Diversity in Asia: Let's not talk about sex

McKinsey’s new report on women working in Asia shows that while there is clearly a need to increase female participation in the workforce and upper management, most companies aren’t making it a strategic priority.
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The cover of our May issue, which looked at the role of women in Asia's banking industry
<div style="text-align: left;"> The cover of our May issue, which looked at the role of women in Asia's banking industry </div>

Women in Asia still face barriers in the workforce, particularly in upper management, according to a new report by McKinsey & Company this week — echoing our own findings in the May 2012 cover story of FinanceAsia magazine.

Since 2007, McKinsey has been making the business case for raising the number of women in senior management positions, but up until now McKinsey’s Women Matter research has largely focused on Western countries, in an effort to find out not only how women contribute to corporate performance, but also what companies are doing to change the status quo and which actions are most effective.

In its new report — Women Matter: An Asian Perspective — McKinsey took 744 companies from the local stock indices of 10 Asian markets and looked at the gender composition of their boards and executive committees. The firm also surveyed some 1,500 senior managers in Asia with the aim of gauging the appetite for greater gender diversity, understanding the barriers that prevent it and working out the best tactics for achieving it.

Asian cultures of course differ widely, so the picture is not surprisingly a varied one. The results show that women hold few of the top jobs in Asia. Moreover, although elements of a gender diversity programme are in place in some Asian companies, for the most part the issue is not yet high on the strategic agenda.

McKinsey found that the proportion of women sitting on corporate boards and executive committees in Asian companies is strikingly low compared with Europe and the US, even though women remain under-represented in those regions too. On average, women account for 6% of seats on corporate boards in the 10 markets McKinsey studied, and 8% of those on executive committees. The comparative figures in Europe and the US are 17% and 10%, and 15% and 14%, respectively.

But some of the problems holding women back in Asia are different than in the US and Europe. First, the rates of female participation in the labour force, while varying significantly from country to country in Asia, generally tend to be lower than they are in the West. This makes it difficult even to begin feeding the pipeline to upper management. McKinsey found that the female labour participation rate in India is 35% — one of the lowest in the world. It is also less than 50% in Taiwan and Malaysia. Yet even in those Asian markets where there is a high proportion of women in the labour force, women tend to fare no better in the corporate world. China, for example, has one of the world’s highest female labour participation rates, but still only 8% of corporate board members and 9% of executive committee members are women, the report found.

And it doesn’t appear to be down to education. Women in Asia account for roughly half of Asia’s graduates. They’re getting educated, but they become increasingly under-represented at the senior levels of corporations — facing different obstacles in different markets, at different stages of their careers.

In China, for example, where labour participation rates are high, women account for more than half of all professional entry-level positions, but McKinsey found they fare much less well thereafter. In India, women are in the minority at university and in entry-level positions. In South Korea, a very small proportion of women move into middle management. A rare exception is Singapore, where, if women reach the senior management of a company, they appear to have a relatively good chance of joining its executive committee.

Why does this all matter? If companies don’t increase the number of women in all levels of the workforce, McKinsey argues, they are surrendering two important sources of competitive advantage: more talent (in an age of scarcity) and capitalising on the particular performance benefits that women in leadership positions bring to an organisation.

Despite the business case for recruiting and developing more women, 70% of the executives McKinsey surveyed in Asia said greater gender diversity was not a strategic priority for their companies — that is, it was not among their top 10 priorities. In Europe, the figure was 47%. In addition, only a minority of Asian executives — some 40% — expected that their companies would step up efforts to improve gender diversity during the next five years. South Korean executives were a notable exception: two-thirds foresaw the rapid introduction of more gender diversity initiatives, McKinsey found.

What’s holding women back?
Thirty percent of business leaders surveyed said many or most women at mid-career or senior level leaving their jobs voluntarily did so because of family commitments. In certain markets, the level is much higher. In India, South Korea and Japan, it is close to half, leading McKinsey to conclude that it is the strength of cultural views, held by many women as well as men, that hinder women’s progress. In Australia, China, Hong Kong and Singapore, family duties appear to exert less influence over women’s decisions about their working lives.

However, a lack of female role models who can inspire and encourage other women, and a lack of the networks that can be crucial to advancement, does seem to be a hindrance.

“In addition, there is a long list of often unspoken or unrecognised biases, such as the fact that people are more comfortable with those who resemble themselves — which means that men often rate the performance of other men more highly than that of women. The fact that women can be reluctant to promote themselves only intensifies such biases,” McKinsey wrote. “Corporations have a role to play in helping to remove or lower all of these obstacles, and more.”

So what’s the solution? McKinsey found three main elements are key to improving the imbalance:

  • management commitment, which means the CEO and the executive team champion gender diversity and set targets for the number of senior women in the organisation;
  • women’s development programmes, which equip women with the skills and networks they need to master corporate codes and raise their ambitions and profiles; and
  • “a set of enablers”, that together help ease women’s progress through the company. These include indicators to identify inequalities and track improvements, human resources processes and policies, and support.
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