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    The push to appoint women directors has brought diversity to an all-boys’ club

    Synopsis

    Regulatory push has made it mandatory for companies to have at least one independent woman director on boards. While most of the top 1,000 listed companies have complied with the directive from the Securities and Exchange Board of India (SEBI), boards still have a long way to go before they become more inclusive.

    Comapanies Act 2013
    There was a rush to induct women into the boards after the Companies Act of 2013 and SEBI’s 2018 mandate. Many industry bodies started mentoring programmes for women professionals to make them board-ready. Several promoters nominated their daughters as directors, usually a preserve of sons.
    The boards of directors of Indian companies are possibly one of the last bastions of male domination in the country’s business landscape. Directors often deferred to the most powerful man in the corporate boardroom and coteries could easily shut down dissenting voices. Women board members, who were mostly relatives of the powers that be, usually remained silent. This institution, however, has now been shaken up.

    Regulatory push has made it mandatory for companies to have at least one independent woman director on boards. While most of the top 1,000 listed companies have complied with the directive from the Securities and Exchange Board of India (SEBI), boards still have a long way to go before they become more inclusive. Self-made billionaire and founderchairman of Biocon, Kiran Mazumdar-Shaw, recounts her experience of being a board member of a company that was dealing with a sexual harassment complaint lodged by an employee.

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    The men on the board, she says, described the complaint as “silly”, “rubbish” or “an exaggeration”. Mazumdar-Shaw says it took her, a woman director, to object to this “flippant” approach, put her foot Men often show an “authoritarian” attitude and a “command and control” approach in situations that need a little “consultative reach-out” for resolution, Mazumdar-Shaw says. Many senior women directors echo her views, and add that walking into a boardroom as the sole woman independent director can be intimidating, especially if the men have been on the board for many years and may have socialised together. And then there are overt signals.

    Top Women Independent Directors in listed Indian companies

    Top Women Independent Directors in listed Indian companies
    Top Women Independent Directors in listed Indian companies

    A senior woman director who is on multiple boards say some Indian boards often have one or two members who do not take women seriously. These people make their attitude apparent by walking out, looking away or scanning their phones when a woman director starts to speak.

    THE EUROPEAN WAY
    2003 Norway mandates 40% board seats for women
    2007 Spain recommends 40% seats for women on company boards
    2010 30% Club campaign starts in Britain to give 30% board seats to women in FTSE 100 companies
    2011 French Parliament passes a bill mandating 40% seats for women on company boards
    2015 Germany introduces 40% board quota for women

    There is a bias to keep board meetings “peaceful” and “happy”, says Ameera Shah, CEO of Metropolis Healthcare. Shah, a director in many Indian and global companies, agrees there is an “alpha dog” problem in boardrooms in India. This prevents difficult topics or differing views from being heard. Women directors become hesitant and often raise issues by asking questions rather than making strong statements.

    It is important for the board of directors, who are elected by the shareholders of a company, to be active and effective to safeguard the interests of the corporation. The directors, particularly the independent directors, are also mandated to look after the interests of the minority shareholders and act as a check on the executive powers exercised by the management team.

    More Women on Board
    More Women on Board

    Thus, an experienced and diverse board of directors is necessary to ensure all stakeholders get representation. The case for women on boards got a leg up when the Companies Act of 2013 mandated listed companies of certain size appoint at least one woman director. In May 2018, SEBI said each of the top 1,000 listed companies must have at least one woman independent director by March 2020. As on December 31, 2019, 977 of that top 1,000 companies had a woman director, and 835 of them had an women independent director.

    This diversity drive has led to some early gains. Women independent directors, usually seasoned professionals, have acted as role models, ensured the interests of women in the workforce and pushed for hiring of more women, among others. Many professional women had joined company boards as independent directors after the 2013 law, largely as MNCs and professionally run groups took the lead. Today, the share of women on the boards of BSE 100 companies has gone up to 14% from 10% five years ago, according to a Bloomberg research.

    AS OF DEC 2016
    AS OF DEC 2016Agencies
    AS OFDEC 2016

    Neera Saggi, a former IAS officer who is an independent director on six listed company boards, says there has been a greater connect with women employees in companies where she is a board member. “Women easily open up about their problems to another woman.” During town hall meetings with women employees, Saggi says she found that women leaders in companies were often given fewer resources when compared with men leaders.

    On the hiring front, she found that women were only being considered for human resources or finance and not for core functions. “To ensure more women from within a company rise to the top job or board positions, we have to ensure more women are hired for core functions,” she says, adding how she was able to take such issues to the board.

