A study of 577 publicly-listed companies in Singapore has shown that diverse leadership pays off.
The analysis shows that a firm’s performance is highest when it has an equal number of male and female leaders in senior management and board positions. Firms also fare better when they have leaders with more than 10 years of industry experience. In contrast, firms with a high proportion of leaders aged over 60 do not fare as well.
The Leadership Diversity and Firm Performance: A Study of Singapore-Listed Companies report, developed and led by the Centre for Governance and Sustainability (CGS) at the National University of Singapore (NUS) Business School, was announced at a webinar today. This study was jointly conducted by CGS, consultancy firm Connecting the Dots and EDGE Strategy which offers an integrated SaaS-based DE&I solution allowing organisations to measure, accelerate and get EDGE certified for where they stand in terms of gender and intersectional equity. DBS and the Securities Investors Association (Singapore) are supporting partners.
Professor Lawrence Loh, Director, CGS, said, “This study is the first of its kind for Singapore-listed companies, with a holistic consideration of multiple dimensions of diversity, including and beyond gender. The results are illuminating in guiding companies in their framing of diversity policies to meet the emerging requirements of regulators and stakeholders.”
The study looks at the degree of diversity in age, educational qualifications, gender, and industry experience of board members and leaders in Singapore-listed companies, as well as the companies’ performance.
When the leaders are more diverse in age, educational qualifications, and gender, the better the company performs.
Ms Low Chin Loo, Head of APAC from EDGE Strategy said, “A meaningful response to the growing interest and pressure to progress to a more diverse and inclusive workplace requires both measurement and actions to transform. EDGE solutions help leaders to measure gender equity and intersectionality at all levels of the organisation, and this study clearly confirms that investing in building a diverse work ecosystem brings concrete benefits.”
Leaders with more than 10 years of experience make an impact
This benefit of diversity does not apply to industry experience, where only leaders with more than 10 years of experience in their specific industry led to a statistically significant positive impact on the firm’s performance. Specifically, a 10 percentage point increase in the proportion of leaders with more than 10 years of experience contributes to a 0.59-0.68 percentage point increase in the Return on Assets (ROA) ratio, which measures how well a company does in relation to its assets.
In contrast, a 10 percentage point increase in the proportion of leaders aged over 60 causes a 0.41-0.63 percentage point decrease in ROA. The study could not find any statistically significant impact of increasing the proportion of leaders aged under 60 on ROA.
Equal number of male and female leaders is ideal
Increasing the proportion of female leaders is good to a certain extent. A 10 percentage point increase in the proportion of female leaders contributes to a 0.44 percentage point increase in ROA.
The growth in ROA from more female leaders peaks when the number of female leaders equals that of male leaders, and declines when the proportion of female leaders is more than half.
This suggests companies should aim for an equal number of male and female leaders. They have more to do, as data from the Council for Board Diversity shows that for the first half of 2021, listed companies on the Singapore Exchange reported only 13 per cent for women’s participation on boards.
The research team also tried to investigate the effect of gender pay gap on firm performance, but was unable to conclude any effect due to limited data. Among the 577 publicly-listed companies, only 15 per cent disclose the exact remuneration and have at least one female leader.
Ms Juanita Woodward, Principal at Connecting the Dots, said, “NUS CGS has been a pioneer in providing board diversity insights since the launch of the 2011 Singapore Board Diversity Report. This new report provides fresh insights on the vast benefits of a diverse board, be it in terms of age, education, gender, or experience. Gender diversity on boards, which is an important theme in Singapore, requires a gender-balanced approach at all levels including at universities and within companies. A strong and diverse leadership talent pipeline for board roles can best be achieved when the benefits of diversity are top of mind.”
Annex
Table 1: Diversity Index statistical results
Table 2: Age of leaders and firm’s performance
Table 3: Leaders’ industry experience and firm’s performance
Table 4: Gender diversity and firm’s performance
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For media enquiries, please contact:
ANG Hui Min
Senior Manager, Corporate Communications
NUS Business School
National University of Singapore
Tel: +65 6601 5857
Email: [email protected]
Veronica Del Motto
Media Public Relations Manager
EDGE Strategy
Email: [email protected]
About the Centre for Governance and Sustainability
The Centre for Governance and Sustainability (CGS), formerly known as Centre for Governance, Organisations and Institutions (CGIO), was established by the National University of Singapore (NUS) Business School in 2010. It aims to spearhead relevant and high-impact research on governance and sustainability issues that are pertinent to Asia, including corporate governance, corporate sustainability, governance of family firms, state-linked companies, business groups, and institutions. CGS also organises events such as public lectures, industry roundtables, and academic conferences on topics related to governance.
