SINGAPORE: To achieve the target of 20 per cent female board directorship in companies listed on the Singapore Exchange (SGX), 130 female directors will need to be added each year from now till 2020, said Minister for Culture, Community and Youth Grace Fu on Friday (Jan 26).
But all it will take is for half the companies on the SGX, especially those without female directors, to appoint just one to their board, she added.
Ms Fu was speaking at the launch of a report on gender diversity on Singapore's boards, put together by the Human Capital Leadership Institute and BoardAgender.
The report highlighted two major issues with the board succession process. The first is the issue of entrenched board directors, where board directors serve longer beyond the recommended number of years. The second issue is with boards that seek replacements, rather than renewal – with boards seeking new members who share the same profile as outgoing directors instead of recruiting new directors who can augment the skill gaps of the board.
To counter these, the report suggested two key transformations.
The first would be to adopt a deliberate and targeted board renewal process, and strengthen the "nine-year rule". This refers to a guideline in the code of corporate governance for the term threshold of independent directors. In addition, companies should use multiple sourcing methods to ensure a diverse candidate pool.
The second would be to protect the independence of nominating committees in the selection process for directors. This will allow committees to choose the best person for the job without putting to a disadvantage the selection of female directors, according to the study.
The composition of nominating committees can also be adjusted to comprise individuals who are a good judge of character, and are visionary and progressive in their thinking.
"Meritocracy and gender diversity are not mutually exclusive," said Dr Don Chen, Assistant Vice President of Knowledge and Solutions at HCLI and Lead Researcher of the project, pointing out that women who are capable of being directors are out there.
However, he said that female directors "may not fit the stereotypical profile of what a board director is supposed to look like".
"They can fall off the radar of nomination committees when they search for the best board candidate based on their archetype of who will make a good director," Dr Chen added.
The report also advised aspiring female directors to be more visible by cultivating their networks and raising their public profile. It suggested that women start small by being on boards of non-listed companies and not-for-profit organisations. This would also give them experience in being on a board of directors.
With more women worldwide coming forward with allegations of sexual misconduct by men in workplaces, there is greater urgency to cultivate boardroom culture in companies that can stand up to scrutiny if faced with such an allegation.
Research also shows that more and more, gender diverse boards are a business imperative as they perform better financially and have greater trust from investors. Marketing research data also estimates that women account for 85 per cent of all consumer purchases, including big ticket items such as homes and automobiles.