    The government is a great employer for women, she says, but when it comes to the private sector, women in senior positions are often used to being the only one in a room full of men. Investment banker Radhika Haribhakti was one among the five ladies in her IIMAhmedabad batch. When she started her career as a banker, she would often be the only woman at meetings. So she never felt uncomfortable when she became the only woman in a boardroom.

    Haribhakti says she pushes for hiring more women in the companies where she sits on the boards. In one instances, she recounts, it led to just one woman being hired at a branch with 10 male employees. This led to high attrition among the women. So she pushed for at least two women in a branch.

    Sonal Desai, a former executive director for HPCL who now sits on multiple boards, including Care Ratings Ltd, says this strategy is also helpful at the board level — a board with two women is a friendlier workplace than just one.

    Haribhakti says, “Even though I had chaired boards of non-profits for 12 years, I was invited to corporate boards because of the regulatory requirement. I see it as no different from the regulatory push for independent directors many years ago.”

    There was a rush to induct women into the boards after the Companies Act of 2013 and SEBI’s 2018 mandate. Many industry bodies started mentoring programmes for women professionals to make them board-ready. Several promoters nominated their daughters as directors, usually a preserve of sons.

    Some used the opportunity to push the diversity envelop beyond gender and bring in women with HR experience or IT talent on boards, says veteran audit professional Shailesh Haribhakti, who also chairs the L&T Finance Holdings board. Shailesh (brotherin-law of Radhika) says: “When Kishore Biyani brought his daughters on board, it immediately introduced age-wise diversity too.”

    But how many companies were serious about using the talent they were onboarding? Some companies always cared about diversity but many still don’t, says Sriram Subramanian, head of shareholder advisory firm InGovern. “Companies need to embrace the regulatory norms in spirit and get the best out of women directors.”

    It has not been easy — the top five women independent directors in 2017, who were on the boards of six or more listed companies, have reduced their board engagements. They have even dropped out of the top 10 list in 2020. The focus on independent directors’ task in preventing frauds has made the role daunting.

    A veteran banker who sits on six listed company boards (11 if private and other classifications are included), Geeta Mathur says it is easy to understand whether a company wants a woman on the board for her expertise or to fill the gender gap. She says one company that wanted to appoint her mentioned in the resolution this step was being proposed to meet regulatory norms.

    Mathur says this was an early signal to what the company wanted. Some companies engage with the board through the year and seek inputs on strategy, risk and governance while others hold the mandatory annual board meetings and do not seek deep engagement of the board, she adds.

    Mathur, an ICICI Bank veteran, does not seek reappointment in companies if she feels the appointment was just to tick the regulatory boxes or if the company culture does not encourage active participation of the board. Radhika Haribhakti says her contribution to boards is based on her experience and expertise in strategy, capital allocation and divestment, and not based on a woman’s perspective.

    So how has the presence of women in boardrooms helped beyond improving gender inclusiveness?

    Mazumdar-Shaw recounts another experience she had when she was inducted on the IIM-Bangalore board, which she heads today. There was mistrust and conflict between the faculty and board when she took over. After she managed to bring in more women, including veteran corporate honcho Vinita Bali and Kotak Mahindra Bank’s Shanti Ekambaram, on to the board, Mazumdar-Shaw says she was able to get the board to change its approach, reach out to the faculty to hear them out and resolve the issues.

    “In today’s world, a consultative style will get better results than an authoritarian or autocratic style. And women are consultative by nature.” Women are as ambitious as men, but they go about it in a different way, she adds.


    Shah of Metropolis adds that due to this different approach, women bring a different perspective to issues - be it about fairness, taking stock of the minority stakeholders¡¦ interest and assessing risk perceptions. The chairman of the board can set the tone of deliberations and ensure the opinions of women directors are also heard with due seriousness, says Shah. It is important for women to be able to communicate their views and make sense to their male colleagues to earn respect, Shah adds.

    Bank of America veteran Arun Duggal, who chairs the ICRA board and sits on a few more, says many foreign investors are keen on diversity on the boards of their investee companies. Some domestic investors are also getting interested in it. This will ensure that women on Indian boards are able to wield greater influence in future.

    Another round of churn is expected on company boards around 2023-2024 as a director¡¦s tenure was capped at 10 years in 2013. Veteran independent directors will have to make way for new members. This will also go a long way in virtually dismantling any remaining old-boys clubs in corporate India.

    "Today, I see more and more women chairing various board sub-committees," says Duggal. "I hope I will see an all-woman board in an Indian company in my lifetime. The regulator might then have to mandate that boards must have at least one man."


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