When Carrie Lam became the first woman to win the Hong Kong Chief Executive election this March, Confucius may have turned around in his grave. “Women are to be led and to follow others” is a quote attributed to the great Chinese philosopher. While women in politics are shaping Hong Kong’s future, local businesses still appear to be rooted in the dusty Confucian way of thinking.
The progress in increasing representation of women on Hong Kong Boards remains slow, the 2017 “Women on Board” report reveals. It contains performance analyses of the top 50 Hang Seng Index (HSI) listed companies and is published by diversity thought leader Community Business. Legislation mandating quotas to increase the number of women on Hong Kong boards is not only required to make significant progress but to catch up globally.
Led by Norway, Germany, France and Italy, Europe’s experience with breaking up the traditional old boys’ clubs affirms that quotas are an effective method to calibrate gender diversity on boards. The 2015 European average of board seats taken by women rose to 25% as a result of having enacted legislation that calls for a minimum percentage of female directors on boards. This is twice as much as “Asia’s world city” has recorded in 2017.
Moreover, Hong Kong already applies gender quotas. The Women’s Commission was instrumental in introducing a 25% benchmark for female appointments to Hong Kong advisory and statutory bodies. Incumbent Chief Executive CY Leung in a 2017 speech said: “I asked the bureau and departments to progressively increase the ratio from 30 to 35 per cent.”
In contrast, anti-quota ambassador The 30% Club flops when it comes to increasing the number of female directors. This membership club believes in “using behind-the-scenes persuasion to help” and consists of over 60 representatives from a variety of organisations. After four years of work by the club’s Hong Kong chapter, the share of women on HSI boards grew by only three points to 12.4%. Their planned “push” to 20% by 2020 sounds like an illusion.
Quota opponents worry about discrimination against individual men running for a board seat. However, this can only be made a concern once women compete on a level playing field, descending from the principals of equality of treatment and equality of opportunity. Both are anchored in the United Nations adopted Convention on the Elimination of all Forms of Discrimination Against Women (CEDAW) and which was extended to Hong Kong in 1996.
A “token”-stigma also prevails. Critical voices are concerned that women employed through quotas may not have the required qualifications and competency and may only win their appointment in order to fill the quota.
“Men seemed to view inexperience as a fixed and disqualifying trait, whereas women saw it as surmountable—something that could be addressed through learning and development”, write Boris Groysberg and Deborah Bell in a Harvard Business Review article about dysfunction in the board room.
Specific development programs such as the Women’s Directorship Programme offered by The University of Hong Kong help women prepare for directorship. “The programme gave me significant insight into the function a board provides to a business, both in terms of individual roles and their respective interaction”, says alumna Helen Galerakis on the organiser’s website.
Moreover, female university graduates in Hong Kong have started to outnumber males. For example, 59.4% female students were enrolled in business and management programs in 2015/16, according to census information.
Ironically, respondents to the 2016 Global Board of Directors Survey, capturing feedback from more than 4,000 male and female directors worldwide, gave their own boards relatively low ratings when it came to board diversity, talent management, and CEO succession planning.
“I’m not a great supporter of quotas but in this case it’s making difference,” Rajeev Vasudeva, the CEO of executive search firm Egon Zehnder said in a Quartz interview covering the women on boards agenda.
Both research and business results refute the quota concerns and tell their own tale. For example, MSCI, an independent research provider for institutional investors, reports that “as of September 2015 companies with strong female leadership generated a Return on Equity of 10.1% per year versus 7.4% for those without”.
With 45.5% females on the board of what is considered a male-dominated industry, General Motors has delivered a stellar business performance under CEO Mary Barra. She was appointed in January 2014 and the 2015 full-year earnings before interest and tax (EBIT) adjusted rose to a record US$10.8 billion, up from US$6.5 billion in 2014. 2016 EBIT adjusted was up by another 15.9%.
“Measures are needed to help enterprises make a deliberate choice in considering female candidates alongside men for senior positions”, says Alicia Yi, Managing Director, Board & CEO Services of Korn Ferry on the company website.
Let us stop stalling progress on diversity and equality in Hong Kong and progressively instate a quota system for women on boards. “What gets measured, gets done” is not just an old cliché but business reality.