Should women in boardrooms be regulated?

In recent years, both in Hong Kong and internationally, an increase in emphasis has been placed on board diversity, and, in particular, on including more women in the boardroom.

The UK Corporate Governance Code (2010) encourages the board to consider the benefits of diversity, including gender, to try to ensure a well-balanced board and avoid ‘group think’. The German Corporate Governance Code (2009) holds similar provisions.

In Hong Kong, the corporate governance code does not go as far. It only states that the board should have a "balance of skills and experience" appropriate for the requirements of the business, though the discussion on the topic is heated.

Some companies, especially in European countries (Norway and Italy for example) have recently implemented regulatory policies forcing listed companies to have a minimum number of women seating in their Boards to ensure diversity and more effective corporate governance.

This regulatory policy is controversial, and the object of much discussion, with conflicting opinions from senior women across the globe.

Whatever the solution, the debate matters, internationally and in Hong Kong. While Hong Kong does well compared to other Asian countries in terms of female representation at mid-level positions, women are still not represented at top management.

The South China Morning Post published an interesting article, on 16 December 2010 showing that while women make up nearly half of the labour force, men fill 90% of seats on the boards of the largest and most important listed companies in Hong Kong.

So what is happening exactly? Why is it that, if women make up more than half of the labour force, even in top-paying positions, there are so few women who make it to the top?

Although this gap can be partially explained by the fact that more women are now entering the workforce compared to the previous generation, and therefore some lead time is required for more women to get to top leadership positions, the difference is still too substantial to be ignored.

So the question is what corporations can do to create more opportunities for women at top levels so that diversity can be achieved.

Is the mandatory Board quota a solution?

I used to be very conflicted about the quota issue. Initially, like many professional women, I saw it as a defeat, as a reverse discrimination. I am aware that there is a high percentage of highly successful women who have strong views against it.

However, after long consideration, I realized that a regulatory intervention - for a defined temporary time - would open a gate for higher number of highly skilled women to have the opportunity to run for top leadership positions.

Women at the top will then serve as role models to younger women. They will help create the right infrastructures and a culture of real diversity so that a regulation will no longer be necessary. I am aware, however, that there are different opinions on this point.

Another point is the flexibility that companies are gradually implementing, through formal flexible policies or informal acceptance of employees working from home thanks to the technology means provided.

Women do not expect privileges per se, but they are aware of the necessity to ask for levels of flexibility if they have to compete in the business world while at the same time remaining, in most cases, the primary caregiver at home.

A higher level of flexibility, enabled by technology, together with a moderate level of temporary regulation, might help ensure a higher number of women in boards of directors and therefore a higher level of diversity.