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Heidrick & Struggles’ report “Board Monitor Asia Pacific” has unveiled that many companies in Asia are still passive in achieving broader boardroom diversity, despite the growing number of women in boardroom.
The data were collected from companies listed on the ASX 200, Hang Seng Index, NZX 50 and Straits Times Index. Five phenomena are highlighted in the report:
- Boards still give priority to CEOs: 56% of the new non-executive directors (NEDs) appointed to these listed boards were current or former CEOs. New Zealand ranked highest with 67% followed by 63% in Singapore, 56% in Australia, and 46% in Hong Kong. This compares with 47% in U.S. Fortune 500 companies.
- Boards prefer listed experience: In Singapore, 88% of newly appointed NEDs had experience on at least one publicly listed board. Australia came in at 82%, New Zealand at 79%, and Hong Kong at 61%, while the figure in the United States was close to 64%.
- International experience continues to be a key focus area: Some 61% of New Zealand’s newly appointed NEDs had international experience, followed by Australia (52%), Hong Kong (43%) and Singapore (39%). Roughly a third of the appointees were non-national – 36% in Australia, 30% in Hong Kong and New Zealand, and 29% in Singapore.
- There has been good progress in gender diversity: Of the 263 directors appointed across all four indexes, 83 were women – an encouraging 31% of all new director appointments. In terms of the new director seats filled by women, Australia led the way at 39%, followed by New Zealand (27%), Singapore (24%) and Hong Kong (20%). The percentage of new female appointments is higher than the average percentage of women already serving on boards.
- Age: The average age of new appointees varied by geography, from a low of 55 in New Zealand to 57 in Hong Kong, and 58 in Singapore.
“Boards whose directors bring diversity of experience, ways of thinking and perspectives as well as gender diversity to the table are best placed for the robust discussions that support effective decision making,” Guy Farrow, managing partner of Heidrick & Struggles Australia, commented.
In Singapore, the Diversity Action Committee has set a target of 20% female representation on boards by 2020, rising to 25% by 2025.
“It is encouraging to see that 24% of the NED appointments went to women executives,” Alain Deniau, partner, CEO and board practice for Singapore, said. “But I do think it’s important for Singapore boards to look outside the current NED talent pool to ensure a broad range of capable and aspiring executives have an opportunity to shine.”
In 2017, a total of 54 new appointments were made to board of companies listed on the Hang Sent Index, up from 45 such appointments in 2016.
“In Hong Kong, we are seeing that boards are receptive to executives with experience in specific functional areas,” David Hui, partner, CEO and board practice for Hong Kong, said. “This is critical in an age where digital disruption and cybersecurity are key issues, and digital convergence is shifting business models and boards. Boards in Hong Kong are also moving away from appointing directors from their circle of friends and families to finding directors who can truly translate the company’s purpose into reality, and this is another critical factor in creating more diverse board leadership for the future,” Hui said.