Over 70 per cent of boards in Asia have no female directors, shedding light on the region’s urgent need for diversity in its senior ranks, according to a new study.

Findings of an inaugural board diversity study by recruitment agent Korn/Ferry International, The Diversity Scorecard: Measuring Board Composition in Asia Pacific, has found that female representation on boards of directors in the Asia-Pacific region remains markedly lower than other parts of the world.

Over 70 per cent of the boards of the top 100 companies in Hong Kong, India, Malaysia, New Zealand and Singapore, have no female independent directors. Boards with two or more female directors were rare, while boards with three or more female independent directors were almost non-existent. 

The study underscores an urgent need for Asia's boards to recruit more diverse directors, especially now so many companies are at a turning point in the global economy. Although the study did not break out industries, wealth management is notoriously male-dominated. There have even been some reverses: Last year, Sallie Krawcheck, the boss of Bank of America Merrill Lynch's wealth management business, left the firm.

The Asia-Pacific ratio compares unfavourably with Europe, where the average board has a female quota of nearly 12 per cent, although the UK government wants to move this to a quarter by 2015.

According to the European Professional Women’s Network, the number of women on boards grew to 11.7 per cent at the top 3001 European companies in 2010, up from 9.7 per cent in 2008 and 8.5 per cent in 2006, the best progress since the think tank first started recording the ratios. Of a total 4,875 board seats in Europe, women occupy 571. Scandinavia has the highest proportion of women on boards, with around 22 per cent of women on boards in Norway, 20 per cent in Sweden, and 14 per cent in Finland.

But Alicia Yi, managing director, global consumer market of Korn/Ferry Asia-Pacific, believes that Asian firms will soon catch on as diverse boards are seen to outperform. "As Asia's growth trajectory propels it to a central spot in the global economy, the most effective boards will be the ones that are international-with functional, sector and gender diversity," said Yi.

"The world is taking notice of the potential and power of women-as consumers, as leaders, and as a growing majority of the talent pool. Companies have started to recognize that successful boards should reflect the markets they serve and that homogenous leadership teams can be less equipped to do business in an increasing complex business environment," she added.

Different demographics

The demographic characteristics of female directors are also very different from male directors, according to the study.

Female directors are younger than male directors across all countries, by about three years on average. They are more likely than male directors to have law or accounting educational backgrounds, while male directors were more likely to have engineering and science backgrounds.

The average tenure of female independent directors is shorter than male directors across all countries. Female directors are more likely than male directors to have public sector or not-for-profit sector experience, and are generally underrepresented in board leadership positions like board chairs.

Other aspects of diversity showed that on average, China had the youngest directors. Hong Kong companies, followed closely by China companies, are most likely to have directors from two or more generations.

The majority of boards, other than those in Malaysia and Singapore, come from a single ethnic group.

"A lot of leading companies are now taking diversity, including gender diversity, issues quite seriously-setting employee targets, tracking and looking for ways to improve-as increasing evidence suggests that more diverse boards and management teams can be more effective and linked to better corporate performance," said Yi.

"I have no doubt that the diversity issue will accelerate in years to come. Only by having a diverse pool of independent, talented, and committed directors will companies be able to connect with and capitalize on the engine of Asia's consumption. Investors are also demanding diverse boards to promote good governance and sustainability and better navigate uncertain and challenging global economies," she added.

The study was conducted in partnership with associate professor Mak Yuen Teen of the NUS Business School at the National University of Singapore, who is a recognized authority on corporate governance in Asia.