Upgrading workplace gender diversity: avoiding tokenism and measuring outcomes

2021 has been declared by the Ministry of Social and Family development as the Year of Celebrating SG Women, placing emphasis on how women in Singapore have contributed to the nation’s growth in all aspects of society. With the spotlight on gender equality, and the first ever White Paper on the topic coming up this year, it is a good time to turn attention towards promoting gender equality in the workplace.

Gender Equality in the Workplace

Among the resident population, the participation rate of female residents in the labour force has been increasing gradually. According to the Ministry of Manpower (MOM) and the Singapore Department of Statistics, the resident female labour force participation rate was 61.2 per cent, a slight increase from 61.1 per cent in 2019. However, this is still a far cry from the 2020 male participation rate of 75.4 per cent.

Meanwhile, a report by MOM in 2020 found that the adjusted gender pay gap, which compares the pay gap between men and women doing similar work, was 6 per cent in 2018. It also noted that while women’s share of labour market participation has increased across the board, they remain “over-represented in traditionally female occupations”, where average earnings tend to be lower.

Additionally, The Council for Board Diversity (CBD) described how as of December 2020, female participation on the boards of SGX-listed companies was 12.7 per cent, a slight increase from 11.8 per cent in December 2019. While there has been some progress in this area, there is still room for improvement.

How Gender Diversity and Representation Supports Business Performance 

What would incentivise companies to promote gender representation and diversity in their organisations? Mounting evidence demonstrates a strong correlation between an increase in gender representation, particularly at the board level, and business performance —innovative capacity, creative thinking, team morale, risk, and financial performance.

Studies have found that having greater gender diversity in top management teams leads to better risk management and performance. Meanwhile, a research paper for the International Monetary Fund, with a sample of 2 million non-financial companies in Europe, found that companies with a greater proportion of women in senior positions saw higher returns on assets, and that this association was stronger in industries requiring more creativity and critical thinking. There have also been studies finding a positive association between female board representation and innovation output.

In a similar vein, a Singapore-focused report by Board agender titled “20 by 2020” described various benefits of having women in executive positions of organisations, including improvements in financial performance, returns on equity, trust from institutional investors, investor confidence, corporate governance, and social impact.

The benefits of gender diversity to companies have also been increasingly acknowledged by investors. Mr David Gerald, CEO of the Securities Investors Association (Singapore), argued that given evidence demonstrating how gender is increasingly becoming “a proxy for cognitive diversity and future performance”, companies that fail to act risk being less well regarded than competing investments in the global market.

However, one could question whether organisations championing gender equality perform well as a result of gender diversity, or if organisations that are socially conscious are already successful to begin with.

Either way, the outcome still seems positive, but there is potential for more rigorous research. In particular, companies and those in the Human Resources industry would benefit from more Singapore-specific research investigating the relationship between human and economic capital. This could include more quantitative research on the relationship between diversity and performance in local companies, and ethnographic studies on how such decisions impact companies and their stakeholders. There is also scope for exploring the impact of other forms of diversity (racial, religious, educational), as well as other Environmental, Social and Corporate Governance (ESG) goals on business performance.

Avoiding Tokenism 

When promoting gender representation at high-level corporate positions, there are  concerns over tokenism and whether or not the action of electing women for such positions is mere virtue-signalling.

According to the Oxford Dictionary, tokenism is defined as “the practice of making only a perfunctory or symbolic effort to do a particular thing, especially by recruiting a small number of people from underrepresented groups in order to give the appearance of sexual or racial equality within a workforce”. Indeed, it is very possible that organisations simply install a few women in higher-level positions in order to give the appearance of promoting gender equality. Such actions can be superficial, and do not indicate any legitimate effort to embrace gender equality.

A report in the International Journal of Finance & Economics observed that when tokenistic efforts towards gender diversity are made (having a few women in high-level corporate positions for symbolic effect), the benefits of gender diversity to organisations are less likely to appear. Their research demonstrated that having “a critical mass” of female board members and more gender-balanced boards promote “long-term sustainable change in the workplace, responsible governance and competitiveness”.

As such, it is important to be able to differentiate between the superficial appointment of women for the sake of appearing socially conscious, and the genuine promotion of gender diversity in the workplace, with the intention to foster a culture of inclusivity and equality. In practice, this could be related to the treatment of these female board appointees as compared to that of their male counterparts: whether they receive equal compensation, have a similar say in decision-making, and are not treated differently due to their gender.

Of course, there is something to be said about how signalling can in itself have a positive impact on a company. Selecting women for executive or board positions would likely motivate and encourage a pipeline of gender-diverse talent at other levels of the organisation. It could also open up opportunities for younger female employees to gain the necessary mentorship and guidance to advance in their careers. Most importantly, having representation at the board levels would likely send an important message to the company as a whole, helping to promote a more inclusive organisational culture, that can also extend to other forms of diversity. However, these positive outcomes require the organisation to be willing to embrace these changes and have a shift in mindset.

A Way Forward  

There is an ethical impetus to promote workplace gender diversity, and the evidence above also indicates a clear business incentive as well, so there is little reason for organisations to not encourage this.

However, as companies rush to look good, they also need to be good. What practical steps can be taken to ensure that gender representation and equality is genuine and non-superficial?

One solution would be to find and implement frameworks to effectively measure and evaluate the performance of companies with respect to gender equality. An example of this would be Bloomberg’s Gender Equality index (GEI), which tracks gender equality in companies by measuring: pipelines for female leadership and talent; gender pay parity; inclusive work culture; anti-sexual harassment policies; and the extent to which the brand is “pro-women”. A step in the right direction would be for companies to identify, select and utilise one of such frameworks to evaluate their own performance in the area.

It is important to remember that gender equality is the fifth United Nations’ Sustainable Development Goal. Thus, incorporating it into a company’s organisational objectives is also in alignment with other socially impactful goals such as clean energy, income equality, and responsible consumption. If companies put in effort to measure, evaluate, and report their sustainable business practices, gender equality should be included as well.

By making gender equality a fundamental objective of a business, and by adopting a framework that could become standardised across different companies, businesses and their stakeholders could measure, evaluate, and potentially even place a value on such business practices. This would require collaborative efforts between different sectors and stakeholders to identify and select the most effective frameworks and indexes to use. Moreover, having largely agreed-upon and widely used frameworks to evaluate performance in gender equality would help public institutions, investors and consumers make informed decisions when choosing whom to deal with, buy from, and invest in.

Ultimately, businesses need to be incentivised to move beyond gaining social brownie points through tokenistic gestures, and towards real and meaningful change. More work and research need to be done to demonstrate the effect of gender equality on business performance and outcomes, and frameworks should be selected and put in place to promote transparency, accountability and motivation. Aligning businesses in this manner would push the needle closer towards equalising the position of women in the workplace, and in society overall.

Lau Ysien is Research Assistant at the Institute of Policy Studies, National University of Singapore.

Top photo from Pexels.