The Stupid Curve: Asia’s Missing Women Leaders

By Imrana Jalal

Why are there so few women in senior management when Asia has had more female state leaders than even Europe? And why does this continue when there is clear evidence that more women in leadership is good for the bottom line?

Roseanne Barr said, “The thing women have yet to learn is nobody gives you power. You just take it.”

So, are Asia’s women taking power or are they waiting for someone to hand it to them on a platter? Is Asia ready for women leaders in the corporate and public sectors? Why are there so few women in senior management or “at the top” of the pyramid when Asia has had more female state leaders than even Europe (albeit usually of the dynastic type)? One would think that the dynastic leadership trend might also lead to more women in the boardrooms and in management. Not so it seems.

Is it a lack of education? Is it age old culture and tradition? Are the boys’ networks established and deepened on the golf courses keeping women out? Is it possible that in this day and age, men still think that women “can’t quite cut it”? And why does this continue when there is clear evidence that more women in leadership is good for the bottom line?

Obviously, it is not education since even in countries where men and women are graduating in roughly equal numbers from universities, they are still not represented in the same proportions at the upper levels of management. Ernst & Young refers to this as the “Stupid Curve”—the  wastage that occurs when women do not climb to senior levels in an organization. Given that talent is spread equally across the sexes, companies are significantly limiting their talent pool, compromising diversity of thinking and business solutions when they exclude women from senior management.

In the Asia and Pacific region, despite some progress, women’s share in senior management in the public and private sectors is still abysmal, except for the PRC, an anomaly at 51%. In India, it’s a paltry 19%, and even worse in Japan—only 7% (see Grant Thornton International Business Report). According to the World Economic Forum, in Asia, women make up less than 6% of company board members, in contrast to 15% in the United States, and 17% in Europe.

In a 2013 survey of 100 listed companies around the region, females comprised fewer than 10% of board members. More than half of the boards in India, Japan, Republic of Korea, New Zealand, and Singapore have no female members at all, says the Korn Ferry Institute. Only six of the 900 boards have more than three female directors.

Likewise, women are missing from the ministerial levels across the region—ranging from 22% in Philippines to as low as 5% in Cambodia.

So, why is Asia so allergic to women in senior management in the private and public sectors? Partly, it is due to historical and systemic gender discrimination, as well as some good old fashioned institutional resistance. Socio-cultural reasons may include “male preference,”  perceptions that women are not good  leaders, exclusion from informal male networks, absence of inspiring female role models and mentoring opportunities, work/life balance challenges, and a perceived lack of flexibility. Gender stereotyping also matters. When women leaders build relationships, encourage team work, express concern for others they can be viewed as less competent or too “emotional.” Alternatively, when women behave similar to many men leaders—act assertively or express ambition, they are judged as “tough” aggressive and too masculine. They simply can’t win.

Women are also less self-assured than men—and to succeed, "confidence matters as much as competence". There is basically a confidence gender gap.

All of this is despite the plethora of evidence that closing the gender gap in leadership leads to better business and financial outcomes.

Companies with greater gender diversity in their leadership teams outperform those with less—often by as much as 30%. Fortune 500 companies with three or more women on their boards gained a significant performance advantage over those with fewer—73% return on sales, an 83% return on equity, and a 112% return on invested capital. A Mckinsey study found that companies with the highest percentage of women in executive committees delivered better performance than those with all-male executives—the former exceeded the latter by 41% in  return on equity, and by 56% in operating results. A study of 2,360 companies discovered that those with one or more female board members have delivered higher average returns on equity, and better average growth.

Do these studies apply to Asia? Yes. A study of nine Indian companies run by women managers outperformed the 30 leading listed firms on the Bombay Stock Exchange (BSE), in year-on-year growth rates for the last five years. Over a five-year period, the nine companies had a compounded annual growth rate of around 35% in pretax income, compared with 21% for the BSE-30 firms. Companies run by women in Viet Nam do better than those run by men. To mid-January 2009, Mekong Capital found that shares of publicly traded companies with female CEOs fell 17.1%, compared with the 38.8% drop in companies with male chief executives. Co-incidence? Maybe. Or, maybe not.

So how do we change the status quo?  Some earthquakes are needed.

Malaysia is showing the way with its own seismic policy shift. In 2011, Malaysia’s cabinet approved a policy that women must comprise at least 30% of decision-making positions in the corporate sector, giving companies five years to comply. The Indian legislature, the Lok Sabha, passed the Companies Bill 2011 which provides that certain classes of companies should have at least one female director. Such policy and legislative changes should shake things up in the bit in the corporate world, and hopefully be a catalyst for change.

We have to change the endemic mindset that is resistant to change. This change requires a seismic shift in attitude from men, and also from some women themselves, and from institutions. Perhaps some major “institutional earthquakes” are required from time to time to change such mindsets.