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Perspectives 2012 “Adaptive Leadership: An opportunity for women to have access to higher responsibilities” Introduction “Women are better adaptive leader.

Men need to recognize this and catch up.” Zarif Munir, Partner and Managing Director of Boston Consulting Group Kuala Lumpur summed up the role of women in corporate performance during a panel discussion on “Diversity and the Adaptive Leader” at the 4th Annual Young Corporate Malaysians Summit 2012 held recently.
Today’s business environment is becoming increasingly dynamic, complex and socially aware.

Companies have to become more agile and responsive to survive and succeed.

As we move from the dawn of the twenty-first century toward the completion of its first decade, the ability to acquire, manage, and retain a diverse workgroup will clearly be a large factor in determining what companies move to the front of the pack.
The lack of talent has been identified as the biggest barrier to corporate performance and growth.

Failure to recruit and retain able women can only exacerbate the acute talent shortage that companies face.

Given the tight labour markets and intense competition for talent, there is a strong business imperative for companies to better tap the female talent pool.

This means gender diversity is increasingly fast becoming a corporate priority.
Previous researches on gender diversity on corporate performance have shown that companies benefit from the different but complementary leadership styles that women bring to their work, to the extent that there is a link between the proportion of women in senior management positions and corporate performance.
Credit Suisse Research Institute (2012) in testing the performance of 2,360 companies globally over the last six years found that on average, it would have been better to invest in corporate with women on their management board than in those without.

Their findings also uncovered that companies with one or more women on the board have delivered higher average returns on equity, lower gearing, better average growth and higher price/book value multiples over the course of the last six years.
The World Bank’s World Development Report 2012 focused on Gender Equality and Development argued that the promotion of gender equality is both the right thing to do and smart economics because it contributes to higher productivity and income growth, helps invest in the next generation, and enhances the quality of decision making.
The management consultancy McKinsey & Company’s global research on the role of women in corporations has long established the correlation between participation of women in executive teams and the financial performance of companies, highlighting the critical importance of gender diversity for business.
Parliament of Malaysia: Halisah Ashari, Research Unit Page 1 Perspectives 2012 Key challenges in women’s labour force participation in Malaysia Women’s labour force participation is defined as the share of women between the ages of 15 and 64 that are either employed or seeking employment.

Women account for half of the human resources in the country and in 2010, about 9 million or 67 percent of all women were of working age.
Among this group, only 46 percent were engaged in or looking for any type of productive work, whether as wage workers in formal or informal companies, self- employed or unpaid workers in a family business.

At least 500,000 – and as many as 2.3 million – Malaysian women are “absent” from the labour market.
Women are “absent” from the labour market in the sense that the number of women working or looking for work as a share of all working-age women is lower in Malaysia compared to other countries of similar or aspirational income levels.

The impact of these absent women in Malaysia’s talent pool could be as large as the “brain drain” of Malaysians who migrate to overseas job markets.
Table 1: Estimates of Malaysia’s “Absent” Women Source: Malaysia Economic Monitor November 2012 Table 2 indicated the biggest challenge for Malaysia with respect to economic opportunities for women relate to labour force participation.

Gender equality matters for Malaysia’s development primarily because the “absent women” represent a skills and “brain drain” from the Malaysian workforce.
With skills shortages being the main bottleneck in Malaysia’s path towards a high income economy, women are an under-utilized resource that needs to be harnessed for Malaysia to achieve its aspirations.
Table 2: Key challenges for Malaysia Source: Malaysia Economic Monitor November 2012 Parliament of Malaysia: Halisah Ashari, Research Unit Page 2 Perspectives 2012 Under-representation at every level According to the latest survey by McKinsey & Company (2012) on gender diversity in the workplace “Women Matter: An Asian Perspective” found that Malaysia, among other Asian countries, fail to tap its huge pool of talented women – an oversight that could impact companies’ growth aspirations given the acute talent shortage in the region (Figure 1).
Figure 1: Variations in the proportion of women in top positions across Asia 2011, Percent Source: McKinsey’s Women Matter: An Asian Perspective, 2012 Figure 2 shows how women, even though they account for half of Malaysia’s graduate cohort, become increasingly under-represented at the senior levels of corporations – facing different obstacles at different stages of their careers.
The numbers of women graduates and of women at entry-level positions in companies have increased whereby some 57 percent of graduates in Malaysia are women.

Though women account for more than half of all professional entry-level positions, they fared much less well thereafter.

Only a fraction of that number makes it to the middle management, let alone the top.

