupied by women by 2020.

Other successful initiatives encourage women to apply for top jobs, such as a Women in Leadership program run by Marriott International, a U.S.-based hotels group. Peggy Fang Roe, chief sales and marketing officer for Marriott in the region, said the group wants to empower women so that they have the confidence to apply for senior positions.

The company holds conferences to highlight female success stories, as well as providing mentorship. It also has 27 female "ambassadors" in Asia who can hold small group sessions with colleagues. "The main issue holding women back is their mindset," said Roe.

Own worst enemy

Roe said that in most cases women faced no objections in joining company boards, in spite of the continued existence of traditional concepts of gender roles in much of Asia. However, many were unwilling to put themselves forward.

Nevertheless, Marriott has been successful in implementing gender diversity, with 40% of managers in Asia now female, along with 40% of leaders above the level of vice-president.

Keith Pogson, a senior partner for Asia-Pacific financial services at EY, a professional services company, and one of the founding members of the Hong Kong branch of the international 30% Club, thinks another issue holding back women is a lack of board turnover.

He said: "In Hong Kong we don't have a tenure cap. Even if the pool of qualified women is high, the impact is low because there aren't many board vacancies that come up."

A study carried out by the Peterson Institute for International Economics, a research group, found that for profitable companies a move from having no female leaders to 30% representation at board level and in "c-level" positions -- such as chief executive officer, chief financial officer and chief operating officer -- led to a 15% increase in net revenue margins.

The report did not disclose how the gain was measured, but it speculated that having more women at top levels led to a diversity of opinions and perspectives.

Roe said it was figures such as these, rather than quotas, that would ultimately be effective in boosting the number of women in leadership. "If we can show the benefits of having women (in senior management roles), that is a strong metric at the end of the day," she said.

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