The need for more women on company boards has been a topic of discussion for a long time. In Malaysia, this issue was brought into focus when Finance Minister Tengku Datuk Seri Zafrul Aziz announced that government-linked investment companies (GLICs) would help the government achieve its target of having 30% women representation on boards.
The Ministry of Finance (MoF) has been encouraging GLICs to show leadership on diversity, equity, and inclusion (DEI) initiatives since 2020. GLICs represent about RM445 billion, or 25% of Bursa Malaysia’s market capitalisation, directly employ 500,000 people, and have RM1.7 trillion of assets under management. With their resources and expertise, they are well-placed to help the government achieve its objectives.
Moreover, Bursa Malaysia updated its listing rules to mandate that public-listed companies (PLCs) with a market capitalisation of RM2 billion and above (as at 31 December 2021) should have at least one woman director by 1 September 2022, and the remaining PLCs by 1 June 2023.
Why do we need more women on boards
The slow progress of women in board roles is counterintuitive, given the wealth of research about the benefits of having women board directors. A McKinsey report from 2020 revealed that companies in the top quartile for gender diversity on their boards were 25% more likely to deliver above-average profitability than companies in the bottom quartile.
A study by the McKinsey Global Institute found that if Malaysia closed its gender gap in leadership, it could add $21 billion to its GDP by 2025. According to the World Economic Forum World Gender Gap Index, Malaysia is ranked 103rd out of 146 countries. The female labour force participation rate in Malaysia is 55.6% (as of July 2022).
Advantages to having more women on boards include:
- Improved financial performance: Studies have shown that companies with more women on their boards are more likely to have financial returns above their respective national industry medians. This is because diversity of thought leads to better decision-making, which leads to innovation and growth.
- Increased innovation: Companies with more women on their boards are more likely to innovate because women bring a different perspective to the table. Women’s diverse life experiences and perspectives help companies identify new opportunities, solve problems more creatively, and make better decisions as a whole.
- Improved corporate governance: Companies with more women on their boards are more likely to have strong corporate governance practices. This is because women are more inclined to be concerned with ethics and social responsibility. Companies can increase women’s representation on boards by developing a pipeline of women directors, making the nomination process fair and transparent and providing mentorship and support. Over half of Gen Z workers would not accept a role in a company without diverse leadership. This is because companies with more women on their boards are more likely to have policies that support women’s employees, such as flexible work arrangements and paid parental leave. These policies are important to Gen Z workers, who are looking for companies that value diversity and inclusion.
What LeadWomen is doing
LeadWomen is working to create a world where boards are more gender-equal, because we believe that a more diverse and inclusive boardroom leads to better decision-making and a stronger economy for everyone. To boost the number of women on boards, we’re also helping to change the way that companies think about board diversity.
Training and development opportunities for women: LeadWomen offers a variety of training and development programs for women who are interested in serving on boards. These programs cover topics such as board governance, financial literacy, and strategic planning.
Connecting women with board opportunities: LeadWomen maintains a community and database of women members who are qualified to serve on boards. We also work with companies and organisations to identify women who would be a good fit for their boards. Are you looking for a woman board director for your company? LeadWomen is offering a limited-time offer to waive board sourcing services fees. Contact Anis Yusof today at anis@lead-women.com to learn more.
Sources
- Dixon-Fyle, S., Dolan, K., Hunt, D. V., & Prince, S. (2020, May 19). Diversity wins: How inclusion matters. McKinsey & Company. https://www.mckinsey.com/featured-insights/diversity-and-inclusion/diversity-wins-how-inclusion-matters
- Madgavkar, A., Ellingrud, K., & Krishnan, M. (2016, March 8). The economic benefits of gender parity. https://www.mckinsey.com/mgi/overview/in-the-news/the-economic-benefits-of-gender-parity
- Poo, C. (2022, September 13). GLICs to lead in realising Putrajaya’s mandate of 30% women representation on boards, MOF says. The Edge Malaysia. https://theedgemalaysia.com/article/glics-lead-realising-putrajayas-mandate-30-women-representation-boards-mof-says
- The Bottom Line Corporate Performance and women’s representation on boards. (2007). https://www.catalyst.org/wp-content/uploads/2019/01/The_Bottom_Line_Corporate_Performance_and_Womens_Representation_on_Boards.pdf
- The Future of Jobs Report 2023. World Economic Forum. (2023, April 30). https://www.weforum.org/reports/the-future-of-jobs-report-2023
