The Journal The Authority on Global Business in Japan

Globally, many companies are missing opportunities due to a lack of diversity among senior leadership. A failure to reflect the social makeup of the markets and communities in which they operate could be holding businesses back. In our recent International Business Report 2018 (IBR), based on a survey conducted during November and December 2017, we captured the views of 2,580 business leaders in 35 countries concerning diversity.

On average, 40 percent of businesses believe diversity is important to their success, but just 14 percent are acting to diversify their senior team.

In Japan, a mere 7 percent of senior management positions are held by women, placing the country last. The global survey average is 25 percent. Moreover, just 13 percent of businesses in Japan have a member of senior management younger than 35, compared with the global average of 24 percent.

Grant Thornton International Ltd. Chief Executive Officer Peter Bodin shared some of the IBR findings and his personal insight in a July 3 interview with Nikkei Sangyo Newspaper, highlights of which follow.

How does Japan’s gender diversity compare globally?
Quite honestly, 7 percent is an extremely low figure. However, even in the United Kingdom, which is thought to be progressive in this respect, the percentage of senior management positions held by women is only 19 percent, and the number is 23 percent in the United States. Even Europe remains at 26 percent as a whole, which is also low. The goal, ultimately, should be 50 percent—close to the gender ratio of the population.

What is needed to change the situation?
Gender diversity is a global movement that will never turn back. Top management should be aware that there is no choice but to pursue diversity when considering long-term strategy. However, change does not just happen. Governmental and societal pre­ssure is instrumental in pushing businesses to change.

In Europe, for example, promotion of female directors is institutionalized. Employees believe that diversified orga­ni­za­tions provide a more pleasant working environment. Activities aimed at diversification are also moving forward. Investors have come to declare that they will no longer invest in businesses with less progressive diversification efforts.

Will Japan’s Corporate Governance Code make a difference?
I believe it can only be a good thing to encourage the appointment of female and foreign national directors, but competent individuals must be chosen as leaders. In-house employee development and recruitment are important. If a company assumes that employees are not yet developed—and does not conduct adequate research—they are likely to overlook competent internal candidates.

What are the effects of diversification?
As globalization continues to progress and management expe­riences rapid changes in the business environment, multifaceted judgment has become a requirement. Through gender, ethnic, and age diversity, we can gain new and different perspectives.

I myself have experience implementing diversification measures. In 2000, when I became CEO of Grant Thornton Sweden, all executive officer positions were held by men. After taking office, I actively appointed competent women. Now, nearly half of the positions are held by women. Consequently, discussions to respond to changes have become more lively, and there has been a clear shift in decision-making processes. Diversification has also enhanced the degree of organizational transparency.

Might diversification reduce corporate corruption?
I cannot profess to have a firm grasp on the situation in Japan. However, I do believe that organizational transparency will be greatly enhanced by pursuing diversification and will lead to a reduction of such risks. Societies continue to become more open due to the widespread use of social media, and this societal change makes it of utmost importance for businesses to ensure internal and external transparency.

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For more information, please contact your Grant Thornton representative at +81 (0)3 5770 8829 or email at mc@jp.gt.com
www.grantthornton.jp/en

Peter Bodin is CEO of Grant Thornton International Ltd