Generally, the proportion of women decreases at each level of the hierarchy.
The higher up the management hierarchy, the less visible women become, either because they have decided to leave or because they have become stuck at a more junior level.

This amounts to a considerable waste of talent given the fact that women account for more than half of Malaysia’s graduate cohort.

If more women are to reach senior positions, they have to be present in the pipeline that feeds those positions.
Parliament of Malaysia: Halisah Ashari, Research Unit Page 3 Figure 2: Losses along the corporate pipeline Percentage womenˡ Perspectives 2012 Source: McKinsey’s Women Matter: An Asian Perspective, 2012 Figure 3 indicated a single-peaked pattern of women’s participation in labour force across different age cohorts in 1980, 1990, 2000 and 2010 for Malaysia.
It is noted that Malaysia is the only country in East-Asia with an age-participation profile that declines steadily after early adulthood and the lower participation rates of older cohorts contribute substantially to low overall participation rates.

Female labour force participation rates are at their highest (65 percent) when women complete their formal schooling years (24 through 26 years of age) and decline steadily with age thereafter, as older cohorts enter into child-bearing and child-rearing years.
The decline in participation by age suggests that the participation of the older Malaysian women is more sensitive to life-cycle transitions.
Figure 3: Malaysia’s participation profile is single-peaked Source: Malaysia Economic Monitor November 2012 Parliament of Malaysia: Halisah Ashari, Research Unit Page 4 Perspectives 2012 Why female representation in senior management matters Progress toward higher female representation in senior management is likely to require action by governments, the wider business community, and individual companies.
Governments can raise awareness of the issue and introduce policies or support measures that help more women to gain a footing in the workplace and more women to fill senior roles.

In 2004, Malaysia’s government set a target of 30 percent for the proportion of women at decision-making level in the public sector.

At that point of time, women made up only 18.8% at the decision-making level in the public sector.

By 2010, more than 30 percent of people in that grade were women (Figure 4).
And in 2011, plans were announced to extend the target to the private sector by 2016, a measure that the prime minister said would “strengthen companies’ structure and future performance.” Figure 4: The public sector achieved its target of having at least 30 percent women in top management (Public Service Department 2011) Public sector personnel by occupational level, percent Source: Malaysia Economic Monitor November 2012 The business community can also lead the way, setting standards and acting as role models in order to shift attitudes and build momentum for change.
A set of gender diversity initiatives, implemented in the right combination, will help greater numbers of talented women rise through the ranks and deliver commensurate business rewards.

How quickly women in Malaysia can climb the corporate ladder depends on when societies change their way of thinking.

However, women’s career paths and the tactics companies use to recruit, retain, and promote women differ considerably along national lines and by gender.
Relatively few women even enter the pipeline, as the rates of female participation in the labour force are low.

Even when women do enter the corporate world, they often fail to progress very far, either getting stuck in the pipeline early in their careers or deciding to leave at middle management.

It is a waste that companies can ill afford, given the severe shortage of senior managers in the country.

Parliament of Malaysia: Halisah Ashari, Research Unit Page 5 Perspectives 2012 i.
The economic case Improving women’s economic opportunities is critical to Malaysia’s high income agenda.

Increases in the labour participation will also lead to a higher growth rate of human capital and Gross Domestic Product (GDP).

McKinsey’s economic case for increasing female participation at all levels of the labour force estimated that raising the participation rates of women has the potential to increase Malaysia’s GDP by between RM6 billion and RM9 billion.

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Talent Women are part of the Economic Transformation Program: as part of the Strategic Reform Initiative on Human Capital Development, a Roadmap for Leveraging Women’s Talent was developed outlining measures targeted at all stages of a woman’s career.

Companies that fail to attract able women risk penalizing themselves by failing to attract the best talent possible.

Ralph Norris, former CEO of Commonwealth Bank of Australia, put it like this, “Women in leadership.

It’s just good business.


There’s no difference in leadership potential between women and men; making sure you can capture a better share of high- performing women is better for the organization.” iii.

Women’s contribution to corporate performance The need to hire and retain the best can be reason enough to improve gender diversity within corporations.

But there are other reasons.


Some companies feel they need more women in order to sustain good relationships with female clients, or they want more female insight into consumer buying patterns.

But balanced representation of women is equally valuable in less female-orientated industries.

Diversity in teams leads to more innovation, more “out-of-the- box” thinking, and more collaboration.

