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Economy

Women break into management in Asia -- slowly

Progress is uneven, but business sense points to more diversity

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 take the job, she will become the first woman to hold the post at Tata, and one of only a handful of women to head a big Indian company. But speculation about her possible appointment has focused attention on the issue of boardroom diversity in Asia.

Several countries in the region have introduced policies aimed at placing more women in senior management positions, from setting quotas to creating training programs and professional 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 of having 30% of leadership positions filled by women by 2020. That was later cut to 15%. But despite the push, the proportion of female directors has remained stubbornly low, at just 3.4% in 2015, according to a study by MSCI, a share index publisher.

MIXED BAG Malaysia has also fallen well short of its target of having 30% of board and senior management positions at listed companies filled by women this year. Women make up 10.7% of directors for all publicly 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 brought the issue to the fore. "We started out at a base of about 7-8%, so moving to 30% within a span of under four years was ambitious to begin with," said Pauline Ho, a partner at PwC Malaysia, a management consultancy. "However, it did give corporate Malaysia and associated bodies a goal to achieve, which I believe played a big part in accelerating this figure."

Other policies to encourage the promotion of women were introduced in Malaysia at the same time. These include setting up a program that offers training for female directors, and founding a Malaysian branch of the international 30% Club, which campaigns to put more women on company 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 fail to comply face fines of up to 1.1 million rupees ($16,119) and other sanctions. As of April, 191 companies listed on the National Stock Exchange had been fined for noncompliance.

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 nonexecutive boards.

But he added a "sizable 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 regard to 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 taking leadership positions, while 36% said it was difficult to return to work after having children.

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

Back2Work is coupled with the group's Work Life Plus Programme, which allows employees to choose 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. Women make up 40% of partners and directors and 58% of managers at PwC Malaysia. Two-thirds of employees who took advantage of the flexible working arrangements said they would have quit without them. The company says it saves 518,600 ringgit ($116,473) a year that would have been spent on hiring and training new staff.

Ho said 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 benefited from senior managers taking part in the drive for gender diversity. The company sets public groupwide 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 offers flexible working hours for parents. The group has already surpassed its target of having women in 30% of its board positions by 2020.

Peggy Fang Roe, chief sales and marketing officer for Marriott International in the Asia-Pacific region

Other successful initiatives encourage women to apply for top jobs, such as the Women in Leadership program run by Marriott International, a U.S.-based hotel operator. 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 mentoring. It also has 27 female "ambassadors" in Asia who hold small group sessions with colleagues. "The main issue holding women back is their mindset," said Roe.

NO VACANCY Roe said that in most cases women faced no objections to their joining company boards, despite lingering ideas about traditional gender roles in much of Asia. However, many women remain reluctant to go for top positions.

That has not stopped Marriott from pursuing greater gender diversity. Around 40% of the company's managers in Asia are women, along with 40% of executives above the level of vice-president.

Keith Pogson, a senior partner for Asia-Pacific financial services at Ernst & Young, a professional services company, and a founding member of the Hong Kong branch of the international 30% Club, thinks another issue holding women back is a lack of board turnover. "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," he said.

A study by the Peterson Institute for International Economics, a U.S. think tank, found that for profitable companies, a move from having no female leaders to 30% representation at board level and in "C-suite" positions 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 broader opinions and perspectives that improved company performance.

Roe said it was figures such as these, rather than quotas, that would ultimately lead to greater numbers of women in leadership. "If we can show the benefits of having women, that is a strong metric at the end of the day," she said.

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