Women in Boardrooms: Women in Boardrooms Taking Centre Stage

Even after indian women won the right to vote in 1950, and then gradually started entering the formal workforce in increasing numbers, corporate leadership circles remained almost entirely male. At present, 21% of board seats are held by women, up from barely 6% in 2013, according to a report by Khaitan & Co, Aon, LML and Arise titled Presence to Influence: Advancing Women in Indian Boardrooms. This feels like overdue progress. However, when compared with th 30–40% representation in countries such as France, Norway, and Belgium that implemented mandatory gender quotas, the pace of India’s progress in terms of gender diversity in boardrooms appears more modest.

The first big push for change in India was the Companies Act of 2013, which mandated the appointment of women directors on boards of companies in specified categories. Section 149(1) said every listed company and certain classes of public companies (those with a paid-up capital of Rs 100 crore or a turnover of Rs 300 crore or more) must appoint at least one woman director on their boards.

The decision to make boards more gender-diverse could well have been triggered by what was happening in the rest of the world. Take the case of Norway, which mandated a 40% quota for women on corporate boards in 2003. Many countries, including Spain, Finland, Iceland, France, Israel, Italy, Belgium, Germany and Austria, followed that up with their own mandates.

That begs the question, how gender diverse have Indian company boards really become?

SLOW AND STEADY

In every sense, India is a different terrain. It has a well-entrenched culture of promoter-driven companies of multiple sizes across regions, multinationals, public sector undertakings and a large number of emerging players. The report cited analysed the BSE 200 group of companies at the end of FY24 and found 18.5% women representation on boards. Again, 98% of that universe had at least one woman director, 59% had two or more, and 22% had three or more.

Before the Companies Act 2013, there were many reasons for the limited representation. “People prefer to work with those who are like themselves. Till you equalise that balance, you will need to push this through regulations,” says Apurva Purohit, Co-founder of food products firm Aazol and an independent director on various boards like those of LTIMindtree, L&T Technology Services.

To Purohit, the issue is not the size of the company. “It comes down to high governance standards. Personally, I am a lot more comfortable with more than one woman on company boards since voices become that much stronger,” she says. For companies, it is an evolving situation, and they would have to recognise the benefits of having more women directors. According to her, many of them start with one woman for diversity. “Over time, they recognise the value a woman brings, and that could take two-three years. The perspective through which you look at gender changes,” she adds.

Of course, the stage of a company makes a difference. More mature companies have more women on their boards.

Sonu Bhasin, an independent director and business historian, feels the size of the company is crucial. “The attitude of the promoter (in a promoter-led company) or the Chairman/MD (in a non-promoter-driven company) determines the composition of the board, including women representation,” she says. Bhasin—who sits on multiple boards, including Berger Paints, Triveni Turbines, Nippon Life India Asset Management, Multi Commodity Exchange of India and NIIT—picks 2014 as the starting point and acknowledges that a large distance has been covered in terms of women’s representation in boardrooms.

“The obvious hits include more women directors than in 2014. The misses include the fact that there are still many companies, including a large number of public sector undertakings, that do not have a woman director,” says Bhasin.

CONNECTIONS MATTER

It is relevant to understand how much the mindset has changed with respect to women’s representation on boards over time. This is best demonstrated through numbers, with Khaitan & Co’s report stating that the 2013 mandate has driven “nearly universal compliance” among BSE 200 companies.

The report points to early concerns that the mandate will make organisations hire women they know, including family members and friends, instead of promoting true diversity. “Today, among the BSE 200 companies, only 10% women directors are related to other members of their boards,” it says.

Sukanya Hazarika, Director of Khaitan & Co, does not hesitate to call the 2013 mandate “affirmative action.” The challenge, she says, revolves around the relatively small pool of experienced women directors. Consequently, the role of networking becomes disproportionately critical. Interviews conducted for the report highlight that close to 97% view it as important. External networks (such as relationships with clients, mentors and women’s leadership groups) serve as the most powerful gateway to the boardroom.

