Girl power on company boards: It’s a two-way street between India Inc and the women, says FM

The women must get over their hesitation in joining company boards to unleash their powers, while corporate India must realise the inherent monetary benefits of inducting more women into leadership roles. It’s a two-way street, said Union Finance Minister Nirmala Sitharaman on Friday as she tackled the long-ensuing issue of low representation of women on the boards of Indian companies. Here are some nuggets from her speech at the second edition of the Women Directors Conclave 2022 held in Mumbai on Friday.

TO WOMEN:

Break the mental barrier: It’s the hesitation of women themselves – while understandable given the patronisation and condescension they face at every level – which stops them from progressing, she said. “But let me assure you, cross that threshold, you realise for what you’re worth, you are recognised. Please, let’s not live in that comfortable cocoon which tells us it’s a tough world out there. That breaking of the mental barrier is the first and big step in training.”

Add value to the board as well-informed directors: Talking about the importance of having vigilant directors on company boards, she pointed out that a director should have their own sources of information instead of relying only on the information the company provides. They should be well informed about what other companies in the market are doing, what the global best practices of corporate governance are, how boards are behaving and what threats there are to a company’s board, she said. “The better-managed companies are appreciated even by retail investors and they, on the basis of the information disclosed, take a call. Sitting in such a company’s board, you as a woman can bring value addition to the company. It cannot be a comfortable men’s club. You have to get in there with your perspectives.”

Idea balance over just gender balance: While male board members socialise frequently, women have limitations in joining the clique. So, the thoughts and ideas women bring to the table tend to be their own rather than the collective echo of the same group. That strengthens the board’s information base on which they can take a collective decision, she added. “Gender balance is what the western governance models will rest on. We need to have gender balance, so we have to get more women into the board. That’s alright. But idea balance is what is more required than gender balance.”

Get into the pool to widen it: Speaking about the common complaint that only the same selected set of women find a seat on the boards of several companies, and rolling off some numbers to highlight how concentrated this can tend to get, she said: “If many of us don’t want to (get in), some of them will keep repeating. We should break that, widen the pool and get into the pool, broad-base the pool. We all need to be in it.”

TO INDIA INC:

How will you woo the women? Company boards looking to bring in more women will also need to understand the expectations of the women. It cannot be just that this is what the men have done for several decades and now you come and join in, she said clarifying that it’s not just about the pay. “What are the roles you will assign them, what are the ways in which you will have the women decide along with the rest of them? Boards will also have to rethink the ways in which they will engage women. It’s a two-way process. It’s very easy to deride ourselves saying we are not enthusiastic to go on the Board, but it has to be both ways.”

Follow the money: While the way forward is to have more inclusivity and gender parity on company boards, the finance minister also pointed to studies showing that companies with more women in leadership turned in better profitability. “Oh you boards, what more do you want? Get us in. The industry will have to take the lead, there’s no way in which I can speak differently. The government cannot do any more nudging.” Having more women brings in a completely different narrative, profile and articulation. “The companies will have to spend some time on how they can re-organise and reset post-Covid for all this.”

The motherhood factor: On the common argument of companies about motherhood keeping women from taking up serious leadership roles or even being a part of the workforce, the finance minister pointed to the US facing a post-Covid situation where employees, including men, are not returning to work. “That itself should be an alarm bell that unless work is seen from the perspective of both man and woman, and make sure that any kind of black-swan event can have the probability of some section not reporting back to work…So, scope has to be widened for the workforce. Only then can you be in a comfortable zone when such exigencies arise.”