Community Business and the Cranfield School of Management published the first Women on Boards: Hang Seng Index 2009 report. The research, based on the UK’s renowned Female FTSE Report, looks at the representation of women on the corporate boards of Hong Kong’s top companies, as listed on the Hang Seng Index (HSI). It ranks the companies in terms of the gender diversity of their boards, with those with the highest percentage of women on their boards appearing at the top.
In the UK and other countries the dearth of women at the top has been highlighted by studies benchmarking the proportion and type of female directors on the boards of the country’s top organisations. With a lack of female representation at senior levels, companies are not only denying their organisations of valuable talent, but also limiting their ability to reflect the needs and interests of their customers and shareholders and therefore restricting their financial performance.
“This is the first time that Community Business has taken a look at Hong Kong’s own leading companies, as listed on the Hang Seng Index and focused on the representation of women on corporate boards in particular.” said Kate Vernon, co-author of the report and Acting CEO of Community Business. The focus on corporate boards is timely. Following the corporate scandals and financial failing of several major institutions across the world and the consequent collapse of shared values and a global recession, questions are being asked internationally about the validity of traditionally homogenous boards of directors. There is a currently growing body of academic evidence linking diverse boards to better corporate governance and various other aspects of performance.
Lack of gender diversity
Looking at the overall findings, the first year of this research reveals that out of a total of 585 directorships on the HSI, just under 9% are held by women. This percentage is comparable to Australia but lower than the UK, US and Canada. Out of the total of 42 companies listed on the HSI, 67% have women on their boards, which leaves 14 companies with no female representation at all.
In addition, 15 companies, around 36% of those surveyed, have more than one female director, 13 companies, 31%, have female executive directors and 7% of all executive director roles are held by women. Of all new appointments made in 2009, as of 24 August 2009, just under 13% were women. All these percentages are in line with, or compare favourably with the UK FTSE 100. Only one company, Sun Hung Kai Properties, has a female Chair and one company, Hang Seng Bank, has a female CEO.
Company rankings
The report includes a Women on Boards League Table which ranks the companies listed on the HSI in terms of the gender diversity of their boards, with those with the highest percentage of women on their boards appearing at the top. At the top of the list is China Construction Bank Corporation which has five women, around 29%, on its board of 17. Bank of China Ltd is second with three women, 20%, on its board of 15 and Cheung Kong (Holdings) Ltd. is third with four women, 19%, on its board of 21. China Life Insurance Company Ltd, China Resources Power Holdings Company Ltd and MTR Corporation Ltd are all in fourth place, each with two female directors, 18%, on their boards of 11.
Views of women directors
Nine female directors on the boards
of HSI companies were interviewed to obtain their views regarding women on boards and personal experiences of being female directors. The majority of women were surprised that the overall percentage of directorships held by women is under 9%, saying that this was lower than they expected.
Reasons cited were the limited talent pool–perceived or actual, Hong Kong’s male dominant society and the so-called ‘invisible filter’—a process whereby women themselves opt out of senior roles because of family obligations. They also highlighted that women tend not to be as well networked as men and therefore often do not get considered for appointments to board positions.
The majority of women interviewed agreed with the statement that more needs to be done, mainly by companies rather than government, to encourage greater participation of women on boards. All but one were opposed to the introduction of legislation or quotas—an approach adopted by some countries in Europe. They highlighted that more education was required to raise awareness about the importance of diversity on boards and its link with business success.
The women identified a number of skills they believed were required to be a board director: integrity, commitment, in-depth industry knowledge, senior management experience and the ability to bring a broader perspective to the business. They were unanimous in their belief that a pool of qualified female talent existed in Hong Kong and that women in Hong Kong were interested in board roles, highlighting that they had worked alongside other very qualified women particularly on not-for-profit and public committees. The majority of women interviewed were optimistic that the percentage of women on boards would increase over the next five years, with predictions ranging from 9% to 20%. However, Dr Ruth Sealy of Cranfield School of Management warns, “Experience in other countries, such as the UK, has shown that without specific action, the pace of change can be painstakingly slow.”
The report concludes that one of the greatest challenges for Hong Kong is that the benefits of gender diversity are not well understood by the business sector and for the most part ensuring fair representation of women on boards is not even discussed either by companies or senior women themselves. “If there is to be noticeable improvement, companies, their stakeholders and senior women themselves need to have open dialogue on this issue and consider what steps can be taken to ensure that more women are considered for appointment to board positions,” said Shalini Mahtani of Community Business.
Paul Arkwright
Publisher
