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Quotas Just a Beginning for Women on Boards
Posted on March 8, 2021 by Editor
Reflections on the Occasion of International Women’s Day.
Written By Ms Meena Raghunathan ( Advisor CSR, Skills, Education, Diversity )
In our work with communities, the term SP is common. It stands for Sarpanch Pati—the husband who is the de facto Sarpanch, though his wife is the elected representative in the woman-reserved constituency.
Women not being able to act in spite of legislative provisions—if we think it is a rural phenomenon, it would be a mistake.
Gender quota challenges play out in corporate India too—only differently.
The New Companies Act 2013 mandated that all listed companies and large public companies should have at least one woman on their Boards. This is a good start, but only a start. Because internationally, research has shown that a lone woman on a Board cannot really make a difference. ‘3’ is a magic number as far as women representation on Boards goes. Many researchers have averred that this is the minimum threshold which ensures that women directors are able to bring into play their strengths and contribute meaningfully to board processes, and hence corporate governance and management. Moreover, research also indicates that the position of a woman on a Board Committee makes a difference—if a woman chairs it, decisions are significantly different from if she is just a member.
Some time ago, I decided to take a look at the representation of women in Boards in 30 of large India’ largest companies to get a feel of how things were.
A quick examination of the top 30 BSE companies threw up these interesting facts:
- Yes, all of them have complied with the law and had at least one woman directors.
- But taking into account the total number of directors in these 30 companies, less than 15% of them are women.
- Only one of the 30 companies had a woman in the Chair.
- There was no company which have women as a majority on the Board or even half the directors as women. Most companies have between 11 and 20 percent women directors.
- Every company has four mandatory committees (sub-committees of the Board). In the 30 companies studied, there are therefore, 120 mandatory committees. Of these, women were represented in less than half. Only 15 Committees were chaired by women.
- Only 10 percent of the companies studied had three or more women on the Board.
- A very small proportion of directors are internal women directors, especially those holding the position of Executive Director.
Large companies in India are seen to be fully compliant with the law, and none of them has missed out on appointing one woman director to the Board. Some have gone beyond, and have appointed two. But very few have facilitated the condition which would really make women representation effective—viz, having three women on the board. Hence it seems that much more has to be done in terms of making the participation of women directors effective. Apart from
absolute numbers, it would seem that proportion of women on the boards could also do with enhancement.
The serious under-representation of women in the position of Board Chairs is a matter of concern.
Equally the fact that very few women directors are internal because it indicates that companies do not perceive that their own senior women would be effectively able to discharge Board responsibilities, and also that they do not see the value of an investment in their training to fit these positions. Such internal representation of women in top management positions is a strong signal for the women employees of the possibilities of career progression.
Also, the representation of women on mandatory committees, and their leadership of these is another area that corporates may need to focus efforts. Board Committees are where a significant amount of detailed work happens, and Committees have the scope to delve deep into the important issues facing the corporation, and setting the tone for governance. Poor representation and low leadership of mandatory Board Committees by women is hence another missed opportunity.
While definitely corporate India has complied with the law, much more needs to be done to meet the spirit of the legislations and to correct the underlying inequities which they are trying to remedy.
Quotas Just a Beginning for Women on Boards
Posted on March 8, 2021 by Editor
Reflections on the Occasion of International Women’s Day.
Written By Ms Meena Raghunathan ( Advisor CSR, Skills, Education, Diversity )
In our work with communities, the term SP is common. It stands for Sarpanch Pati—the husband who is the de facto Sarpanch, though his wife is the elected representative in the woman-reserved constituency.
Women not being able to act in spite of legislative provisions—if we think it is a rural phenomenon, it would be a mistake.
Gender quota challenges play out in corporate India too—only differently.
The New Companies Act 2013 mandated that all listed companies and large public companies should have at least one woman on their Boards. This is a good start, but only a start. Because internationally, research has shown that a lone woman on a Board cannot really make a difference. ‘3’ is a magic number as far as women representation on Boards goes. Many researchers have averred that this is the minimum threshold which ensures that women directors are able to bring into play their strengths and contribute meaningfully to board processes, and hence corporate governance and management. Moreover, research also indicates that the position of a woman on a Board Committee makes a difference—if a woman chairs it, decisions are significantly different from if she is just a member.
Some time ago, I decided to take a look at the representation of women in Boards in 30 of large India’ largest companies to get a feel of how things were.
A quick examination of the top 30 BSE companies threw up these interesting facts:
- Yes, all of them have complied with the law and had at least one woman directors.
- But taking into account the total number of directors in these 30 companies, less than 15% of them are women.
- Only one of the 30 companies had a woman in the Chair.
- There was no company which have women as a majority on the Board or even half the directors as women. Most companies have between 11 and 20 percent women directors.
- Every company has four mandatory committees (sub-committees of the Board). In the 30 companies studied, there are therefore, 120 mandatory committees. Of these, women were represented in less than half. Only 15 Committees were chaired by women.
- Only 10 percent of the companies studied had three or more women on the Board.
- A very small proportion of directors are internal women directors, especially those holding the position of Executive Director.
Large companies in India are seen to be fully compliant with the law, and none of them has missed out on appointing one woman director to the Board. Some have gone beyond, and have appointed two. But very few have facilitated the condition which would really make women representation effective—viz, having three women on the board. Hence it seems that much more has to be done in terms of making the participation of women directors effective. Apart from
absolute numbers, it would seem that proportion of women on the boards could also do with enhancement.
The serious under-representation of women in the position of Board Chairs is a matter of concern.
Equally the fact that very few women directors are internal because it indicates that companies do not perceive that their own senior women would be effectively able to discharge Board responsibilities, and also that they do not see the value of an investment in their training to fit these positions. Such internal representation of women in top management positions is a strong signal for the women employees of the possibilities of career progression.
Also, the representation of women on mandatory committees, and their leadership of these is another area that corporates may need to focus efforts. Board Committees are where a significant amount of detailed work happens, and Committees have the scope to delve deep into the important issues facing the corporation, and setting the tone for governance. Poor representation and low leadership of mandatory Board Committees by women is hence another missed opportunity.
While definitely corporate India has complied with the law, much more needs to be done to meet the spirit of the legislations and to correct the underlying inequities which they are trying to remedy.