When Kathy Matsui started working at the Tokyo office of Goldman Sachs in 1994 she used to joke: “I started out with three strikes against me: young, foreign and female.” Her rivals were overwhelmingly middle-aged Japanese males at large domestic brokerage firms.
Matsui, who became the first female partner at the New York firm in Japan during 2000, said the male-dominated world of business is slowly changing as the government pushes companies to hit diversity targets as part of its efforts to spur economic growth. Similar moves are afoot across the region from Malaysia to Hong Kong.
There is much to be done.
When it comes to having women in senior management positions and pay in banking, Asia still lags behind other regions.
The gender gap in corporate and investment banking across Asia Pacific can be seen most clearly in pay. The difference between male and female compensation is relatively low at 6% to 9% for most job titles but increases dramatically to 21% for managing directors according to Emolument. [See bar chart]
But Chinese girl power, in particular, and banks’ efforts to retain talent is slowly changing that.
Partly thanks to that Greater China effect, the regional average for female board representation in Asia inched up to 9.4% in 2015 from 8.0% in 2012, executive recruitment firm Korn Ferry International said in a report in March.
Just 24 of the 1,000 largest Asian companies examined by Korn Ferry have at least four female members on their boards. But of the two dozen, nine are in mainland China and another nine are in Hong Kong.
“China is very positive in terms of gender diversity. There are now more women in the professional ranks coming through into senior levels,” Antonia Cowdry, regional head of human resources, Asia-Pacific, at Deutsche Bank told FinanceAsia.
She added that Deutsche Bank now employed more women than men in China.
Better risk management
For financial professionals it doesn’t take a huge mental leap to imagine that a more diverse workforce and management might be more profitable for businesses in the long run. After all, to achieve higher returns with lower risk investors are usually advised to spread their bets across different assets and in the wake of the global financial crisis banks are under intense pressure to manage risks more effectively.
“In an era of globalization, where there are similarities between banking platforms and products, it is people who make the difference. The more diverse a team, it stands to reason that ideas generated for clients will be more creative and interesting,” Nick Green, a managing director at Carraway Group, an investment banking headhunting firm in Hong Kong told FinanceAsia.
As a result, global investment banks and other large financial institutions are increasingly driving change throughout Asia by setting up diversity teams, hosting events to make sure they hire, retain, and promote a more diverse range of people, not least women.
“There is a huge amount of time mentoring junior women coming up through the business and making sure they have the right training and support and guidance from the female partners globally. It is very much a collaborative effort,” Kate Richdale co-head of investment banking Asia excluding Japan, Goldman Sachs told FinanceAsia.
In March for the past five years Citi has celebrated International Women’s Day globally; its 2015 celebration included over 220 events in over 130 cities and nearly 90 countries. In Hong Kong the Out on the Street: Asia 2014 LGBT summit drew speakers from HSBC, Deutsche Bank, and GE Capital, among others.
In Sydney ANZ Bank covered its ATMs – or GAYTMs – in jewels and bright colours as part of its partnership as principal sponsor of the Sydney Gay and Lesbian Mardi Gras.
Some studies show a clear correlation between female board representation and a company’s financial performance.
One this year by Korn Ferry scanned 1,000 companies across 10 countries in the Asia-Pacific region and found that boards with 10% or more female directors delivered, on average, a 3.6% higher return on equity and 1.3% higher return on asset than those with fewer female directors.
But what constitutes cause and effect remains unclear because better-managed companies are often the first to grasp the diversity nettle.
So for all the irresistible logic, there is as yet no cast-iron, hard evidence to show that greater female representation at a senior level actually helps businesses.
What’s more, a 2011 study by Harvard academics Frank Dobbin and Jiwook Jung found that gender board diversity could sometimes even hurt firms. After analysing data from 432 major American corporations for the period 1997 to 2006, they found that institutional investors with company holdings below 5% tended to sell their shares in response to the appointment of female directors.
Even so, with global firms increasingly embracing the business case for having more women on board – as part of a broader push for a more diverse decision-making process that also cuts across race, caste, religion, sexual orientation, and physical abilities – can Asian firms afford to continue resisting change?
A report by the Boston Consulting Group in 2010 estimated that women controlled 27% of the world’s total wealth – a sizeable chunk by any measure and one that is likely to have grown since then and is set to continue growing as more women enter the workforce.
Many banks are cagey about releasing data on female targets. HSBC said it would not disclose its target percentages for senior female representation. Others are more forthcoming: Citi said that as of January, female representation of senior managers globally rose to 24%, up from 23% in January 2014 and 22% in January 2013.
But some insiders believe the work afoot to put banks at the forefront of change is already paying some dividends, even as parts of the business – such as trading – remain male-dominated.
“On the whole we would put Asia ahead of, certainly the UK and to a certain extent US, in terms of the total number of women engaged in financial services,” Deutsche Bank’s Cowdry said.
In India, meanwhile, more than half of all female chief executive officers – who in turn constituted 11% of the total – hailed from the banking and financial services sector, according to a 2011 report by recruitment firm EMA Partners International.
Work to do
To be sure, progress across the region is patchy.
Aside from cultural and religious barriers, relatively low female labour participation rates in some countries limits the pipeline of new female recruits with the potential to become the C-suite and banking stars of the future.
But even in those countries with high female labour participation rates and high levels of women in tertiary education -- including Singapore but also China -- women remain woefully under-represented at the more senior levels, notes Anne-Marie Balfe, Asia-Pacific Diversity and Inclusiveness Leader, EY.
“The number of female senior executives has slightly increased [in recent years]. [However] when you attend CEO-level roundtables and forums, you still see a table full of [men]. You will usually feel quite lonely, as it’s still a man’s world,” Li Tong, the first female CEO of Bank of China International told FinanceAsia.
A McKinsey & Co. report from 2013 also shows that 70% of executives in Asia at that time did not count greater gender diversity among their top-10 priorities.
Slowly but surely efforts are underway to move the needle.
In Malaysia, the prime minister launched an initiative in May to help triple female representation on company boards to 30%.
Following an amendment to the listing rules in September 2013, new issuers in Hong Kong are also now required to have a board-level diversity policy.
There are even flickers of progress in Japan, a notoriously barren landscape for gender diversity, where the talent pool cries out for some female oxygenation, given the country’s aging and declining population.
Prime Minister Shinzo Abe stated last year that he wanted to see 30% of all senior leadership posts occupied by women by 2020, while legislation pending in the Japanese Diet could force organisations with more than 300 employees to disclose gender diversity targets and action plans to reach those goals.
Goldman Sachs’s Matsui, who is chief Japan equity strategist and co-head of Asia Investment Research at the US bank and one of our ‘Top 25 Women in Asian Finance’ this year, believes some form of affirmative action, such as quotas in public administration, might yet be required if Japan is to get there.
But she is also banking on other drivers as the country opens up to outside influences and adopts more female-friendly policies.
“I’m hopeful that, globally, the younger generation of millennium males will act as a tailwind since they’re increasingly raising their voices for greater work-life flexibility. In other words, this is an issue for everyone, not just women anymore,” she said.
Additional reporting by Julie Zhu