“Building these connections begins early in one’s career, and that is sustained over time, rather than being limited to periods when individuals are actively seeking board positions. Even women with strong professional credentials, such as CXOs often depend on allies to boost visibility and credibility in male-dominated networks,” says the report.

Inevitably, women with strong networking skills, through their trusted circles, are recommended for board roles. The report mentions a director who recounts how a former boss recognised her potential and directly recommended her to the chairman of a multinational company, “resulting in pivotal career advancement.”

Manisha Girotra, CEO of investment bank Moelis India, says, “We have come a long way with many well-qualified women from professional backgrounds sitting on boards.” The mandate of having at least one woman per board is the hitch. “Only a few are trying to increase that to two,” she explains, before naming Marico and Sona Comstar as exceptions.

To her mind, women bring great improvements on parameters such as return on capital, return to shareholders, sustainability, succession planning, retention of talent and leadership. “In this world of high destruction created by artificial intelligence (AI), the skills that women bring to the table, especially those relating to high EQ (emotional quotient), will attract talent. Talent does not work for those who are only intelligent but for those with empathy, and that helps retain and hire talent,” says Girotra.

WAY AHEAD

Shriram Subramanian, Founder and Managing Director of InGovern Research Services, a corporate governance advisory firm, says India is one of the few countries where women’s representation on boards is mandated by the regulator (the Securities and Exchange Board of India). “The turning point was in 2017 when the Kotak Committee report recommended at least one independent woman director,” he says. This was after it observed that several promoter-driven organisations had appointed relatives after the new Companies Act and the SEBI LODR (Listing Obligations and Disclosure Requirements) mandate in 2014.

While India has a clear ‘one woman’ mandate, several countries opt for a percentage. That is viewed as a key reason for the sharper rise in the women representation abroad. “We must move away from having one or two women directors and have a threshold; 30% is a good number,” says Hazarika. Still, inherent biases cannot be wished away, and she refers to “microaggression” from other board members and how making oneself heard can become extremely difficult at times.

“If we have to move away from networking, there must be an increase in the number of tests/exams to increase the talent available,” she says. From a regulation point of view, there must be stricter guidelines for non-compliance, she adds.

Subramanian disagrees that there is a dearth of women directors. He says there are enough women in senior management who can take up directorships. “Gender diversity is much needed, and boards should appreciate the benefits,” he says. But the process is taking time. Subramanian looks at diversity a little differently and insists it must go beyond just having women on the board. “Gender diversity for the sake of it will never work. The objective should be to have a diversity of views and opinions.”

Swetha Joseph, Director, DEI Practice, Talent Solutions, Aon Consulting India, says inclusion is an act of broadening representation, such as on key board committees or at workplaces. A simple way to start is by examining what biases or stereotypes are preventing the expansion, she says. “For instance, instead of using the traditional qualifications or criteria to recruit a board member, such as previous experience in the C-Suite, companies can break down the specific skills that are important, which are usually honed by being in the C-Suite, but need not be limited only to those who have had the experience in those specific roles.” This will immediately expand the pool of potential candidates and encourage diversity of industry, areas of expertise, and field of work, she says, adding this could even add generational diversity into the mix.

The larger effort lies in understanding how a woman director makes a tangible difference to the board. Hazarika says data proves that diversity leads to more innovation and improved performance. “With diversity, discussions get more productive. Women are known to raise issues related to ESG or bring in a different approach to strategy, leading to a more rounded view,” she says. That’s not the only thing. Hazarika emphasises women laying stress on better working conditions. On this, Purohit has a simple view. “A woman’s viewpoint is obviously different from that of a male and allows us to look at a problem differently.” Girotra is optimistic and thinks regulation will ensure there are two women on a board.

So, while progress has been made, there is still a long way to go.

@krishnagopalan