More gender diversity in Boards

Mr Willie Cheng,

Chairman of the Singapore Institute of Directors,

Distinguished Guests,

Ladies and gentlemen,

1. Good morning. I was at the first launch event for the Corporate Governance Guides series in 2015.
   

2. Since then, the Singapore Institute of Directors have come up with four more Guides. This entire series of Guides represents SID’s commitment to upholding high standards of corporate governance. So I am happy to be here again to lend my support, and launch the final guidebook.

Challenges from our shrinking and ageing workforce

3. Board Directors provide stewardship to companies in delivering shareholders’ values while navigating through the rise and fall of tides in the business environment. The work of SID is all the more important in current times when the business and regulatory environment are facing rapid changes. Globally, economic growth will continue to slow. The rising influence of nativist politics and protectionist economics, particularly in Europe and the US, risk undermining international trade. Technology is disrupting conventional business models.
   

4. Within Singapore, I would like to highlight one challenge which is our demography. Our workforce is ageing, and the growth in our workforce is slowing. Today, the number of Singaporeans entering the labour force just exceeds the number of those who are retiring.
   

5. This is a diagram of our citizen population size in 2016, broken down by age group. As you can see, there were 242,000 citizens reaching their early 20s, ready to join the workforce. At the same time, some 190,000 citizens were reaching their retirement age, and exiting the workforce. So, for every one older Singaporean exiting, there will be 1.3 younger replacements. The workforce is still growing – but slowly.
   

6. This will not be the case two decades from now. Even at current immigration rates, our citizen workforce will shrink. This diagram shows a projection of our citizen population in 2030. There would be 188,000 citizens entering the working age and 262,000 citizens exiting. So, only 0.7 young Singaporean would be able to replace each older Singaporean leaving the workforce. This shortage of manpower will place further constraints on industries and businesses.

Building family-friendly workplaces

7. You may notice in these two diagrams that there are two rather conspicuous humps. In the 2016 diagram, the bigger one at the 50s and 60s age group, the post-World War II Baby Boomers,and their children, the smaller humps at around the 18 to 27 age group. This group is relatively better educated than their father’s generation.
   
   

8. These two humps form the bases of many of our important manpower and social policies – the need to restructure our economy, as the children are better educated and want better jobs than what their parents have been doing and vacating, and we have fewer young workers than those retiring. So there is a mismatch of jobs available, vacated by those who are retiring, and those who are entering, in terms of job expectations and aspirations. At the same time, our numbers are smaller, and you will not see a one-to-one substitution. So that speaks a lot about the need for higher productivity in the industries that will be facing a large cohort of retiring workers.
   

9. Second, the children are now entering their marriage and parenthood phase of life. Our Marriage and Parenthoods schemes, including support at the work place, such as maternity and paternity leave, childcare support and so on, have to be in place now.
   

10. I hope to impress you with the important message, that the M&P and social policies that support family, have a very strong foundation in demography. The demographic factor drives fundamental economic growth. They are all linked; it is not MSF or the women MPs dreaming up schemes to help women only. There is really a very strong reason why this is fundamental to the strength of our population growth, and the fundamental of economic prospects.
    

11. These important demographic trends have long term implications on our economy and it will be critical that our business understand our policy objectives. The desire to get married and start a family is strong – 8 in 10 singles in their 20s to mid-30s want to get married, with 9 in 10 married wanting at least 2 children1. This is quite a recent survey; so the intention and desire to get married and settle down and have a family, is strong. As you can see, because of demographic considerations, we have a second hump of the baby boomers coming in. It is important we have the policies we have now, to catch this wave. These young adults and new workers would appreciate workplaces that can support both their career goals and family aspirations. Companies that value and promote work-life harmony will be more attractive to young talents, as well as mothers returning to the workforce.
    
    

12. Our female labour participation rate currently stands at 60.4%, lagging the male rate, 76.2%, by 16 percentage points2. The more we are able to attract women to return to work, the more economic growth we can derive from our population, and we can rely less on immigration.

Gender diversity in business leadership

13. A gender-diverse business leadership, including at the Board levelwill provide better guidance on more gender equal policies. In the boardroom, female directors can bring perspectives and value-add to the table, reducing “group think”. Their input can enhance the company’s HR policies and practices, and better support the female staff to fulfil their obligations at work and at home.
    
    

14. The representation of female directors on the Board also signals the value of female leadership, and encourages other women to step up and take on key roles.

