Opening Address by Minister Grace Fu at the launch of the Singapore Institute of Directors' Nominating Committee Guide on 28 Aug 2015
Promoting Gender Diversity on Boards
Mr Willie Cheng Chairman of the Singapore Institute of Directors
Ladies and Gentlemen,
Good morning. It is my pleasure to join you today at the launch of the Singapore Institute of Directors’ Nominating Committee (NC) Guide and Diversity Pledge.
Today’s event celebrates our commitment to improving diversity on boards.
Lack of gender diversity in business management and leadership
Let’s look at gender diversity. Women in Singapore have made significant progress in education and the workforce. In 2014, women made up just over half (51%) of the enrolment in the universities. Almost three quarters (73%) of resident females between 25 and 64 years were in the workforce, compared to just 6 in 10 (62%) a decade ago.1 Yet, Singaporean women continue to be under-represented in top management positions. In 2014, women held just 27% of management positions in private companies in Singapore, lagging behind our regional counterparts. If we look at the large listed companies in Singapore, the percentage with all-male boards has decreased from 51.4% in 2013, to 46.3% in 2014.2;This is an improvement, but the fact remains that women comprised just 8.8% of all board directors in SGX-listed companies.3 At last year’s SID Directors’ Conference, I noted several large listed companies which did not have a single woman on their boards. Since then, only one of those companies has added one female director to its board.4 I am keeping a close watch on the progress made by these companies.
Business case for women in leadership
Globalisation has made competition for talent global too. Companies that are able to harness talent would see sustained growth and competitiveness. Women bring diversity and talent.
First, women leaders enhance performance of management teams. A 2013 study published by the Harvard Business Review found that the majority (57%) of male directors agreed that women brought fresh perspectives and ideas to the boardroom. Another of its studies showed that women leaders demonstrated particular strengths such as driving for results, inspiring and motivating others, and encouraging collaboration and teamwork.5 Research by McKinsey also showed that, compared to men, female leaders tend to invest more resources in people development and place more emphasis on building respect within their teams.
Second, greater gender diversity in company leadership is linked to better financial performance. According to a study by Roy Adler, over a period of over two decades from 1980 to 2001, Fortune 500 companies that were the most active in promoting women into their top management teams enjoyed a profit margin 34% higher than the industry median.6 Companies in which women made up more than 15% of senior management had a return on equity (ROE) of 14.7%, compared to 9.7% ROE in companies where women made up less than 10% of senior management. 7 In a 2014 report published by the NUS Business School and BoardAgender, it was found that SGX-listed companies with at least one woman on the board had a 3.3% return on assets, compared to just 0.3% for companies without gender diversity.
Companies with more gender diverse boards tend to perform better. There is a compelling business case for gender diversity in business leadership.
Harnessing the full potential of talent - women and men
To harness the full potential of the talent pool – both women and men – companies and other organisations will need to put in concerted effort to establish policies, processes and systems which provide opportunities for able employees, regardless of gender, to be developed as leaders. I would like to urge companies to consider the following three areas.
First, offer equal opportunities for leadership development to men and women with potential. The International Labour Organisation noted that women tend to be concentrated in certain functions and may lack all-rounded management experience, limiting their ability to move on to higher-level leadership roles.8 The 2014 Gender Diversity Task Force report noted that females tend to be better represented in management positions in human resource, administration, legal, compliance and regulatory functions, and finance (35-61% of positions) but poorly represented in strategy and planning, technology, operations and sales (11-18%).9 One reason that fewer women rise to the positions of CEO and board directors could be that they are not given enough exposure at the managerial level to various key functions in the organisation.
Companies need to make a conscious effort to design and formalise leadership selection and development processes to provide equal opportunities for all their employees with leadership potential, regardless of gender, to broaden their management experience. Companies can put in place processes such as guided transfers between business functions to develop all-rounded leadership capabilities, and provide opportunities for networking and taking on stretch assignments. In addition, processes to nominate potential candidates for board positions should be transparent and merit based. These processes would enable companies to tap on the potential of all their people to optimise overall company performance.
Second, implement family-friendly work practices that benefit both men and women. Employers understand the importance of talent attraction and retention. And those who are able to help their employees better manage their work and family commitments will get the best out of employees. Men and women now aspire to have meaningful careers and fulfilling family lives. Businesses should therefore focus on building a performance-based culture which emphasises outcomes over physical presence in the office. This benefits both men and women, as more men seek to play a greater role at home, just as women are stepping up to take on more work responsibilities.
