Gender quotas not the only answer to closing the gender gap
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Gender quotas not the only answer to closing the gender gap

DESPITE strong evidence in favour of gender diversity in organisations, the number of women in boardrooms globally remains low.Patterns of women’s participation in Southeast Asian corporate governance offer critical insights into what needs to be done to harness the benefits of gender diversity in leadership.Gender-diverse workplaces enjoy higher levels of employee retention and satisfaction, greater productivity and increased creativity. Analysis of corporate boards in Southeast Asia points to a positive correlation between gender diversity in corporate governance and business performance.

Data collected in Indonesia, the Philippines and Vietnam indicate that women directors are just as influential as men in corporate governance networks. Studies elsewhere show that gender-diverse top management teams lead organisations that are better able to weather business and economic crises.

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Despite the economic incentives for organisations to move towards gender-balanced workplaces and leadership, annual report data from the largest publicly listed companies in Indonesia, the Philippines and Vietnam shows persistently low women’s participation rates, particularly at middle and top management levels.

Similar data on the Asia Pacific shows that Japanese and South Korean women directors comprise only 5 percent of boards. In most Southeast Asian countries, women occupy between 10 and 19 percent of board seats. Australia and New Zealand are leaders in the region, with women’s corporate governance participation rates of around 22 percent and 20 percent respectively. But these remain far below the 50 percent threshold representing equal participation.

Policy and regulatory initiatives across the world have led to significant advances in female education participation and completion rates. The latest UN gender statistics show that more women than men attend tertiary education institutions in most major economies in Southeast Asia. Thailand has the highest ratio at 1.44 women-to-men (on par with Australia’s ratio of 1.43). The average proportion of women graduates in science, technology, engineering and mathematics degrees in Southeast Asia is around 37 percent. This is higher than the comparable 32 percent rate in Australia.

Despite success in boosting education rates, women’s labour force participation rates (averaging at around 51 percent in the Asia Pacific) remain consistently lower in Southeast Asia than men’s labour force participation rates (averaging at around 72 percent).

There are some notable exceptions in Southeast Asia — women’s labour force participation rates in Vietnam and Cambodia are 71 percent and 77 percent respectively, significantly higher than Australia’s 60 percent rate.

Countries that have legislated gender quotas on management boards tend to have higher women’s participation rates in corporate governance. Norway is a world leader in quota legislation and women occupy 47 percent of board seats in that country. But recent studies show that the impact of quota legislation is mixed at best.

Studies on Scandinavia show that some companies find ways to avoid complying with board quota requirements by changing their legal structure. Deeper investigations have also shown that while women occupy a significant proportion of board seats, in reality a minority of women — so-called ‘Golden Skirts’ — occupy multiple directorships in several companies. This has the effect of artificially inflating the rate of women’s participation in corporate governance.

While legislating gender quotas for boards does have positive effects, the absence of regulation is insufficient to explain the gender leadership gap.

Malaysia is the only country in Southeast Asia that has legislated board gender quotas. While the country has a higher rate of women’s participation in corporate governance (14 percent) compared with other major economies in Southeast Asia, it is Vietnam that has the highest women’s participation rate in the region (19 percent), which was achieved without imposing board gender quotas.

Research drawing on data from Indonesia, Singapore, the Philippines and Vietnam suggests that the persistence of the gender leadership gap is explained by firmly rooted cultural norms and practices concerned with gender roles and expectations. Analysis shows that cultures where gender roles are less defined or less rigid tend to have more women on boards. Cultures where competence and performance are valued over status and where inclusiveness is fostered also have the most gender-diverse corporate boards.

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The lesson from these Southeast Asian countries is that informal institutions embodied in culture exert a powerful legitimising influence on the roles that women are able and expected to play in society. These deeply internalised expectations affect not only the decisions that women make with respect to their own career aspirations, but also underpin the organisational policies and regulatory frameworks that govern the socioeconomic activities of men and women.

The first step to increasing gender diversity in leadership is to bring to light these culturally rooted gender biases, allowing gender stereotypes to be challenged both at home and in the workplace. This serves as a starting point for governments and organisations to establish the infrastructure and enabling mechanisms to better support the creation of gender-diverse organisations and leadership teams.

Putting in place a strong regulatory infrastructure to encourage greater women’s economic participation is good, but it is not enough. There is a need to move beyond regulation and focus on changing the fundamental assumptions about women and men that exert a powerful but unconscious influence on women’s pathways to leadership.

By Sandra Seno-Alday, a Lecturer in International Business and an Executive Member of the Sydney Southeast Asia Centre (SSEAC) at the University of Sydney.

This article is abridged from a version that appears in the latest issue of East Asia Forum Quarterly, ‘Investing in Women‘.

This article has been republished from East Asia Forum under a Creative Commons license.