Women are transforming global business environment
The groundbreaking news that the European Parliament passed a vote last month requiring that large listed companies ensure women hold 40 percent of non-executive board seats by 2020, means the global business community has to prepare for major changes.
The vote itself is good news for advancing equality between the sexes. The issue is now on the radar of the global business community — giving it a sense of urgency. European Commission Vice-President Viviane Reding called the resolution a “historic moment for gender equality in Europe”.
However, the implications of the vote and what this means for the wider business community is not clear, as it is essentially dependent on how the directive is enforced. We will gain further clarity in coming months, but now we have to prepare for the potential impact.
One major issue to consider is the disparity between different parts of the world on the issue. Asia is already lagging behind in the advancement of women, and unless gender diversity is seen as an issue of the utmost importance for the business community, the new directive in Europe could exacerbate the situation.
It is interesting to note that in Europe 16 percent of the members of its boards, on average, are women compared with 9 percent in Asia. Hong Kong now has more women in the workforce than men, but currently only 9.4 percent of female directors sit on boards, and 38 percent of Hang Seng Index-listed companies have no women on their boards (Women on Boards, Hang Seng Index 2013 report).
As a result of the new directive, female talent in Europe will be in demand. Women ready to take on the challenges of boards are already in short supply or hidden. Businesses will need to be more open about women taking on their first board appointments.
This situation presents its own set of hurdles, in ensuring board members are adequately prepared for the roles and responsibilities they face. Courses to teach women about boards, such as the Women’s Directorship Program run by the University of Hong Kong, serve to ensure women leaders are ready to rise to challenges of the boardroom.
The key to ensuring these ambitions can be achieved is to address one of the main barriers women impose upon themselves — which sometimes holds them back — a lack of confidence. Some men, therefore, block women by preferring to hire in their own image.
Female leaders in Hong Kong and the wider Asia-Pacific region may be called upon to take up board positions in Europe, resulting in a significant talent drain. Multinational companies are already looking for talented women in the region, so this directive may further stretch our already limited resources.
The recently published Women on Boards Report highlights 92 percent of those questioned identified barriers to making boards more diverse, with 33 percent stating the inability to identify diverse board candidates. Having developed Inspire, our global network for senior businesswomen over the last five years, we know the talent is out there and old arguments do not stack up. There are many board-ready women and talented female executives with the right skills, ready to help a business reflect and identify with their customer base and the community they serve. Fundamentally, creating more balanced teams leads to better, more robust decisions, improved performance and reduced risk. When you look at this as a business issue rather than a gender issue why would you neglect or fail to engage with 50 percent of the workforce, clients and other stakeholders?
In Hong Kong, we are starting to see changes, such as the introduction of the 30% Club. Businesses such as Standard Chartered Bank, GE, Schneider Electric and KPMG have already signed up for the voluntary initiative. However, the principle of quotas is gaining pace and is now likely to become law in many parts of Europe, replacing the current voluntary initiatives, which in reality failed to deliver. As we don’t wish to be left behind, real action needs to be taken to avoid reducing our talent pool and losing half of it to more enlightened markets.