One such company that understands the value of family-friendly work practices is KPMG Singapore. In addition to having flexible work arrangements, they have initiated “Mums & Pops @ KPMG”, a focus group that seeks to understand the needs of working parents in the company and champions ideas to promote work-life harmony. Ms Yvonne Chiu, Audit Partner at KPMG Singapore and Partner-in-Charge of “Mums & Pops” said, “Our people are at the heart of our policies and supporting them in their professional and personal growth is a key driver of our talent attraction and retention efforts.”10
The Government supports working parents through parental leave provisions. We have just announced an increase in Government-paid paternity leave from 1 to 2 weeks in the recent Jubilee Package. We are also continuing to make significant improvements to the accessibility, affordability and quality of pre-school. Through the Work-Life Grant, Government provides funding support to encourage more employers to implement flexible work arrangements.
Third, take clear visible steps to promote gender diversity. Companies can begin by taking stock of where they stand with regard to gender diversity. Last year, several MNCs including Apple, Microsoft and eBay, published statistics that showed the lack of gender diversity in their organisations.11 Many of these companies have since put in place policies and initiatives to foster greater gender diversity. For example, Microsoft has developed training courses for their human resource teams on overcoming recruitment biases and being more inclusive in hiring practices.12 eBay’s Women’s Initiative Network, or WIN, launched in 2011, organises high-key initiatives such as global summits facilitating dialogue among senior leaders on how to increase the number of women in leadership roles, reduce their attrition rate and improve women’s job satisfaction.13 Since the introduction of WIN, the number of women in director level positions and above in the company has increased 1.5 times to 514 14 , and eBay continues to work with researchers to gain insights on improving gender diversity.15
In closing, I would like to emphasise that promoting diversity on boards, be it gender, age or ethnic diversity, is not about giving certain groups preferential treatment. It is about recognising the value of diverse perspectives in the boardroom and harnessing the full potential of all talent companies have in their fold. I believe this is the key to sustainable, optimum leadership performance in an increasingly complex and competitive global environment.
I am glad to see that we are taking steps in the right direction. Let us continue to work towards greater gender diversity in business leadership.Thank you.
1 Ministry of Manpower (2014). Labour Force in Singapore, 2014. (Pg T9)
2 Diversity Action Committee (2015). Facts and Numbers. http://www.diversityaction.sg/resources/facts-and-numbers/
3 Diversity Action Committee (2015). Report on Women’s Representation on SGX-listed Companies’ Boards as at end 2014.
4 Starhub Ltd (2015). Board of Directors. http://www.starhub.com/about-us/company-information/corporate-structure/board-of-directors.html
5 Zenger, J. and Folkman, J. (2012). “Are Women Better Leaders than Men?” https://hbr.org/2012/03/a-study-in-leadership-women-do/
6 Adler, R. (27 Feb, 2009). “Profit, Thy Name Is…Woman?”. Pacific Standard. http://www.psmag.com/business-economics/profit-thy-name-is-woman-3920
7 Credit Suisse (2014). The CS Gender 3000: Women in Senior Management. (Pg 18, 23)
8 International Labour Organisation (2015). Women in business and management: Gaining momentum in Asia and the Pacific. (Pg 12-13)
9 Diversity Task Force (2014). Gender Diversity on Boards: A Business Imperative. (Pg 31)
10 Unantenne, N. (n.d.) “Mum-friendly companies in Singapore – Do you work for one of them?” http://sg.theasianparent.com/mum-friendly-companies-in-singapore/
11 DeAmicis, C. and Carson, B. (21 Aug, 2014). “Eight charts that put tech companies’ diversity stats into perspective”. https://gigaom.com/2014/08/21/eight-charts-that-put-tech-companies-diversity-stats-into-perspective/
12 Microsoft (2015). Our Global Diversity & Inclusion. https://www.microsoft.com/en-us/diversity/business-of-inclusion/default.aspx
13 McKinsey & Company (2014). “Realizing the power of talented women”. http://www.mckinsey.com/insights/organization/realizing_the_power_of_talented_women
14 USA Today (12 March, 2015). “Hillary Clinton drops in on eBay women’s summit.” http://www.usatoday.com/story/tech/2015/03/11/hillary-clinton-ebay-womens-initiative-network-summit/70174034/
15 eBay Inc. (31 July, 2014). “Building a Stronger, Better, More Diverse eBay”. http://blog.ebay.com/building-stronger-better-diverse-ebay/