Report

Unlocking Korea's Growth Potential by Empowering Women in the Workplace

Korea’s 13-year record at the bottom of the OECD Glass Ceiling Index calls for solutions to boost female leadership.

By Heejae Ahn, Hyoju Seo, Junghee Bae, and Jinny Yang

First published on noviembre 12, 2024
min read


Executive Summary 1. The case for change Korea's working-age population, currently at its peak, is projected to decrease by 22% over the next two decades, highlighting the urgent need for strategies to secure and maximize workforce potential. Bain & Company analysis suggests that increasing female economic participation could boost Korea's GDP by 0.7 percentage points. However, recent years have seen gender diversity discussions become more complex, driven by widening political and social gaps between genders globally, as well as Generation MZ's resistance to group-specific support. This evolving landscape necessitates a renewed focus on female representation and finding solutions to fully leverage workforce potential. Bain's recent study analyzed nine years of financial performance data from Korea's top 500 public companies and found that those in the top quartile of female executive representation averaged double the enterprise value and growth rate of the bottom quartile. Companies with more than 30% women executives showed a strong correlation with higher profitability. 2. Analyzing women's labor indicators in Korea Despite high tertiary education and labor force participation rates, Korea has ranked lowest in the OECD's glass ceiling index for women in business for 13 consecutive years, with its Gender Gap Index also among the lowest globally. The proportion of women in deputy and assistant manager roles is half that of other developed nations. Interviews with CHROs indicate that many companies, wary of reverse discrimination claims, are less attuned to this issue. Key factors in female talent attrition within the first five years include work-family balance challenges and societal intolerance of career gaps. For women in junior leadership, main drivers of defection are inadequate promotion practices, insufficient support, and competency assessments skewed by unconscious bias. 3. Improvement initiatives and best practices To address these challenges, Bain recommends four priority initiatives for improvement (out of eight total): Expand flexible work and results-based evaluation: Pandemic-era shifts led companies like Amazon and Google, originally hybrid-friendly, and Salesforce and Microsoft, initially fully flexible, to increase office attendance to enhance efficiency and collaboration. Meanwhile, Spotify continues to leverage its "Work From Anywhere" model as a core talent strategy. To address potential downsides like isolation, Spotify organizes regular in-person gatherings and emphasizes results-based evaluation, enabling employees to work autonomously across global locations without strict office requirements. Implement mandatory diversity metrics disclosure: Government-led mandatory reporting of gender representation and pay gaps are necessary to increase awareness in business and society. OECD countries have demonstrated the effectiveness of this approach in boosting women's representation in management. Establish quotas for women in executive talent pools and promote mentoring programs: Following diversity leaders like IBM, set quotas for key executive candidates to ensure talented individuals are not overlooked. Implement mentoring and training programs to provide equal advancement opportunities and strengthen organizational competitiveness. Allocate parental leave for men: Encourage male parental leave to reduce the burden of women's career interruptions. Strategies include increasing income replacement rates for male leave, raising the parental leave pay cap, and mandating minimum leave days for men. Leading countries show that male parental leave quotas significantly prevent women's career interruptions and reduce gender pay gaps. 4. CEO interviews Domestic female CEOs interviewed for this report highlighted the following efforts needed from both corporate and individual spheres to maximize female workforce potential: Call for national change: Create a societal foundation that mandates and supports gender-equitable talent utilization Nationalize women's talent: Position it as a crucial economic growth strategy, transcending mere gender equality concerns (following models like Abe's Womenomics) Expand disclosure on diversity metrics: Broaden the scope of reported diversity metrics and implement incentives for companies excelling in this area Allocate male parental leave: Ensure equal mandatory leave periods for both genders to prevent gaps for women Create affordable childcare: Ease the financial burden of domestic help and expand childcare infrastructure Advice for companies: Foster an environment where all employees can reach their potential Recognize that change in the top 10% of leadership is crucial for an inclusive culture Overcome first-mover pressure and continue building precedents for women leaders Establish work-family balance for all employees and provide resources for effective implementation Implement clear diversity metrics, manage and publish them, and recognize contributors' achievements Advice for aspiring female talent: Make personal efforts for success Reframe the idea of "sacrificing for family" as "role modeling" and seek family support for your career goals Acknowledge women's tendency for risk aversion and actively combat hesitation Recognize networking as an essential skill and improve through conscious practice Articulate career goals clearly and actively sponsor and support other women in the company READ THE FULL REPORT (IN KOREAN)

