Asia Society | Women Leaders of New Asia

“Destination: Board Diversity” by Aliza Knox

Aliza Knox

Aliza Knox

Driven by the benefits of a more diverse board, companies around the world are actively working toward gender inclusion at the highest levels of their business. Glimmers of diversity on corporate boards are slowly, but steadily, appearing. The issue of board diversity is now garnering the attention it deserves, and together, we can find new ways to build on this increasing momentum.

Let’s take a look at some statistics.

In the US, almost 90 percent of S&P 500 companies have at least one woman board member. However, there are far fewer female directors at smaller companies, with only 60 percent of the companies in the Russell 3000 index having at least one woman director, and half of the small cap companies in the Russell 2000 Index with no female directors at all. In addition, while 90 percent of Fortune 500 companies have at least one female director, less than 20 percent have 3 or more women serving together.[1]

In Europe, a McKinsey study of 235 companies suggests that the majority of large businesses are devoting significant resources to resolve the gender imbalance at the board level, making progress with diversity, recruitment, and promotion processes. Indeed, 63 percent of the companies have at least 20 different initiatives in place as part of their gender diversity programs. And in eight out of nine countries, there are now more women on corporate boards–for example, 20 percent of board members in France are women, up from 8 percent in 2007, and 19 percent in the Netherlands, up from 7 percent.[2] However, despite the growth, the relatively low percentages suggest there’s still a ways to go on board diversity.
Companies in APAC are behind on the board gender diversity curve. In a sampling of the largest companies in Australia, China, Hong Kong, India, Malaysia, New Zealand, and Singapore, only twenty-two out of 700 boards had more than two female directors.[3]

There are positive developments in the APAC region. According to the Australian Institute of Corporate Directors, the proportion of women on Australia’s boards rose from 8 percent in January, 2010 to 14 percent in July 2012, meaning that almost 30 percent of all board vacancies over that period were filled by women.[4] A McKinsey review also noted broader awareness around diversity and talent development within some APAC companies. South Korean executives, who stated that they expect to accelerate diversity measures in their companies, were particularly notable in their acknowledgement of the importance of gender diversity initiatives.[5]

Interestingly, in Pakistan, women make up 30 percent of boards (where the majority are family owned companies, and founders have learned that their daughters, more than their sons, want to help run the company).[6]

It will take 158 more board seats held by women to reach 10% female representation on SGX Boards

Singapore is lagging in its corporate board diversity: 60% of SGX-listed firms don’t have a single women on the board. Globally, Singapore’s female participation in boards ranks second to last, just ahead of India. Growth of female representation in boardrooms is heading in the right direction, but is slow, with 6.6% of SGX boardroom positions held by women in 2008, up to 6.9% in 2010.[7]

Why should we care about diversity at the highest levels of business? Because gender diversity on boards is proven to deliver competitive advantage, help boards relate better to customers, and aid with corporate growth and talent acquisition.

Diversity improves financial performance
In the US, companies with gender diverse boards delivered markedly better results. For example, Fortune 500 companies who had at least three women on their boards of directors found that:

  • Return on equity increased by at least 53 percent.
  • Return on sales increased by at least 42 percent.
  • Return on invested capital increased by at least 66 percent.[8]

In Europe, 89 European companies with more than two women on the board outperformed, on average, their  sector in return on equity (11 percent vs. an average of 10 percent),  operating result (EBIT of 11 percent vs. 6 percent), and stock price growth (64 percent vs. 47 percent).[9]

In Australia, board diversity affected ASX 500 corporate performance as follows:

  • Companies with women on the board delivered a higher return on equity (ROE) than those without women on their board.
  • Over three years, companies with no women directors delivered a -.1 percent ROE, vs. almost 7 percent for companies with women directors; over five years, the respective numbers are .5 percent vs. just over 9 percent.
  • Companies with women on the board outperformed companies with no women on the board in 8 of 10 sectors.[10]

Last, in an extensive study of SGX-listed companies, gender diversity on boards–noted for bringing about a greater exchange of ideas, improved group performance, and new insights and perspectives–was found to have a strong, positive association with firm performance.[11]

Diversity enhances organizational performance
A McKinsey study examined differences between leadership behaviors based on gender and looked at behaviors that positively affect organizational performance. The study found that the leadership behaviors more frequently exhibited by women improve organizational performance by strengthening three dimensions:

  • Accountability (via expectations and rewards behaviors)
  • Leadership team (via role model and people development behaviors)
  • Work environment and values (via people development and participative decision making behaviors)

In contrast, leadership behaviors frequently exhibited by men strengthen other dimensions:

  • Coordination and control (via control and corrective action)
  • External orientation (via individualistic decision making)[12]

Female directors were also found to have better attendance records than male directors, male directors have better attendance on more gender-diverse boards, and women are more likely than men to join monitoring committees.[13]

Having both men and women on a board ensures a more balanced set of skills and behaviors to govern the organization.

