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Should the government mandate women directors on corporate boards?

Business Standard 

It's progressive since it will help women move up from mere functional positions but a quota is artificial and unsustainable

Prema SagarPrema Sagar
Principal & Founder, Genesis Burson-Marsteller

“In a society in which women were culturally brainwashed into believing that they are inferior to men, mindsets do not allow for voluntary nomination of women on It would be no exaggeration to claim that not much has changed today”

In 21st century India, women are struggling to live as equal citizens. Age-old prejudices, biases and patriarchal mindsets remain major obstacles in the path of women being treated with respect. This bias has followed women into hallowed portals of corporate boardrooms. This is in stark contrast to the position of women in the Vedic period when philosopher stumped sage with her questions on the soul, and she was eventually appointed as one of the gems in the court of King Janaka. The respectable position that women occupied in ancient Indian society changed by the Middle Ages, and their low status has continued in modern times. Here and there an odd woman is made a senior executive, and as a society, we believe we have done our bit.

The data speaks for itself. Currently, in India, of the 1,112 directorships of 100 companies listed on the Bombay Stock Exchange (BSE), only 59 are held by women. Not one of the companies that constitute the sensitive index, Sensex, is headed by a woman. Of these women directors, 50 per cent are independent directors. This makes India 38th in the world in terms of women representation on boards, according to the study, “Board Diversity in India”, conducted by Hyderabad-based Institute of Public Enterprises.

Globally, 9.8 per cent of directors in 2011 were women, with 58.3 per cent of companies having a female on the board.

In a society in which women were culturally brainwashed into believing that they are inferior to men, mindsets do not allow for voluntary nomination of women on It would be no exaggeration to claim that not much has changed today. Changes have been only cosmetic. Most men still believe they hold the privilege to decide what a woman should be and should do in a company. Take a cursory look through the list of top executives in companies, and it is easy to make out the strong bias against women. They are kept happy with soft jobs and, if they are considered capable at all, they might at the most occupy the position of a chief financial officer. That’s it. Leave them to do HR jobs, seems to be the broad in companies.

Malaysia has set a target of 30 per cent women in boardrooms within five years; Norway has imposed a quota; Australia has asked companies to report on gender ratios; and the European Union is considering legislation to make companies have women make up 40 per cent of corporate boardrooms.

A recent study by the Royal Society of Edinburgh has found that engineering and science companies have the lowest representation of women. The UK’s new corporate governance code would mandate companies to spell out policies for boardroom diversity.

Indian women seem to have a harder time than men when it comes to working their way to the top of the corporate ladder — the board of directors.

The government’s recommendation for to be mandated on in the companies Bill is a progressive step. Leaving it to companies to voluntarily change the gender ratio in boardrooms has not worked so far. No society can allow women to be kept out of corporate decision-making in today’s day and age. It has been proven time and again that women are more empathetic.

Good corporate governance calls for greater women representation. One often hears an excuse that there are not enough women to pull into boards. What an excuse! If women are not moved up from functional positions to those of CXOs, how will you find experienced women to join corporate boards? It is imperative to positively intervene and bring change.

As Kenyan environmentalist and Nobel laureate Wangari Maathai said, “In the course of history, there comes a time when humanity is called to shift to a new level of consciousness, to reach a higher moral ground. A time when we have to shed our fear and give hope to each other.”

E BalajiE Balaji
Managing Director & CEO, Randstad India

“A quota may trigger the initiative of diversity but it may not help the company build depth or sustain the policy. If there is a mandatory need to fill in the seats, there is a likelihood that companies will do so by filling them with inappropriate appointments”

Diversity at the corporate board level is not just a goal or a guideline; it is a business imperative. There are proven studies to show that it results in building good governance, apart from being instrumental in development and growth. As a quick start towards the path of diversity, a government-mandated quota may help in that it provides a standard and uniform guideline. However, we need to understand that a quota may trigger the initiative of diversity but it may not help the company build depth or sustain the policy. Also, I believe, quotas introduce an element of artificiality and will last for only a certain period of time.

If there is a mandatory need to fill in the seats, there is a likelihood that companies will do so by filling them with inappropriate appointments for want of better individuals. So, such a perfunctory exercise will result only in vacancies being filled. In fact, it could prove detrimental too, since the chosen individuals may not have the necessary skills to perform their role.

I have seen diversity in its true spirit promoted across the world. Based on those best practices, I would like to suggest a few approaches that look beyond quotas.

Voluntary compliance and disclosure: For a start, the government should introduce what is termed a “comply and disclose” policy. As a non-mandatory policy, the management could, at every AGM, elaborate on the steps it has taken towards achieving its diversity goals. The goals will have to be objective and result-oriented, and not generic or nebulous. In terms of strategy and planning, the management will need to monitor closely qualified women in the system who have the potential to join the board. Also, managements should provide broad but concrete guidelines on the mix of skills, knowledge and competencies under the eligibility criterion. Probable candidates should be assessed based on these criteria, and then should be equipped to grow into organisational leaders. This can be done through training and coaching.

Coaching to build a quality funnel of women leaders and the role of a unified body: Companies that start to focus on the career progression of women employees at various levels will face the challenge of maintaining a steady and ready talent pool. Although the current situation marks an improvement from what prevailed in the eighties, only 50 per cent of women who graduate from business schools enter the workforce. A large proportion of them have taken breaks for family reasons. To combat this issue and help women balance family and work life, companies need to create a conducive work environment for women. Women employee-friendly HR policies that allow for breaks from work, like pre- and post-maternity leave, flexible working hours and sabbaticals, go a long way in helping women professionals excel in their careers.

Industry forums should establish a programme to promote the representation of women on company boards. This unified body should focus on coaching initiatives as well act as the “go to” public database for male and female candidates for directorships. In some countries, women in leadership roles are active networkers and act as human portals to obtain suitable women candidates for corporate boards.

Special recognition and assistance in business: The government can attract them with rewards for their voluntary compliance. This can be done by providing tax benefits or avenues for them to enter new business segments or expanded geographical regions. This step will increase organisations’ willingness to adopt the policy.

In the long run, only an organic approach that tackles the perils of the quota system will create an objective and ethical organisational philosophy that values an individual for the competencies they bring to the table.

A country has truly evolved only when its people are judged based on their work, rather than by economic class, place of birth or gender.

First Published: Fri, January 04 2013. 00:31 IST
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