Executive Summary

1. The case for change

Korea's working-age population, currently at its peak, is projected to decrease by 22% over the next two decades, highlighting the urgent need for strategies to secure and maximize workforce potential. Bain & Company analysis suggests that increasing female economic participation could boost Korea's GDP by 0.7 percentage points.
However, recent years have seen gender diversity discussions become more complex, driven by widening political and social gaps between genders globally, as well as Generation MZ's resistance to group-specific support. This evolving landscape necessitates a renewed focus on female representation and finding solutions to fully leverage workforce potential.
Bain's recent study analyzed nine years of financial performance data from Korea's top 500 public companies and found that those in the top quartile of female executive representation averaged double the enterprise value and growth rate of the bottom quartile. Companies with more than 30% women executives showed a strong correlation with higher profitability.

2. Analyzing women's labor indicators in Korea

Despite high tertiary education and labor force participation rates, Korea has ranked lowest in the OECD's glass ceiling index for women in business for 13 consecutive years, with its Gender Gap Index also among the lowest globally. The proportion of women in deputy and assistant manager roles is half that of other developed nations.
Interviews with CHROs indicate that many companies, wary of reverse discrimination claims, are less attuned to this issue. Key factors in female talent attrition within the first five years include work-family balance challenges and societal intolerance of career gaps. For women in junior leadership, main drivers of defection are inadequate promotion practices, insufficient support, and competency assessments skewed by unconscious bias.

3. Improvement initiatives and best practices

To address these challenges, Bain recommends four priority initiatives for improvement (out of eight total):

Expand flexible work and results-based evaluation: Pandemic-era shifts led companies like Amazon and Google, originally hybrid-friendly, and Salesforce and Microsoft, initially fully flexible, to increase office attendance to enhance efficiency and collaboration. Meanwhile, Spotify continues to leverage its "Work From Anywhere" model as a core talent strategy. To address potential downsides like isolation, Spotify organizes regular in-person gatherings and emphasizes results-based evaluation, enabling employees to work autonomously across global locations without strict office requirements.
Implement mandatory diversity metrics disclosure: Government-led mandatory reporting of gender representation and pay gaps are necessary to increase awareness in business and society. OECD countries have demonstrated the effectiveness of this approach in boosting women's representation in management.
Establish quotas for women in executive talent pools and promote mentoring programs: Following diversity leaders like IBM, set quotas for key executive candidates to ensure talented individuals are not overlooked. Implement mentoring and training programs to provide equal advancement opportunities and strengthen organizational competitiveness.
Allocate parental leave for men: Encourage male parental leave to reduce the burden of women's career interruptions. Strategies include increasing income replacement rates for male leave, raising the parental leave pay cap, and mandating minimum leave days for men. Leading countries show that male parental leave quotas significantly prevent women's career interruptions and reduce gender pay gaps.

4. CEO interviews

Domestic female CEOs interviewed for this report highlighted the following efforts needed from both corporate and individual spheres to maximize female workforce potential:

Call for national change: Create a societal foundation that mandates and supports gender-equitable talent utilization

Nationalize women's talent: Position it as a crucial economic growth strategy, transcending mere gender equality concerns (following models like Abe's Womenomics)
Expand disclosure on diversity metrics: Broaden the scope of reported diversity metrics and implement incentives for companies excelling in this area
Allocate male parental leave: Ensure equal mandatory leave periods for both genders to prevent gaps for women
Create affordable childcare: Ease the financial burden of domestic help and expand childcare infrastructure

Advice for companies: Foster an environment where all employees can reach their potential

Recognize that change in the top 10% of leadership is crucial for an inclusive culture
Overcome first-mover pressure and continue building precedents for women leaders
Establish work-family balance for all employees and provide resources for effective implementation
Implement clear diversity metrics, manage and publish them, and recognize contributors' achievements

Advice for aspiring female talent: Make personal efforts for success

Reframe the idea of "sacrificing for family" as "role modeling" and seek family support for your career goals
Acknowledge women's tendency for risk aversion and actively combat hesitation
Recognize networking as an essential skill and improve through conscious practice
Articulate career goals clearly and actively sponsor and support other women in the company

READ THE FULL REPORT (IN KOREAN)