Female leadership not just diversity issue, but survival necessity

In 2022, Korea mandated that listed companies with assets exceeding 2 trillion won must appoint at least one female member to their management teams. As a result, the percentage of female directors in Korea increased from 10.5 percent in 2016 to 14.6 percent in 2022, according to The Economist’s data.

However, this is still significantly lower than the OECD average of 33.8 percent, as a failure to appoint female directors does not bring any legal disadvantage to firms. As a result, Korea ranked at the bottom among the 29 OECD member countries surveyed in the Glass Ceiling Index published by The Economist in March.

The Nordic countries, comprised of Iceland, Sweden, Finland, and Norway, alternated positions among the top four from 2016 to 2022, demonstrating consistently high performances. Conversely, during the same period, Japan and Korea remained steadfast in their lower rankings, consistently occupying the 28th and 29th positions, respectively.

Benja Stig Fagerland, an associate professor at the University of South-Eastern Norway School of Business, and also the founder of SHEconomy, an organization committed to shattering gender barriers and ensuring sustainability, takes a straightforward approach to sparking change.

She believes that corporations should realize that the pursuit of “women in leadership is not a diversity issue, but a business issue.”

This perspective stems from her experience in the 2000s, following the Norwegian government’s legislative push requiring listed companies to fill at least 40 percent of their director seats with women.

While a debate continues whether the groundbreaking quotas have fully achieved their intended goals, several key points are evident. The quotas increased management diversity, and, notably, many companies have responded positively to the inclusion of women in senior management roles.

During this period, Fagerland served as the Gender Equality Manager at the Confederation of Norwegian Business and Industry (NHO), Norway’s largest business lobby group. In reaction to the government’s policy, she led the “Female Future” project, aiming to assist members in identifying and boosting the presence of women in management positions.

Fagerland recalled her focus on persuading companies that including women in leadership roles was not just equitable, but a smart, data-driven decision.

The response was surprisingly favorable.

“I was the former CEO with an economics degree. I understood the challenges they had, so I built a strategic plan they could understand with the rhetoric they were using. It was natural for me to delve into the economic advantages,” Fagerland explained during a recent video interview with The Korea Times.

“And I could see these well-known CEOs suddenly facing the media stating, ‘We support Benja. We understand that it’s about business,'” she added.

One of Fagerland’s key narratives is that diversity engenders a richness of perspectives, ideas and talents that propel innovation and foster a thriving corporate ecosystem.

In 2019, McKinsey discovered a compelling link showing that businesses in the top quartile for gender diversity on executive teams were 25% more likely to outperform their counterparts in profitability.

Similarly, the Peterson Institute for International Economics revealed that companies where women account for at least 30 percent of director seats enjoy a remarkable 6 percentage point higher net profit margin compared to those lacking female leaders.

Such an inclusive team can broaden market appeal and also gain consumer trust, according to Fagerland.

“Even the largest companies are still introducing their new products or concept services based totally on gender stereotypes, like making small, cute, pink products, assuming they will appeal to women,” Fagerland said. “Women have always been, and will be, the majority of the consumer base making purchases. Those companies that fail to recognize this will inevitably fall behind,” she added.

SHEconomy, a term coined by Fagerland, blends SHE and Economy to represent the powerful economic impact driven by women’s participation, influence and impact across various economic sectors. Fagerland’s research highlights this market’s value at a staggering $20 trillion, an amount equivalent to the combined GDPs of China and India.

“This is not about quotas. It’s a strategic move that drives innovation and financial success,” Fagerland said. “It’s both on mobilizing women and diverse teams within the organization, but also to address your concept, your services and your products, to embrace diversity and women.”

Despite Norway’s reputation as an egalitarian society, evidenced by women holding 45 percent of parliamentary seats and a female labor participation rate of 64.4 percent, the country faced challenges similar to what Korea is experiencing today when initiating discussions about female leadership in the 2000s. There was “gender fatigue,” as Fagerland describes.

“The debate often pitted one gender against the other,” Fagerland recalled. “Some question how we teach females to be like men to get into the boardroom, and whether men had to go out for a woman to enter, among other issues.”

There were microaggressions as well. At a business conference in Denmark where she was the sole female speaker, Fagerland had to reintroduce her credentials, as the moderator did not mention any of her achievements or work.

“When the men were introduced, it was like ‘he got these and these awards and this is his title, bam bam bam.’ But when I took the stage, the moderator’s first comment about me was that I had just given birth to a daughter four days ago. That same evening, the largest news channel in Denmark aired my husband walking around with our baby – both of them were fine and happy – and me on the stage. You could see the narratives there,” Fagerland said.

What struck her profoundly was the prevalent focus on “fixing” women, rather than addressing the systemic issues perpetuating gender imbalances. This realization led her to adopt “Fix the system – not the women!” as her guiding mantra, committing herself to transforming the global approach to gender equality.

Benja Stig Fagerland, the founder of SHEconomy, delivers a keynote speech during the 1st Annual Seoul Gender Equality Dialogue hosted by UN Women Centre of Excellence for Gender Equality, at a hotel in Seoul, Nov. 2. Courtesy of Benja Stig Fagerland

Her dedication to this cause was evident in visits to Korea this year, where she participated in the 11th Nordic Talks, organized by four Scandinavian embassies in Seoul, and the 1st Annual Seoul Gender Equality Dialogue, hosted by the UN Women Centre of Excellence for Gender Equality.

When asked which concerns voiced by female leaders in Korea she found to be shocking, Fagerland said the only thing was, “We have so much in common.”

“We have this assumption that coming from a Nordic country would make me have a secret recipe and answers to everything (about gender-related issues). However, we are facing the same barriers and same systemic challenges,” Fagerland said.

Fagerland is now initiating a global standard and best practice for social sustainability and Corporate Diversity Responsibility (CDR), together with SHEconomy’s global partners, including Google, Microsoft and Accenture.

“I would love to get a real Korean company on board, not Google Korea or Microsoft Korea. We can make the changes, but we cannot do it individually,” Fagerland said.

“In the future, we will just have leaders.”