Into the mix | ACCA Global
ACCA - The global body for professional accountants

While Singapore’s government is going some way to redress the gender imbalance on boards, debate around quotas plus the impact of cultural constraints remain

This article was first published in the March 2014 Singapore edition of Accounting and Business magazine.

In mid-January, Singapore’s parliament heard a question from member Dr Lee Bee Wah about gender diversity on the boards of directors of listed Singapore companies. Lee, who also serves as chairman of the Government Parliamentary Committee for National Development, asked Chan Chun Sing, minister for social and family development, if the ministry had looked into the causes of the low representation of women on boards.

Lee was alluding to new research, published in November 2013, showing that women comprise less than 8% of directors on the boards of Singapore Exchange (SGX) listed companies. Of the directors on the boards of the 677 SGX-listed companies studied, only 7.9% were women, according to Singapore Board Diversity Report 2013, compiled by the National University of Singapore Business School’s Centre for Governance, Institutions and Organisations (CGIO) and BoardAgender. Alarmingly, the findings show that Singapore fares worse than regional peers Malaysia (8.7%), China (9%), Hong Kong (9.4%) and Indonesia (11.6%). SGX CEO Magnus Böcker labelled the finding ‘appalling’, adding that it was potentially damaging to the country’s reputation as it vies to become the region’s international business hub.

The findings were echoed by Korn/Ferry International’s Diversity Scorecard 2013. Analysing board membership in the 100 largest listed companies in nine Asia-Pacific markets, the report found that 50% of boards in Singapore have no female directors.

Historically, Asian countries have come late to the gender diversity forum, says Karen Loon, diversity leader at PwC Singapore. ‘Many Asian countries haven’t had gender programmes and generally haven’t focused on the strategic importance of gender,’ she says.

Part of the reason that Singapore is facing increasing demands to tackle diversity is the country’s very low unemployment rate and rising demand for skilled workers. Rather than continuing to bring in foreign workers, the government has stepped up efforts to encourage companies to give employment priority to local people. And yet even with this tail wind, the pace of change at board level, to quote BoardAgender, has been ‘glacial’.

Government action

The government has begun to tackle the issue. In 2012 the Ministry of Social and Family Development established a taskforce to investigate the state of gender diversity on boards and in senior management, as well as its impact on corporate performance and governance. In mid-2013, the probe into gender diversity on boards became more substantial when the Singapore National Employers Federation, along with the Singapore Institute of Directors, SGX-listed companies and statutory boards, also launched a survey on gender diversity on boards and in senior management. And towards the end of last year, the Diversity Task Force was strengthened by the appointment of a high-level advisory panel.

The momentum towards significant change appears to be gathering. At a Securities Investors Association of Singapore conference in November, Grace Fu, minister, Prime Minister’s Office, urged the Monetary Authority of Singapore to consider requiring companies to adopt and publicly disclose a diversity policy in annual reports that would include ‘measureable objectives for implementing their policy, and for companies to report the progress on achieving their objectives’, in line with similar steps taken in Hong Kong, Australia and the UK.

The CGIO/BoardAgender report did more than just point out the board imbalances; it also revealed the strong business case for having more women on the boards of Singaporean listed companies. This echoes studies conducted elsewhere in the world that have revealed that listed companies with more women board directors outperform their peers in terms of financial returns and corporate governance, as well as a raft of other key performance metrics (see table).

The debate around the statistics reveals that there are many – and complex – possible reasons for the poor showing of Singaporean women in top leadership roles – with no quick or easy remedy.

To put Singapore’s situation in context, it is important to understand that the government’s Tripartite Alliance for Fair Employment Practices has strict guidelines to ensure that job candidates are not unfairly discriminated against in terms of their age, language, ethnicity or gender. Furthermore, the Singapore Code of Corporate Governance was amended in 2012 to reflect that corporate boards should provide for diversity across the spectrum, including gender.

And, as Seah Gek Choo, talent partner at Deloitte Singapore, points out, much has been done to raise awareness of gender diversity on boards in recent years. ‘Most companies have a nomination committee for their boards of directors,’ she says. ‘The challenge lies in finding adequate and suitable candidates who will add value.’

Anecdotally, evidence of the country’s even-handed approach is obvious. There are many women in the workplace, and it appears that increasingly they are rising through the ranks to senior management roles. But between top manager and board director, the numbers fall off a cliff.

The quota question

Part of the reason, says Junie Foo, co-founder of BoardAgender, is the ‘old boys’ network’ of male directors sticking to what’s familiar and appointing people to boards who look, think and act just like them. The situation is not helped by the current board rules allowing incumbent directors to remain for lengthy tenures. And quotas will not help, she says: ‘Singapore will consider many other avenues first. Quotas would detract from the main challenges.’