Diversity breeds innovation
Diversity is tied to stronger problem solving and creativity. The London Business School found that innovation improves with gender mix, peaking when there is close to a 50:50 proportion of men and women on teams.[14]

The sentiment that diversity benefits innovation is shared by key thought leaders: Alan Lafley, the former CEO of Procter & Gamble, said “Diverse organizations will out-think, out-innovate and outperform a homogeneous organization every single time.”[15]

Diversity brings you closer to your customers
Consider another reason to prioritize board diversity, this time from the perspective of effectively catering to your customers. Many companies serve audiences of myriad ethnicities, nationalities, cultures, languages, and genders. Yet, company boards don’t always represent the customer base they serve, despite the fact that a board’s primary mission is to understand its customer base to build the business.[16]

Simply put, how can we expect to serve our customers if we can’t relate to them?

AutoNation, the largest auto retailer ($4.6B market cap) in the US, recently added to its board Alison Rosenthal, a woman with experience in social, growth, international, and mobile. Mike Maroone, AutoNation’s President and COO, said “We looked at our board [and realized] it’s male dominated, while women make over 50 percent of the purchasing decisions in our business.”

Also, consider LuluLemon, which recently added Facebook local and mobile executive Emily White to its board. Christine Day, CEO of LuluLemon, stated “We wanted a board member who understands how our target guest thinks, is a leader in the world of digital innovation and social, and understands steep growth. Emily is part of a new generation that is going to change the game.”[17]

John Donohoe, CEO of Ebay, who added Facebook product marketing exec Katie Mitic to their board, stated “We were looking to add people who understand the web of the future and our consumer (50 percent of whom are women), and who are product and tech savvy.”[18]

And when I asked Deborah Ellinger, CEO of The Princeton Review, for her thoughts on gender diversity, she said “There is no question that having a woman on board helps, especially in companies where the customers are predominantly women. We see things from a different angle, and therefore are able to provide a very different perspective.”

Recent Asian examples of female leaders who bring a different perspective to corporate boards include Wei Christianson, CEO and managing director of Morgan Stanley, on the board of Estee Lauder; Ying Yeh, vice president and chairman of Nalco, on the board of ABB/Volvo; and Jennifer Li, CFO of Baidu, on the board of Philip Morris.

Diversity aids recruiting
Finally, don’t forget about board diversity’s impact on a company’s ability to attract talent. Over half of university graduates worldwide are women, which represents a significant future talent pool for businesses everywhere. To attract these graduates, you’ll need some recruiting firepower on your board for your outreach efforts.

In a recent New York Times profile of Sheryl Sandberg, Facebook COO and the first woman on Facebook’s board of directors, one industry professional referred to Sheryl as “radioactive plutonium when it comes to a recruiting weapon within Facebook,” saying “Young women really want to be her and learn from her.”[19] Imagine the recruiting benefits of having someone on your company’s board who’s surrounded by that much magic.

Women on a board can be also be role models for current employees, serving as real-life examples that women can succeed at the highest levels of a company and industry. In a recent gender diversity survey of 13 large companies in Asia, one respondent said: “Women in high positions encourage junior women. It shows by example that there is an opportunity. I am the first female director to take such a position… In Japan, when hiring new employees at an organisation job fair, this can increase the number of female candidates. It gives a good public image.”[20]

Designing and improving diversity programs at the board level can take shape in any number of ways. While there’s no single solution to the problem, there are no boundaries, either. That means we can all look to our teams, partners, peers–even our governments–for guidance. We can embrace the opportunity to rely on our own creativity in making the right changes for our companies. And we can take cues from other pioneers in the industry who are well on their way to enviable levels of diversity on their boards.

