Hong Kong’s typical director – a male about 50 years old
Few Asian companies consider it important to get women or younger executives in their boardrooms, falling way behind the numbers in Britain and the Nordic countries, a survey shows
When you talk about directors in Hong Kong, what image first comes to mind? Is it a middle-aged man in a suit and tie? You’d be right.
According to Hong Kong Exchanges and Clearing statistics for 2012, the majority of directors are between the ages of 41 and 60, with the average age being 53.2 years old.
Of the roughly 10,000 directors in Hong Kong, about 67 per cent are between 41 and 60, while 23 per cent of directors are over the age of 60. Only 10 per cent are under 40.
At that time, in terms of gender, only about 9 per cent of companies had female directors (this has now improved to more than 11 per cent) which was way below Britain’s then 17 per cent and even its current 26 per cent and Norway’s mandated quota of 40 per cent.
Kirti Lad, director for Harvey Nash Executive Search Asia Pacific, said many Asian companies are family-owned and they tend to name friends as directors and few would hire independent firms to evaluate the composition of their boards or to find directors for them.
“This lack of diversity on Asia-Pacific boards is symptomatic of an ecosystem that continually hires in its own image, resulting in the (often unintentional) prevention of women and those of different ages from progressing to board level,” Lad said.
According to a survey released last week by Harvey Nash and London Business School’s Leadership Institute on of 650 respondents in Europe and Asia, Asian markets lag behind Britain and Nordic region countries on efforts to achieve board diversity by incorporating directors of different ages, gender, race or knowledge.
In Asia, only 40 per cent of respondents said they promoted gender diversity on their boards, below the 46 per cent figure seen in Britain and 57 per cent in the Nordics.
In terms of age diversity, it is even worse. The Harvey Nash survey showed that only 14 per cent of Asian respondents consider age diversity to be important among board members, lower than 24 per cent in Britain and 27 per cent in the Nordics.
Hong Kong and Asia have made slow progress towards having more women sitting in boardrooms in recent years, but age representation seems harder to crack.
Of course, it could be argued that experienced business people are needed to be directors. But it should be noted that many businesses, from entertainment to fashion to mobile gaming are targeting tech-savvy youngsters as their key customers.
The appointment of people from the younger generations – their customers – to serve on company boards may even help them develop strategies tailored to their needs.
According to a McKinsey report in 2015, “Why diversity matters”, companies in the top quartile for racial and ethnic diversity are 35 per cent more likely to have financial returns above their respective national industry medians.
Companies take note: Board diversity is all about the money.