Other companies see gender diversity as necessary to their reputations as employers.
McKinsey found that the particular ways in which female leaders behave, such as emphasizing people development and collaboration, can benefit a company’s organizational health and financial performance.

Women tend to be stronger in terms of collaboration and people development, while men tend to be stronger in individual decision making.

By having more women at the senior level, companies are helping to improve organizational health as well as financial performance.
What holds women back Companies need to understand where the obstacles to broader gender diversity lie.

Figure 5 indicated that the greatest by far of many working women was the double burden of holding down a job while looking after their families.

Many or most women at mid-career or senior level leave their jobs voluntarily because of family commitment.

The strength of cultural views, held by many women as well as men, is another contributing factor that hinders women’s progress.
Parliament of Malaysia: Halisah Ashari, Research Unit Page 6 Figure 5: Barriers to gender diversity within senior management Perspectives 2012 Source: McKinsey’s Women Matter: An Asian Perspective, 2012 There is also a lack of government support in areas such as child care (Table 3).

The absence of such infrastructure support was seen as the third-biggest obstacle to increasing gender diversity in Asia, particularly Malaysia.
Table 3: Lack of pro-family policies a key barrier in Asia Source: McKinsey’s Women Matter: An Asian Perspective, 2012 Unlocking the women’s potential in Malaysia Malaysia’s impressive growth record is matched with important advances in gender equality.
Along with a transformation of its economic structure and dramatic poverty reduction, Malaysia’s sustained economic growth over the past three decades has been matched by a narrowing (and even reversal) of gender gaps in education enrolment and literacy, increased women’s labour force participation, as well as the incidence of wage work and real earnings.

Significant challenges remain to unlock the potential of women to fully contribute to the economy.
Significant gender gaps in economic opportunities remain.

The main challenge is to raise female labour force participation (FLFP), which at less than half of the female working age population is low for Malaysia’s level of development.

In addition, Malaysia Parliament of Malaysia: Halisah Ashari, Research Unit Page 7 Perspectives 2012 shares with many countries the challenges of avoiding a misallocation of talent due to segregation of women into certain fields of study, industries, and types of jobs.
The latter is likely to be especially salient in Malaysia given the small number of women who are entrepreneurs and managers.

Closing gender gaps in economic opportunities could substantially leapfrog Malaysia to high-income status.

Estimates of Malaysia’s “absent women” – women who could be expected to be in the labour market given Malaysia’s level of development – range from 500,000 to 2.3 million, representing a drain from the country’s talent pool.
Moreover, women are underrepresented in management and leadership positions.

Reducing the number of “absent women” and enhancing the management talent pool with greater number of women is estimated to increase income per capita by 23 percent.

Malaysia’s low participation of women in labour markets is linked to a pattern whereby women do not return to work after marriage and childbearing.
Similar to other East Asian countries FLFP declines after women reach child-bearing age but differently from other countries, in Malaysia participation does not rise again several years later.

This pattern suggests that the participation of Malaysian women older than 26 is more sensitive to life- cycle transitions relative to their peers in other countries, which is supported by the finding that married women – whether in urban or rural areas – have the lowest participation rate.
In addition, Malaysian women also retire earlier than their male counterparts.

Married women who leave the workforce do not return due to difficulties reconciling work and family responsibilities.

67 percent of women not in the workforce cite ‘housework’ and other family duties as a reason compared to 2 percent of men.

Relatively low secondary enrolment rates are also linked to low FLFP.
While gender gaps in secondary education have been closed, given that Malaysian women with post- secondary qualifications are 70 percent more likely to work, the relatively low secondary enrolment overall also contributes to the “absent women” phenomenon.

Gender segmentation in education and labour markets is clearly visible.

In the workforce, Malaysian women are under-represented in engineering, architecture and other ‘non-female’ fields, an extension of gender streaming in higher education.
Women also tend to engage in low-productivity, low-paying activities relative to men.

Although this is not a problem for Malaysia alone, the sorting of entrepreneurs and managers by gender does seem to be more severe in Malaysia with potentially large economic costs.

In addition, an earnings gap exists linked to different returns to education profiles for men and women.
Education alone is not sufficient to close gender gaps as social norms and formal institutions continue to affect the choices of all women.

Low participation and segmentation (and the attendant earnings gap) are mainly driven by social norms that see women as being primarily responsible for childcare and housework while men are expected to be the main financial provider.
These beliefs are supported by formal institutions, such as prohibitions for women to work under certain conditions, which often discriminate by gender, even if indirectly.

