Women Matter: An Asian Perspective

Since 2007, McKinsey has been making the business case for raising the number of women in senior management positions. The issue is of particular concern in Asia, where a failure to recruit and retain able women can only exacerbate the acute talent shortage that many companies operating there face. McKinsey's latest research expands into Asia and the results show that women hold few of the top jobs. Although elements of a gender diversity program are in place in some Asian companies, for the most part the issue is not yet high on the strategic agenda.
 
 
 
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Harnessing female talent to raise corporate performance

 
 
Since 2007, McKinsey has been making the business case for raising the number of women in senior management positions. The issue is of particular concern in Asia, where a failure to recruit and retain able women can only exacerbate the acute talent shortage that many companies operating there face. In addition, our own research has shown that companies benefit from the different but complementary leadership styles that women bring to their work, to the extent that there is a link between the proportion of women in senior management positions and corporate performance.
 
To date, McKinsey’s Women Matter research has largely focused on western countries in an effort to find out not only how women contribute to corporate performance, but also what companies are doing to change the status quo and which actions are most effective. This year, we have expanded our research in Asia. We took 744 companies from the local stock indices of ten Asian markets and looked at the gender composition of their boards and executive committees. We also surveyed some 1,500 senior managers in those markets with the aim of gauging the appetite for greater gender diversity, understanding the barriers that prevent it, and working out the best tactics for achieving it. 
 
Asian cultures of course differ widely, so the picture is a varied one. Nevertheless, the survey results are a benchmark against which to assess both the current situation and likely future progress. Not surprisingly perhaps, the results show that women hold few of the top jobs in Asia. Moreover, although elements of a gender diversity program are in place in some Asian companies, for the most part the issue is not yet high on the strategic agenda.
 
We think this needs to change. It is a huge waste of talent, as half of Asian graduates are female. And it is waste that Asian companies can ill afford, given the severe shortage of senior managers in the region. Asian CEOs and their executives have had much to preoccupy them at a time of such fast economic growth. But there is now a business imperative for hiring, retaining, and promoting more talented women.
 
This report aims to show how to address that imperative by outlining the elements of a corporate gender diversity program capable of delivering concrete results. To drive what amounts to a cultural change within their organizations, the visible commitment of senior executives will be essential. Their task will be to preach the business case for recruiting more women into senior positions, to lead by example by hiring more women and personally sponsoring them, to set targets to ensure the organization starts developing more women of the right caliber, and to take personal responsibility for tracking progress toward those targets. 
 
 

Women’s representation in top management in Asia

 
The proportion of women sitting on corporate boards and executive committees in Asian companies is strikingly low compared with Europe and the United States, even though women remain under-represented in those regions too. On average, women account for 6 percent of seats on corporate boards in the ten markets we studied, and 8 percent of those on executive committees. The comparative figures in Europe and the United States are 17 percent and 10 percent, and 15 percent and 14 percent respectively.  There are, however, significant differences between markets in Asia.
 
 

Under-representation at every level

 
The narrow representation of women at the top of the corporate hierarchy is not the only problem. If more women are to reach senior positions, they have to be present in the pipeline that feeds those positions. In the West, female labor participation rates are reasonably high and women are well-represented in the work force overall (although some industries attract more women than others). But the higher up the management hierarchy, the less visible they become, either because they have decided to leave or because they have become stuck at a more junior level. The same is true in Asia in that, generally, the proportion of women decreases at each level of the hierarchy. But there are other points to note. 
 
First, the rates of female participation in the labor force, while varying significantly from country to country in Asia, tend to be lower than they are in the West. This means it can be difficult even to begin feeding the pipeline. In India, the female labor participation rate is 35 percent – one of the lowest in the world. In Taiwan and Malaysia it is also less than 50 percent. Yet even in those Asian markets where there is a high proportion of women in the labor force, women tend to fare no better in the corporate world. China, for example, has one of the world’s highest female labor participation rates, but still only 8 percent of corporate board members and 9 percent of executive committee members are women. 
 
Second, there is no shortage of female graduates. In many of the markets we studied, around half of graduates are women. In Australia, Malaysia, and Indonesia, the figure is 57 percent. There are striking exceptions. In India, the female literacy rate is much lower than that of males – 62 percent versus 85 percent, according to the government’s 2011 census – and this affects the number of women entering higher education. For the academic year 2009-2010, only 10 to 15 percent of students admitted to the Indian Institute of Management, renowned for grooming many of India’s CEOs, were female. But by and large in Asia, lack of education does not explain the scarcity of women in top jobs. Women’s participation in the labor force is described in more detail in the full report. (click to view)
 
Even though women account for half of Asia’s graduate cohort, become increasingly under-represented at the senior levels of corporations – facing different obstacles in different markets, at different stages of their careers. In China, for example, where labor participation rates are high, women account for more than half of all professional entry-level positions but fare much less well thereafter. In India, women are in the minority at university and in entry-level positions. In South Korea, a very small proportion of women move into middle management. A rare exception is Singapore, where, if women reach the senior management of a company, they appear to have a relatively good chance of joining its executive committee.
 
In many Asian markets in recent years, the numbers of women graduates and of women at entry-level positions in companies have increased. Thus some commentators argue that it will simply take more time for more of these women to arrive at the top. But our research, as well as experience elsewhere, suggests this is unlikely to be the case. A rise in female graduates in Europe has had only a marginal effect. If companies want to see more women in their leadership teams, they will have to address the cultural and organizational issues that prevent them moving through the corporate pipeline. That is no small challenge. Is it worth taking on?
 
 

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