Lack of women’s representation in Boards

15. At a previous SID Conference, I spoke on women’s representation in company Boards. I also named six top Singapore Exchange (SGX)-listed companies that did not have a single woman on their boards. I have made a name by “naming” the companies and I shall not disappoint the audience this year.
    

16. How have we fared so far? Starhub has one woman on their Board. Olam International now has two. The other companies – Genting Singapore; Global Logistics Properties Ltd; Golden Agri-Resources Ltd; and Wilmar International – still have none.
    

17. Across the SGX-listed companies, women hold a very dismal 9.7 per cent of board seats, a small notch from 9.1 per cent in the previous year3. This pales in comparison to women’s representation in the workforce and in senior management ranks. I know for a fact that when I went to university, already the male-female mix is fairly equal. Today, I think there are more female students than male students in the university. If you look at population and education, women are having a fair performance as well as fair opportunity – that for the pyramid to skew so much against them, it’s really something that’s beyond our comprehension. Definitely, there are some works to be done; the supply of women talent, and the supply of competent women with experience is there, so I think that it’s high time that we address the issues.
    

18. Even in the industries where many of the customers and staff are female – such as Food and Beverage; Household and Personal Products; and Consumer durables and apparel – many companies have all-male boards4. If there are women on their board, the board could better understand the perspectives of its female customers and workforce, and gain a deeper knowledge and engagement of its stakeholders.
    

19. That said, we are not advocating that women be given preferential treatment – merit still comes first. But we can, and must do more to strengthen the gender diversity in corporate leadership. We have to address the blind spots, and we have to address the obstacles.

Growing the gender diversity in Boards

20. Under the Code of Corporate Governance (CG Code), it says that “the Board and its Board Committees should be made up of directors who, collectively, provide an appropriate balance and diversity of skills, experience, gender, and knowledge of the company.”
    

21. Although the CG Code is not mandatory, it applies to listed companies on a “comply-or-explain” basis. Companies that do not meet these guidelines, must step out to explain their deviations.
    

22. The Nominating Committee guide in the CG Guides and the Diversity Action Committee (DAC) further propose ways to grow the gender diversity in Boards. And I call on companies to take up their recommendations.
    

23. First, go beyond the usual network and cast the net widerwhen you search for board candidates. You can engage an executive search firm to help identify high-potential female candidates, and appoint women to their nominating committee, who can help recommend other names from their networks.

24. Second, make a conscious effort to develop your internal executive pipeline to increase the pool of women for board roles in the future. One way is to place your high-potential executives – both male and female – in business functions or cross-function teams that will cultivate their leadership capabilities. Provide mentorship and opportunities for them to network, take on stretch assignments, and be trained in board roles. If you can build this pipeline in tandem with your succession planning, you will have a larger pool of younger executives ready to step up and join the board when the opportunity arises.
    

25. The PAP Women’s Wing, along with BoardAgender, an initiative of the Singapore Council of Women’s Organisations (SCWO), are making recommendations jointly to the Monetary Authority of Singapore (MAS). We advocate that a 20-20 target – at least 20% of female directors on boards by 2020 – be adopted by listed companies and statutory boards. We are calling on MAS to make the “comply or explain” disclosure policy on board diversity a mandatory one.
    

26. I understand that the DAC is also making a similar recommendation to the MAS to make it a requirement in the Code of Corporate Governance for listed companies.
    

27. I urge all companies here to set the leading example and make early plans to ensure gender diversity in its leadership. You are in the position to be a role model for your industries.

Conclusion

28. In closing, I would like to thank SID for organising today’s launch event, for inviting me to speak, for us to gather and renew our commitment to upholding high standards of corporate governance. Let us continue to grow greater gender diversity in business leadership, that can guide the policies to create progressive and better workplaces. Your efforts can help more Singaporeans and Singapore companies overcome the challenges ahead.
    

29. Thank you and I wish you a fruitful day ahead.

1. Source: NPTD’s Marriage and Parenthood Survey 2016.

2. Labour force participation rates are as of 2016. Source: Labour Force Survey, Ministry of Manpower (MOM)

3. Sources of statistics: “Women on Board: Tackling the Issue” report, by the Diversity Action Committee (Sept 2016). “Women’s Representation on SGX-listed Companies Boards as at Jun 2015” facts and numbers, on DAC’s website (https://www.diversityaction.sg/)

4. Source of statistics: “Women on Board: Tackling the Issue” report, by the Diversity Action Committee (Sept 2016).