Parliament of Malaysia: Halisah Ashari, Research Unit Page 8 Perspectives 2012 In the long-term, norms need to evolve for gender gaps to be bridged; in the meantime measures can be put in place to help men and women balance responsibilities.

Changing prevailing social norms takes time.


In the medium-term, supportive measures at all stages of the life-cycle can be put in place, ranging from flexi-work arrangements and expanded childcare options, to incentives for more female participation in ‘non-female’ educational fields and job types.
While current initiatives to leverage on women’s talent are laudable, other policy options must be explored, evaluated, and tailored, to enable Malaysian women to fully contribute to Malaysia’s transformation towards a high-income, inclusive and sustainable economy.

There is a clear business case for hiring, retaining, and promoting more talented women and for enhancing women’s participation rates at all levels of the work force, particularly at senior management levels in corporate Malaysia.
As Malaysian companies compete in a globalized market place, companies who do not work to improve women’s participation are surrendering two important sources of competitive advantage: having the best talent in an age of talent scarcity, and the particular performance benefits that women in leadership positions bring to an organization.

Bringing more women into the workforce will help bridge those skill gaps.
Parliament of Malaysia: Halisah Ashari, Research Unit Page 9 Figure 6: Unlocking women’s potential in pictures Perspectives 2012 Source: Malaysia Economic Monitor November 2012 Parliament of Malaysia: Halisah Ashari, Research Unit Page 10 Perspectives 2012 Conclusion Many factors, including demographic shifts and affirmative action policies, are driving diversity in the workplace.

Numerous sources show that the demographics of our workforce are shifting toward an increase in the percentage of women.
It is to the company’s advantage to fully harness the capabilities of a diverse workforce.

Companies should take full advantage of today’s workforce ever-increasing diversity by learning how to manage diversity more effectively.

Tapping into diversity is essential for success in today’s business.

Diversity breeds creativity and creativity drives innovation.

To be successful, companies need to be able to innovate so that they can remain differentiated from the competition.
Otherwise, the company becomes a collection of “commoditized” people that produce “commoditized” products and services.

The problem with the narrow representation of women at the top of the corporate hierarchy can be overcome by ensuring the presence of more women in the pipeline that feeds those positions.

Companies need to address the cultural and organizational issues that prevent women moving through the corporate pipeline.
First, the double burden will have to be addressed – no easy task given certain deep-seated cultural views, often held by women as well as men.

A corporate culture that also needs to be addressed which is the second-biggest obstacle preventing women’s advancement in which a manager’s commitment is gauged by whether he or she is available anytime, anywhere, makes it more difficult for women who want to balance work with family responsibilities to succeed.
Companies that are equipped to successfully leverage the distinct and rich talents and skills and knowledge of all employees will not only avoid drains on profitability, they will actually attain a number of strategic benefits.

By effectively harnessing the different perspectives and talents of a diverse workforce, companies can differentiate and produce results that are superior to any that could come from the collective efforts of a more homogenous group.
By gaining mastery over these critical skills today, companies will gain a powerful competitive edge.

Interaction between people, not structures and processes, are at the key to understanding any organisation.

Strong adaptive leaders who apply these key principals to their business will allow their enterprises to develop and thrive in a complex, modern world, but at the same time being aware of their social responsibilities.
People lie at the heart of an organisation, but it is people acting within teams, networks and communities that are the basis of culture and corporate values in today’s business environment.

Diversity is critical for innovation, and it is an advantage, not a hindrance, that no two people will see the world in the same way.

The key is finding a way to connect with, and harness, these diverse perspectives.

The bottom line is that the ability to manage diversity is extremely valuable.
The effectiveness of companies in managing diverse relationships can be a powerful tool to meet corporate performance.

Parliament of Malaysia: Halisah Ashari, Research Unit Page 11 Perspectives 2012 References Arfken et al (2004).

The ultimate glass ceiling revisited: The presence of women on corporate boards.

Journal of Business Ethics.

Elstad and Ladegard (2010).

Women on corporate boards: key influencers or tokens?

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Nielsen and Huse (2010).


Women directors’ contribution to board-decision-making and strategic involvement: The role of equality perception.

European Management Review.

Terjesen et al (2009).

Women directors on corporate boards: A review and research agenda.

Corporate governance: An international review.

Torchia et al (2011).

Women directors on corporate boards: From tokenism to critical mass.

Journal of Business Ethics.

Credit Suisse Research Institute (2012).


Gender diversity and corporate performance.

Malaysia Economic Monitor November (2012).

World Bank’s World Development Report (2012).

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