1. Create motivation
Governments can set legally binding quotas for the proportion of women on corporate boards. For example, because of a quota implemented in Norway ten years ago, women sit on 40 percent of boards there today.[21] This success lead the European commission to draft a proposal to force Europe’s listed companies to reserve at least 40 per cent of their non-executive director board seats for women by 2020 or face fines and other sanctions[22].

The mere threat of quotas can also bring about change. For example, in the year that the French government introduced, but didn’t yet pass, a quota for women on boards, companies in France doubled their female representation on boards.

Instead of forcing quotas, Malaysia opted to use a shared goal among companies as a source of national inspiration (Corporate Governance Blueprint 2011), setting a target of 30 percent of women directors on boards.[23]

This is similar to the policy instituted in 2004 to increase women in the ranks of civil service, which resulted in the ratio of women in senior leadership roles there rising steadily from 18.8%  to 32.3%  in 2010.[24]
Companies should consider other motivating factors unique to their situations. For example, in Japan–which has one of the lowest female labour participation rates among OECD countries–the labor force is predicted to shrink by 15 percent between 2010 and 2030, threatening GDP growth. Women can help fill this gap.

High-visibility industry experts or persons of authority can also help create urgency around gender diversity simply by calling attention to it as a critical component of corporate governance. This approach has been used in Singapore. Magnus Böcker, CEO of Singapore Exchange Ltd. has said “It is imperative for boards to comprise an appropriate mix of skills and mindsets. Our listed companies are encouraged to review their Boards’ composition and balance of gender diversity, to meet the increasing demands from investors on good governance and corporate sustainability.”[25]

2. Plan for succession

Let’s assume a company has prioritized gender diversity at the board level, or is looking to replace or add members. How does that company create a pipeline for the next generation of female directors?

Many regions around the world are already making strides toward finding, recruiting, and nurturing female candidates for future board positions. For example, the European Business Schools and Senior Executive Women recently launched a call to action for business schools to identify and promote female senior leadership, enable professional networking for women, increase the inflow of women to business schools, and tailor curricula to prepare female candidates. Following the call to action, a growing list of “board ready” women–7,000 as of June 2012– highlights the enormous female director candidate pool for European (and global) corporations.[26]

In the US, the Forté Foundation, a group of 39 business schools, asked its member schools to identify at least five potential women to serve as corporate board members. The foundation will partner with other groups to expand the list, with a goal to produce a pool of roughly 165 board ready women. Last, Forté will offer assessment tools and education to prepare women for potential board positions in the future.[27]

In Australia, the Australian Institute of Company Directors has developed a wide range of initiatives to increase the pipeline of women on boards and in senior management positions, including recommendations for boards to report on diversity policies and goals for senior management; transparency in board selection processes; and a database for current and aspiring women directors.[28]

The Singapore Institute of Directors has created a site where women can post their interest in serving on boards. To make further strides locally, perhaps the SID can initiate its own programs with business schools and women’s networks in a similar fashion to the European and US efforts above. The need for urgent action in Singapore is clear: it will take 158 more board seats held by women to reach 10% female representation on SGX boards.[29]

With the new corporate governance code in Singapore, the definition of an independent director is now more strict. As a result, companies will need to hire new independent directors, which represents a great opportunity for boards to consider female candidates.

3. Be creative
I challenge all of us to think more creatively about how to find and develop potential female director candidates: Within our own companies, can we pilot programs where women can serve on internal committees or subsidiary boards? How about grooming mid- and top-level executives for board positions early on? For example, the Australian Institute of Company Directors developed the Chairmen’s Mentoring Program, where leading chairmen and experienced directors of ASX 200 companies provide personal guidance to aspiring female directors over the course of a year, share their knowledge of governance issues, and help mentees build their professional networks.

To complement our internal activities, can we also look externally and consider sourcing director talent from outside our industry? For example, Google’s board of directors includes Shirley M. Tilghman, president of Princeton University, and Ann Mather, who has a varied background in media, finance, and computer animation.

As, Susan Wojcicki, a member of Google’s senior management team, said: “With stiff competition and fast product cycles, there’s not enough room to be gender-biased. What matters is being able to show product innovation and growth.”[30]

I look forward to seeing more global companies proactively harness the contributions of both men and women at the highest levels of their organizations. Until that point, however, we need to revolutionize our thinking around corporate boards and aggressively seek out the diversity in leadership that will make our businesses thrive.

