Women are under-represented in corporate boardrooms everywhere and Singapore is no exception. According to the report Women on Boards: Tackling the Issue by the Diversity Action Committee, women held 9.7% of directorships among listed companies on the Singapore Exchange (SGX) as at June 2016. The Committee was set up in 2014 at the recommendation of the Diversity Task Force under the Ministry of Social and Family Development (MSF), to drive efforts to raise female representation on corporate boards at a faster pace.
Gender diversity in a boardroom is beneficial — it strengthens decision-making by the board, results in more informed risk management practices and overall, allows for stronger corporate governance. This would better position companies to attract and capitalise on business opportunities for higher returns. The Singapore Board Diversity Report 2014, jointly presented by the NUS Centre for Governance, Institutions and Organisations and BoardAgender, showed that companies with at least one female on their boards have, on average, higher returns-on-assets, compared to all-male boards.
In October 2016, I studied the most recent annual reports of the largest-cap companies with market capitalisations of S$1 billion or more listed on the SGX. I found that the number of women on the boards of these companies was positively correlated with the firm’s performance. This indicates that companies with more female directors could potentially do better financially.
According to the Diversity Action Committee, there is increasing awareness in Singapore for companies to move towards having greater gender diversity on boards. Groups like BoardAgender and the Singapore Institute of Directors track female representation on boards, and conduct discussions on board diversity. However, even as we see more women becoming company directors, more than half of listed companies continue to have all-male boards. What’s the cause of this?
Examining the underlying factors
There are probably two main reasons for why we currently have too few female board directors.
First, women may not have the same aspirations as men. The Global Gender Diversity Report 2016 by recruitment specialist Hays found that of the 11,500 people surveyed globally, fewer women than men aspired to rise to a top leadership position in their careers. In Singapore, only 61% of the female respondents aspired to rise to a top leadership position, compared to 84% of male respondents.
It is fair to question if this “ambition gap” is innate or instead influenced by social norms. This leads us to the second reason: societal attitudes. The same report by Hays found that 37% of the female respondents thought that there was no equality in pay between genders. The Comprehensive Labour Force Survey from the Ministry of Manpower (MOM) in 2015 backs that up since the median income of women in Singapore is less than men. Most respondents also said that men occupied the most senior position in their organisation, and 64% said that their manager was male.
The perception among women that they are not on same equal footing as men and that fewer top jobs are available for them may make them less inclined to aim high. The Diversity Action Committee report further showed that only 21% of senior management roles in listed companies are filled by women.
What can be done
Proposals have been made to quicken the pace of diversifying boards in Singapore. One recommendation is to review the Code of Corporate Governance and require companies to disclose their diversity policies, including those relating to gender diversity, and their progress in achieving these objectives.
Hays also recommended that companies should further encourage female ambition, by adopting and communicating gender diversity policies to employees from the start. Such policies could involve mentoring and training programmes for women, signalling that the company is interested in grooming them for larger roles and supporting their career goals.
Organisations can also help women balance between work and family. The most common practice is to provide flexible working arrangements for employees. In 2014, 47% of companies in Singapore did so, as shown in the Conditions of Employment survey conducted by MOM.
Yet some women continue to worry that they will passed over for promotions if they do not put in enough time in the office. This is where families, especially spouses and partners, can come in. Men can take on more responsibilities at home, and help women to feel that they have the option of pursuing their career aspirations and managing both work and family life.
The 2015 labour force survey from MOM showed that there is a discernible dip in the labour force participation rate for females aged 30 to 34, indicating that some women stop working altogether, possibly to fulfil their responsibilities to the home. Thus, if we want to build a larger pool of capable and qualified female employees who can become tomorrow’s leaders and board directors, we need to support women who want to remain in the workforce today.
Petrina Chew is a Research Assistant in the Economics and Business research cluster at IPS. For another piece on board governance, read IPS Senior Research Fellow Dr Alex Tan Tai Loong’s op-ed, A Blanket Cap on Board Tenure Would Do More Harm Than Good
Top photo from Singapore’s Diversity Action Committee.