Hong Kong listed companies are showing a growing emphasis on boardroom diversity

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Hong Kong boards saw a record share of 42% of appointments going to women and brought in board directors with more diverse experience.

Hong Kong Hang Seng-listed companies are seeing a bounce back in the share of director appointments going to active executives, a record share of appointments going to women, and a decrease in the appointments of first-time public board members, showing a stronger emphasis on bringing in more diverse executives into the boardroom, according to the latest findings from Heidrick & Struggles.

The 2023 Hong Kong Board Monitor analysed board composition trends from 1 January 2022 to 31 December 2022, revealing a sustained appetite for board refreshment and a recalibration of board composition.

According to the data, a record share of 42% of appointments went to female executives in 2022, a 12% increase from the previous year and a significant improvement from pre-pandemic levels of 6% in 2019.

The report indicated that, against a backdrop of pandemic-related restrictions and reduced tourism and retail activities over the past few years, the importance of gender diversity at the boardroom level has become increasingly clear. Organisations that prioritise gender diversity have been shown to perform better, bringing in new perspectives that help maintain agility. Additionally, rules that require all publicly listed Hong Kong companies to have at least one woman on their boards by 2024 are also the main driving factors.

Particularly, within the financial services and industrial sectors, the share of women in industry-wide board appointments increased by 9% and 7% year-on-year respectively.

Companies are seeking board directors with more diverse experiences

Meanwhile, the increase in appointments of active directors suggests that companies are more open to executives serving on external boards instead of focusing solely on their own businesses. Data from 2022 showed that two-thirds of the new appointments (66%) are currently active, an 11% increase from the previous year, bringing it close to pre-pandemic levels observed in 2019 (71%). This indicated that companies are shifting towards a more accepting mindset with regard to their executives contributing to other board activities.

At the same time, companies are seeking wider executive experiences outside of previous traditional roles such as CEO and CFO. The data revealed that companies are bringing in executives with more diverse experience, including regional leaders, presidents, chief information officers and chief operating officers. There was also a decrease in the share of seats that went to directors with CEO experience (18%), almost half that of pre-pandemic levels of 37% in 2019. While the rate of hiring executives with CFO experience hit an all-time low (6%), it was in line with 2019 trends.

"Amidst rapid change and unpredictable future needs, it underscores the importance of having the right board members with extensive experience and knowledge to navigate complex regulatory landscapes and stringent requirements," said David Hui, head of CEO & Board of Directors Practice at Heidrick & Struggles Hong Kong.

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