Aliza Knox is a senior executive at Google Asia Pacific who sits on the board of a listed company in Australia, as well as on a workforce development organization in the US.


[1] Connor, Michael. “Women Lack Numbers and Influence on Corporate Boards.” Business Ethics. 19 March, 2012. [online]

[2] Devillard, Graven, Lawson, Paradise, Sancier-Sultan. Women Matter 2012: Making the Breakthrough. McKinsey and Company. 2012. [online]

[3] Yi & Mak. The Diversity Scorecard: Measuring Board Composition in Asia Pacific. The Korn/Ferry Institute. 2012. [online]

[4] Australian Institute of Company Directors. Appointments to ASX 200 Boards. 2012. [online]

[5] Süssmuth-Dyckerhoff, Wang, Chen. Women Matter: An Asian Perspective. McKinsey&Company. June 2012. [online]

[6] Fowler & Rodd. “Why Having Women on Corporate Boards Matters.” BigThink. 12 May 2012. [online video]

[7] Dieleman & Lim. Singapore Board Diversity Report: Gender Diversity in SGX-Listed Companies. October 2011.

[8] Joy, Carter, Wagner, Narayanan. The Bottom Line: Corporate Performance And Women’s Representation On Boards. Catalyst. 2007. [online]

[9] Why Gender Diversity Matters. Texas Wall Street Women. [online]

[10] ASX 500-Women Leaders Research Note. The Reiby Institute. 30 June 2011. [online]

[11] Pei. Is Board Diversity Important for Firm Performance and Board Independence? Monetary Authority of Singapore. April 2012.

[12] Desvaux & Devillard. Women Matter: Female leadership, a competitive edge for the future. McKinsey and Company. 2008.  [online]

[13] Adams & Ferreira. Women in the boardroom and their impact on governance and performance. Journal of Financial Economics. 4 Aug 2009. [online]

[14] Gratton, Kelan, Voigt, Walker, Wolfram. Innovative Potential: Men and Women in Teams. London Business School and The Lehman Brothers Centre for Women in Business. 2007. [online]

[15] HIPInvestor. “Does Your Company’s Diversity Match Your Customers?” TriplePundit. 26 March 2012. [online]

[16] HIPInvestor. “Does Your Company’s Diversity Match Your Customers?” TriplePundit. 26 March 2012. [online]

[17] Lee, Aileen. “Why Your Next Board Member Should Be A Woman.” TechCrunch. 19 February 2012. [online]

[18] Lee, Aileen. “Why Your Next Board Member Should Be A Woman.” TechCrunch. 19 February 2012. [online]

[19] Perlroth & Cain Miller. “The 1.6 Billion Dollar Woman, Staying On Message.” The New York Times. 4 February 2012.  [online]

[20] Mahtani, Francesco, Ng. Gender Diversity Benchmark for Asia. Diversity & Inclusion in Asia Network. March 2009. [online]

[21] “Waving a big stick.” The Economist. 10 March 2012. [online]

[22] Fontanella-Khan, James. “EU Pushes 40% quota”, Financial times- Brussels, 3 Sept 2012 [online]

[23] Fowler & Rodd. “Why Having Women on Corporate Boards Matters.” BigThink. 12 May 2012. [online video]; Tee & Lee. “Grooming More Women for the Board.”, 19th Nov 2011 [Online]

[24] Lee, Xieli. “Malaysia calls for more Women in Boardrooms.” Human Resources Magazine, Singapore, July 2011

[25] Dieleman & Lim. Singapore Board Diversity Report: Gender Diversity in SGX-Listed Companies. October 2011.

[26] The European Business Schools Women on Board Initiative. “Women on Boards: Vice-President Viviane Reding meets with leaders of Europe’s business schools and industry.” Press release. 19 June 2012. [online]

[27] Damast, Alison. “A Call to Action: U.S. B-Schools to Identify Board-Ready Women.” Bloomberg Businessweek. 29 June 2012. [online]

[28] “AICD Takes Action On Board Diversity.” The Australian Institute of Company Directors [press release]. 24 Nov 2009.

[29] Dieleman & Lim. Singapore Board Diversity Report: Gender Diversity in SGX-Listed Companies. October 2011.

[30] Wojcicki, Susan. “Good news about women in tech.” TIME Ideas [online]. 2 Nov 2011.


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