NUS Business School is known for providing management thought leadership from an Asian perspective, enabling its students and corporate partners to leverage global knowledge and Asian insights.
The School is one of the 17 faculties and schools at NUS. A leading global university centered in Asia, NUS is Singapore’s flagship university which offers a global approach to education, research and entrepreneurship, with a focus on Asian perspectives and expertise. Its transformative education includes a broad-based curriculum underscored by multi-disciplinary courses and cross-faculty enrichment. Over 40,000 students from 100 countries enrich the community with their diverse social and cultural perspectives.
For more information, please visit bschool.nus.edu.sg, or go to the BIZBeat portal which showcases the School’s research.
About Connecting the Dots
Connecting the Dots is a Singapore-based boutique consultancy. Since its launch in 2014, the company has focused on projects that enable companies and organisations to better align their objectives to the UN SDGs and ESG framework through new business models, strategies, and technology. Connecting the Dots works with global tech companies, multi-lateral development agencies and banks, universities, SMEs, and FinTech companies with an aim to scale and grow business in the Asia region with a “profit with purpose” mindset.
Ms Juanita Woodward, Principal at Connecting the Dots, has been a trailblazer on the theme of women’s economic empowerment since the early ‘90s. In November 2021, her long-time activities were acknowledged by the American Chamber of Commerce of Singapore with the HERo Award: Trailblazer of the Year, SME.
In Singapore, Ms Woodward is the Founding President of the PrimeTime Business and Professional Women’s Association, which will celebrate its 25th anniversary in 2022, and Co-Founder of BoardAgender, which celebrated its 10th anniversary in 2021. In her professional career, she works on initiatives with UNCDF and other organisations to enable financial access for women and women-led businesses in Asia’s emerging markets.
Ms. Woodward is currently an Advisor to the newly launched National University of Singapore (NUS) Women In Business Club, empowering the next generation of female leaders in Singapore. Since 2013, she has been an Advisory Board Member of NUS Business School’s Centre for Governance and Sustainability (CGS).
EDGE Strategy
EDGE Strategy offers an integrated SaaS-based DE&I solution allowing organisations to measure, accelerate and get EDGE certified for where they stand in terms of gender and intersectional equity. Working with EDGE and becoming EDGE Certified involves a rigorous third-party review of representation across the pipeline, pay equity, effectiveness of policies and practices, and inclusiveness of an organisation’s culture. As an integral part of the assessment, statistical data is analysed, policies and practices are reviewed and employees’ experiences of career development opportunities in the current workplace are accounted for. Depending on the specific results of each organisation, an action plan is formulated, and firm commitments towards its implementation.
EDGE Certification is built around the independent third-party certification of data and information and is distinguished by its rigour and focus on impact. Granted by one of the EDGE accredited independent third-party certification bodies – SGS, Intertek or FloCert, it remains valid for a period of two years. EDGE’s current customer base consists of over 200 large organisations in 50 countries across five continents, representing 30 different industries
Annex
Table 1: Diversity Index statistical results
| Diversity aspect of leaders | Impact on firm performance |
| Gender | Positively significant |
| Age | Positively significant |
| Educational qualifications | Positively significant |
| Industry experience* | Insignificant |
* Refers to years of experience in the relevant industry
Table 2: Age of leaders and firm’s performance
| Proportion of leaders in the respective age categories | Impact on firm performance |
| Up to 60 years old | Insignificant |
| 61 to 70 years old | Negatively significant |
| Over 70 years old | Negatively significant |
Table 3: Leaders’ industry experience and firm’s performance
| Proportion of leaders with industry experience* | Impact on firm performance |
| Up to 10 years | Insignificant |
| 11 to 20 years | Positively significant |
| Over 20 years | Positively significant |
* Refers to years of experience in the relevant industry
Table 4: Gender diversity and firm’s performance
| Gender diversity | Impact on firm performance |
| Adding female leaders when current proportion is less than 50% | Positively significant |
| Adding female leaders when current proportion is more than 50% | Negatively significant |
Note: Leaders refer to those in senior management and board positions.
