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Go beyond legislation to encourage board gender diversity
ON Jan 1 2019, revisions to the Code of Corporate Governance in Singapore that encourage gender diversity by requiring companies to adopt and disclose a board diversity policy, and then report on progress, will take effect. This is just one of the many initiatives by the Singapore government in recent years to help women in the workplace.
Nonetheless, while there has been an increase in the number of seats held by women in all listed companies from 2017 to 2018, Singapore's numbers remain surprisingly low, as compared to other developed countries.
With the new year fast approaching, it is worth reflecting on the current representation of women in senior management positions and boardrooms and asking why it is taking some time for progress to take hold despite the best of intentions.
In fact, Singapore is a forerunner in certain areas when it comes to promoting gender diversity in the workplace. The government has numerous policies in place to help working women, such as schemes to encourage more flexible work arrangements, increased childcare capacity and expanded eldercare services as women are still the majority of primary carers. On top of this, the upcoming revisions to the code focus on top leadership.
One of its potentially transformative aspects is that it calls for a more rigid definition of independence, requiring directors who have served nine years or more to be replaced. Half of all listed companies will therefore be appointing at least one new independent director in short order, affecting a total of 705 directorships.
This policy change provides the chance to swiftly introduce greater gender diversity to Singapore's company boards. But whether businesses take advantage of this opportunity remains to be seen and history suggests that they might not. While 35 per cent of board appointments from January 2015 to June 2018 were first-time directors, most of these new appointees were men - 70 per cent for the top 100 primary-listed firms and a whopping 80 per cent for all listed companies.
A closer look at the numbers across these boards reveals that there is still plenty to improve on. Women make up about 45 per cent of Singapore's labour force, but they occupy only a third of all available senior management positions. Their representation in boardrooms is even lower.
Despite some progress, Singapore's Diversity Action Committee is still far away from its declared goal of having at least 20 per cent of all SGX-listed company board seats occupied by women by 2020.
The proportion of board seats held by women in all listed companies increased from 10.3 per cent in June 2017 to 11.2 per cent as at June 2018. All-male boards declined from 50 per cent to 49 per cent. The figures for the Top 100 companies, though slightly better, were still low, increasing from 12.2 per cent to 14.7 per cent, while all-male boards declined to 27 per cent as at June 2018.
In comparison, Singapore continues to lag far behind other countries such as Norway and France, where female board representation is as high as 42 per cent.
A study by the Human Capital Leadership Institute and BoardAgender suggests an answer as to why boardroom gender diversity continues to progress so slowly in Singapore - a majority of stakeholders across a wide cross-section of industries cited concerns about tokenism and the consequences of a seemingly non-meritocratic nomination process. This belief, that gender diversity in some way impedes on meritocracy, needs to change.
Stakeholders need to recognise past individual accomplishment is not the sole means of attaining future organisational benefit. They should therefore consider a balance of candidates that among things represents a company's diverse workforce and culture. It is only then that gender diversity will be more widely recognised for the successful and sustainable results that it brings.
Another contributing factor is gendered cultural norms, which limit the intended positive effects from regulations and policies. Prevalent traditional gender roles in South-east Asia mean that women are almost "obliged" to take a break from their career to raise a family, as the responsibilities of childcare still largely fall on mothers.
The implication of such cultural norms is that women spend twice as much time on care and household work as compared to their male household members.
Consequently, the net result of this is that their male colleagues are able to collect more experience and opportunities, while their once equal female colleagues fall behind. Despite numerous networking initiatives for women and other policies which have been introduced to help women transition back to work and the benefits of such support for the economy, until cultural norms around who provides childcare are addressed, we are unlikely to see progress.
While it is certainly good news that more women are occupying senior roles and board positions at public companies, the numbers can and should improve.
At the same time, policymakers must be cautious that their policies do not lead to companies merely box-ticking - foregoing real progress and not benefiting from change. The policy schemes supporting working women and the revision to the Code of Corporate Governance in Singapore are good next steps, but it remains essential that we move beyond legislation and start changing normative thinking.
- The writer is ICAEW regional director, South-east Asia