Over the past three years, companies in Southeast Asia have made sizable progress on their DEI initiatives. That progress is worth celebrating, yet business leaders in the region say that there is far more work to be done. Specifically, they feel that DEI is valuable in building a more innovative culture, enhancing the employee value proposition, and improving business performance. But they can capture these benefits only by redoubling their efforts to create a more diverse, equitable, and inclusive workplace.
BCG’s 2023 survey asked more than 6,000 employees in six Southeast Asian countries (Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam) about their company’s DEI programs and their overall experience. The survey looked at three underrepresented groups: women, LGBTQ+ employees, and ethnic minorities. In addition, we asked follow-up questions about other factors such as immigration status, socioeconomic status, caregiver status, and ability to work remotely. (This research follows a similar survey we conducted in 2020 that used the same methodology.) We then expanded and enriched our results with a roundtable discussion of senior business leaders at some of the most successful and best-known companies in Southeast Asia. On a positive note, the results show that companies have made good headway. But some employees—specifically those who identify as LGBTQ+—are seeing smaller gains.
The challenge now is how to improve and how to determine which DEI programs provide the best returns. Our analysis points to clear measures companies can take to improve their DEI performance. Critically, these measures must be linked to the unique needs of each country, company, and employee group. By applying an individualized and differentiated approach, Southeast Asian organizations can create more diverse, equitable, and inclusive workplaces and transform DEI into a source of competitive advantage.
DEI is crucial for organizations to thrive in all markets, but it’s particularly important in Southeast Asia—a highly heterogenous region of 680 million people who comprise more than 1,500 ethnic groups and speak more than 1,000 languages and dialects. Roughly two-thirds of the population is of working age, and many have intersectional identities; that is, they represent more than one aspect of diversity. For example, an employee may identify as a woman, LGBTQ+, an ethnic minority, and a person with a disability.
Overall, our survey results show that the region has made broad progress in adopting DEI programs over the past three years, despite the challenges posed by COVID. When asked whether their company has diversity programs in place across the three main dimensions that we considered—women, LGBTQ+, and ethnicity—43% of respondents overall said yes, up from 36% in 2020. However, these advances are highly variable. Looking at the data by DEI characteristics reveals where countries have made the biggest gains and where more effort is required. (See Exhibit 1.)
Women. Throughout the six countries we researched, the share of employees saying that their company has DEI programs in place to support women increased between 6 and 15 percentage points. Moreover, programs for women are seen as highly effective, especially in Indonesia and Vietnam, where roughly 90% of women respondents say they have personally benefited from them. Yet those benefits don’t yet translate to true equality: 72% of women say that they still face obstacles at work because of their gender, citing issues with leadership commitment, recruitment, retention, advancement, and pay.
Ethnicity. Similarly, programs aimed at ethnic minorities have become more prevalent. The number of respondents who say that their company has such a program in place increased by 8 to 15 percentage points over the past three years. It’s worth noting that the gains were widespread; all six countries in our analysis showed progress. Yet 62% of ethnic minorities say that they, too, face significant obstacles at work.
LGBTQ+. The DEI population that showed the most variable results over the past three years is LGBTQ+ employees. Overall, respondents in the region are on average 5 percentage points more likely than in 2020 to say that their company has a program for LGBTQ+ employees. But in Indonesia, Singapore, and Malaysia, fewer than one-third of respondents say that their company has an LGBTQ+ policy.
In addition, employees say that LGBTQ+ policies are less effective than those for women or ethnic minorities (with Malaysia and Thailand as exceptions). More than two-thirds of LGBTQ+ employees say that they experience obstacles because of their identity—and cis-straight employees are less likely to recognize these obstacles than majority groups do for other aspects of diversity (a gap of 12 percentage points). This points to a perception gap between leaders, who are typically cis-straight and in charge of creating an inclusive culture, and their LGBTQ+ employees, who are the ultimate beneficiaries. In establishing or reexamining the policies, leaders should make sure they are aware of the needs of their LGBTQ+ (and other diversity groups) workers and wherever possible include representatives of these groups when designing their offerings.
LGBTQ+ employees also say that they face unique challenges in their day-to-day work life. For example, 64% feel they are expected to play the role of listener and peacekeeper in meetings, compared with only 51% of non-LGBTQ+ employees. Furthermore, LGBTQ+ respondents were roughly 10 points more likely to report being tasked with nonwork errands such as buying gifts and picking up lunch or coffee.