Quotas are unpalatable to other stakeholders, too; Böcker has said that he disapproves of them, and David Gerald, CEO of the Securities Investors Association of Singapore, echoes his opinion.

‘I personally believe that there should never be a quota and it should be, at very best, a best practice in the [Corporate Governance] Code,’ says Gerald. ‘A mandatory quota will not ensure that the boards will have the right women on the board.’

Gerald suggests an alternative. ‘I believe the Singapore Institute of Directors should be proactive and start compiling a list of capable and qualified women who are willing to serve on boards,’ he says. ‘Shareholders could also question boards that have yet to appoint a woman on the board. I would like to see if the [SGX] Listing Rules could provide a “comply-or-explain” requirement.’

Foo points to another reason why a light touch is needed. ‘Quotas wouldn’t work, because cultural issues are still very strong,’ she says. ‘It is still a very male-dominated society.’

‘Family culture’

And this is where board diversity in Singapore, where family traditions are entrenched, starts getting much more complicated. Karen Blal from diversity consultancy Trompenaars Hampden-Turner points out that many Singaporean companies operate in a ‘family culture’ environment, starting out as family enterprises.

‘The family culture is hierarchical and traditionally has a man at the top of the organisation,’ Blal says. ‘It is personal rather than task-oriented and who you are is more important than what you do. When the father retires, one of the sons usually takes over.’

Meanwhile, women are expected to be the primary caregivers, not only of their children but also of parents, in-laws and other elderly relatives who often all live under one roof. In addition, recent economic conditions mean that many children remain in the family home until later, maintaining the caregiver burden on women for much longer than their counterparts elsewhere.

Ang Fung Fung, partner at KPMG in Singapore and Asian co-chair of Woman Corporate Directors, says that many professional women prioritise their family at some point in their lives: ‘A lack of senior and experienced corporate professionals can be traced to this shift in priorities, and cannot necessarily be attributed to a lack of opportunity.’

Mildred Tan, head of advisory services at EY Singapore and chair of the government’s Diversity Task Force, says that promoting gender diversity on boards must begin at executive workforce level to ensure a pipeline of qualified women who are potential board appointees.

‘Flexible work arrangements can help by enabling female executives to balance both their career and personal life demands,’ says Tan. ‘Government can help by providing schemes and tax incentives that encourage employers – and employees – to embrace flexible work as well as fostering a more conducive environment including greater accessibility to quality childcare options.’

But women themselves need to embrace flexible working. Loon says that the problem is also due to mindset. ‘Asians place a lot of value on work and that includes being visible [to bosses]. They are therefore less likely to work from home or opt for job sharing to help them balance home and work.’

Cultural changes and a shift in the mindset of women themselves may take longer to achieve than implementing the recommendations of the Diversity Task Force when they are published in mid-2014. Nonetheless, there is still plenty of room for companies to take the initiative without waiting for the government’s steer, if only out of self-interest to benefit from the financial returns diverse boards bring.

Foo has several suggestions, including recognising the value that women bring to organisations. ‘Companies should purposefully foster a culture where women are trusted, motivated, engaged and listened to, and HR policies must be reviewed to identify and remove gender preference,’ she says, adding that organisations should benchmark their policies and programmes against other leading employers. ‘Above all, they should commit to, communicate and build an inclusive workplace culture that is free of gender bias or stereotypes.’

Female Directors and Firm Performance

The Singapore Board Diversity Report 2013 found positive relations between the ratio of women in the boardroom and the firms’ ROA and ROE in the subsequent three years, but not the stock market returns. The appointment of a new female director to the board is also followed by better ROA and ROE in the next three years, but again not for the stock market returns (see below).

 Firm performance in the next three years (annual average)No new appointment of female directorWith new appointment of female directorDifference in returns            Statistical significance of difference
Return on assets1.41%1.74%0.33%Yes
Return on equity1.44%1.76%0.32%Yes
Stock market returns-4.85%3.82%8.67%No


Source: Singapore Board Diversity Report 2013, CGIO/BoardAgender:

The international picture

Norway40.9%
Sweden27.0%
Finland26.8%
United Kingdom17.3%
European Union17.0%
United States16.6%
Australia15.8%
Indonesia11.6%
Hong Kong9.4%
New Zealand9.1%
China9.0%
Malaysia8.7%
Singapore7.9%
India5.8%
South Korea2.4%
Japan 2.0%


Source: Singapore Board Diversity Report 2013, CGIO/BoardAgender

Amanda Vermeulen, journalist

Last updated: 16 Jun 2014