More women leaders to vitalize Asia's corporate sector

Published on Tuesday, 31 May 2016

Published by Akiko Terada-Hagiwara on Tuesday, 31 May 2016

Women at a business meeting in the Kyrgyz Republic.
Women at a business meeting in the Kyrgyz Republic.

Despite progress, the number of women with decision-making power in the workplace in developing Asia continues to lag behind men. To answer why, we recently looked at data on the gender leadership gap for 20 developing Asian economies plus Japan, the US, and Germany.  

The analysis shows that while women comprise about 40% of the entire workforce, they are only about 14% of corporate boardroom members and senior management. Women’s share drops to below 10% if limited to the corporate boardrooms of private firms.

This comes in spite of efforts by many Asian countries to implement gender equality measures to increase the number of women in boardrooms and senior management positions. The Malaysian cabinet approved in 2011 a policy mandating that women comprise 30% of senior management positions by 2016 in firms with more than 250 employees. The Government of India has introduced a law that requires all listed firms to have at least one woman on the board by March 2015.

Several economies have respectable female representation, such as Kazakhstan and Viet Nam where the number of female workers in the workforce is on a par with males, and the female share in top management is also high, exceeding 30% in both countries.

Female presence in the workforce and in the boardroom and senior management. BAN = Bangladesh; FIJ = Fiji; GER = Germany; HKG = Hong Kong, China; IND = India; INO = Indonesia; KAZ = Kazakhstan; KOR = Republic of Korea; JPN = Japan; MAL = Malaysia; PAK = Pakistan; PHI = Philippines; PNG = Papua New Guinea; PRC = People’s Republic of China; SIN = Singapore; SRI = Sri Lanka; TAP = Taipei,China; THA = Thailand; US = United States; VIE = Viet Nam. Note: Employment data refers to the average for the period 2009–2013.    Source: ADB estimates using data from Orbis and International Labour Organization, Key Indicators of the Labor Market, 8th edition (accessed 31 July 2015).

In general, countries in Southeast Asia perform well too, with the female share of top management above average, led by the Philippines, Malaysia, and Singapore. Thailand, Indonesia, and Viet Nam lead the ranks of Southeast Asian countries with the highest female share of boardroom membership, with levels comparable to North America and Europe. India is an exception in developing Asia, as every board has at least one female member because of a recently enacted law, but the average share in India is not significantly higher than the regional average.

Variation is more pronounced when looking at female senior management and boardroom representation by industry. More than half of female employees work in the service sector in Asia, and this is where female representation is highest in 13 Asian economies with comparable data.

Part of the reason women’s representation in corporate leadership remains low in the region is because Asia’s corporate sector is dominated by manufacturing ( 52% of the total), a sector where women’s representation in top management tends to be extremely limited. This contrasts sharply with higher income groupings such as the members of the OECD, where the service sector is more developed and can absorb more than 80% of female workers. Many boardrooms, especially in heavy industries, are completely male. Women are slightly better represented in services such as health care, real estate, and finance. Female representation is consistently lower in developing Asia than in the advanced economies in the sample. Communication is the only area where developing Asia outperforms the selected advanced economies in terms of female representation.

Female share in top management in developing Asia by industry. Note: As used here, ‘top management’ refers to board members and senior management. Source: ADB estimates using data from Orbis (accessed 31 July 2015).

Achieving a more gender-balanced workplace, particularly in decision-making roles, is beneficial to both employees and employers. As McKinsey and Company (2007) showed, firms with three or more women on their senior management teams tend to perform better. Such companies score higher on leadership, quality of the work environment, and values such as coordination and control, which are associated with higher operating margins.

This result is supported by Catalyst (2004), which found a positive correlation between gender diversity and financial performance in terms of return on equity and total return to shareholders. Further evidence has shown that if all women were excluded from managerial positions the output per worker would fall by over 10% (Cuberes and Teignier 2014). Qian (2016) provided consistent evidence from 10 Asian economies that improvements to gender diversity in the boardroom and the appointment of new qualified female directors are positively associated with a firm’s performance in the subsequent year.

How do we achieve a more gender-balanced workplace? Needless to say that impediments for women to enter the labor market—such as lack of necessary education and skills, family unfriendly environment, or social norms—need to be removed in the first place so that women can actually start working. Increasing trade openness and developing productive service sector can also result in higher women’s participation in the labor market, and in decision-making roles as a result.

The research is clear – Asia wins when we increase women’s representation in decision-making roles.