In both the research results and the subsequent roundtable discussion, business leaders in SEA strongly agreed that investing in a DEI agenda is a crucial element in creating business value. Among survey respondents, 89% of people in leadership roles believed that integrating a DEI lens into their company’s strategy can generate new business opportunities. That aligns with a growing body of BCG research quantifying the gains from a comprehensive approach to DEI. For example, BCG’s recent BLISS (bias-free, leadership, inclusion, safety, and support) research found that senior leadership commitments to DEI have dramatic effects in attracting and retaining highly valued employees.
One clear advantage of having a diverse workforce is that companies can better understand the perspective of a wider range of customers and therefore serve them better. They can tap into new markets, expand their customer base, and improve business resilience. (See the sidebar “Standard Chartered Bank Launches a Financing Facility for Women Entrepreneurs.”)
Retaining talent is another rationale for investing in DEI. Most employees—even those from majority groups—want a workplace that is more diverse, equitable, and inclusive, and the survey results show that people will change jobs to find one. More than half of all respondents say that they are willing to leave their current employer for a more inclusive culture. As Exhibit 2 shows, the highest share of these employees was in Thailand (75%), followed by Malaysia (70%) and Vietnam (64%).
The willingness to leave is notably higher among LGBTQ+ employees, those with a disability, and those younger than 35. In a very tight talent market across Southeast Asia, where unemployment is 2% to 3% in many countries, this further underscores the urgency of prioritizing DEI to retain employees and reduce turnover costs.
Given the importance of DEI to employees and the business alike, the question is how companies can make faster progress. Our analysis, along with our experience helping clients in the region improve their DEI performance, points to several sets of measures.
Ensure commitment among senior leaders. Creating a diverse, equitable, and inclusive environment begins at the top. The BCG study mentioned above, which identifies the factors that influence experiences of inclusion in the workplace, found that the commitment of senior leaders and direct managers is a critical factor in creating an environment in which people can thrive.
Our research in Southeast Asia reinforces these findings. When respondents believed that the executive team was committed to DEI, the turnover risk decreased by 9% for women, ethnic minorities, and LGBTQ+ employees. Importantly, an inclusive environment raises the boat for everyone; in an inclusive workplace, the intent to quit among ethnic majorities decreased by 6%. All employees also reported a significant increase in happiness and motivation, ranging from 20 to 30 percentage points. (See Exhibit 3.)
Establish a baseline of foundational measures that benefit all groups. As a first step in building a DEI culture, all organizations should invest in foundational measures that employees throughout Southeast Asia deem most effective. There are some national differences but in general, the rankings of table-stakes measures were consistent across the countries we studied:
Our research also highlighted two areas that have become more important since we did the 2020 research:
Implement targeted measures for specific groups. In addition to foundational interventions, our research also identified a set of DEI measures that women, ethnic minorities, and LGBTQ+ employees value but may be overlooked because they aren’t perceived as important by company leaders, who tend to be cis-straight, men, and in the ethnic majority. These are gaps that leadership teams need to address:
Tailor your approach. Last, companies must understand that employees are not homogenous groups. When designing DEI programs and benefits, it’s crucial that they take a disaggregated view and understand the needs and wants of their own specific markets and employee groups. In our findings, differences emerged across the top issues by group and country. For example, in Singapore, women and ethnic minorities highlighted recruitment as the biggest challenge, while advancement and retention were seen as the biggest challenges by women and LGBTQ+ respondents in Indonesia, Philippines, and Thailand.
Similarly, the importance of different interventions varied across countries:
Company-level differences add another level of complexity. Accordingly, leadership teams need to listen to their workforce and apply a tailored approach that links solutions to their unique context. That means broadening the scope of DEI investments beyond diversity groups to ensure that all employees are included. (See the sidebar “Ayala Expands Its DEI Lens to Include Nontraditional Aspects of Diversity.”)
The DEI progress among Southeast Asian companies over the past three years is worth celebrating, yet SEA business leaders say that it is still not enough. Employees and other stakeholders are increasingly aware of companies’ social impact, and there are real risks in failing to embrace DEI, including poor morale, turnover, and declining business performance. Our findings show that there are significant returns for companies willing to do the work required to build truly equitable workplaces. Importantly, Southeast Asian business leaders are increasingly recognizing the value of DEI and are focusing their efforts and investments accordingly.
The authors would like to thank Ryley Mehta, Ashutosh Sinha, and Eleanor Furtado for their contribution to this report.
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