The SEBI regulation mandating at least one independent woman director in the top 1,000 listed companies by April 1, 2020, is a commendable first step toward gender equality. However, much more is needed on corporate boards. Merely checking the box for one woman director represents tokenism. It will not work. What is needed is the recognition that women have unique strengths and perspectives and must be part of the decision-making process at the highest levels of corporate India. Without a paradigm shift that permeates through all levels of the organisation and builds equitable systems, companies cannot expect to reap the true benefits of women.
With a majority of corporate board members being male, it becomes very urgent that gender parity on boards be accelerated to ensure fair representation for Indiaâ€™s half a billion women. Women have not been left out of important board decisions in other countries. In 2003, Norway mandated 40% of board seats for women. In 2010, the 30% Club campaign started in Britain to give 30% of board seats to women in the Financial Times Stock Exchange (FTSE) 100 companies. In 2011, the French Parliament passed a Bill mandating 40% of board seats for women.
The results are evident in a 2019 Deloitte Report â€” Women in the Boardroom: A Global Perspective â€” based on statistics from 8,648 companies in 49 countries. All three of the above countries are in the top quartile for highest percentage of women on boards. Interestingly, the top 5 countries (Norway, France, Sweden, Finland and New Zealand) either have a woman leader or are in the top 10% for women representation in Parliament. Sadly, Indiaâ€™s ranking in the Deloitte study stands at 29, with smaller countries such as Malaysia & Nigeria ranked at 16 & 17 respectively.
Numerous studies have shown that in India and across the world, girls and women outperform boys and men in academics not only in school, but also in higher education. Furthermore, women continue to balance work/family/household responsibilities, while navigating a difficult work environment. When the playing field becomes more equitable both in the home front and the work front, one can only imagine womenâ€™s enormous contributions that will benefit society and the country.
In a 2019 report, Fixing the Flawed Approach to Diversity, the Boston Consulting Group found that while all the companies surveyed have diversity programs in place, only about a quarter of employees in diverse groups said that they had personally benefited. Their research indicates that many leaders still have blind spots regarding diversity, and perceive a workplace with far less bias than actually exists. Consequently, they continue to launch programs that they think will yield results. However, unless the leadership acknowledges their blind spots, they cannot achieve meaningful change.
Gender parity on company boards should not be for the sake of balance, but for what balance can accomplish. Several studies have repeatedly shown that increasing diversity is not only the right thing to do for an organisationâ€™s culture, it also leads to better business outcomes. Women bring unique skills and conversations to the table. A study by the global consulting firm Hay Group found that women outperform men in 11 of 12 key emotional intelligence competencies such as collaboration, communication, ability to network, critical thinking, and professionalism, all of which overlap with essential leadership skills. McKinsey & Companyâ€™s 2019 Women in the Workplace Study found that women influence and control nearly 75% of household spending, particularly grocery and retail. Companies should take note of this important statistic, and ensure that this critical customer base is driving decisions from the board level through all levels of the product development chain. From a bottomline perspective, having gender parity on boards brings enormous value to an enterprise.
Many global enterprises that have become household names such as Johnson & Johnson, IBM, and Proctor and Gamble have led by example. They have incorporated best practices to effectively move women to senior ranks through mentoring, sponsorship, involvement in employee resource groups, and leadership development training. Over the past 21 years, these companies have been consistently featured in the list of Top 70 Companies for Executive Women published by the US-based National Association for Female Executives (NAFE).
On a more personal level, I was confident that with my educational qualifications (doctorate in nuclear engineering) and work experience (23 years in Fortune 500 companies), I could bring unique perspectives and contributions to the board of Ambadi Investments Limited â€“ the holding company of the Murugappa group â€“ a company whose Board my late father served for decades. But that was not to be as my uncles and male cousins voted me out. Although my struggle to break the glass ceiling in the boardroom of my familyâ€™s business has not yet yielded success, my resolve to continue the fight for gender parity only became stronger.
My personal woes notwithstanding, there are many success stories worldwide. Each story will undoubtedly reveal that it is not enough to check the box. Change requires complete commitment from leaders to balance the diversity of the company for shareholders and for society. Companies must provide adequate resources, construct strategic plans, create actionable roadmaps, and monitor and maintain feedback loops for continuous improvement. It is only by weaving womenâ€™s empowerment into the very fabric of a companyâ€™s daily life can true gender parity and its monetary benefits be achieved.
Dr. Valli Arunachalam has a doctorate in nuclear engineering and is a technology consultant with 23 years of work experience in Fortune 500 Companies. She is leading the fight against gender bias in the Murugappa group, her familyâ€™s Rs 37,000 crore industrial conglomerate.
Views expressed are the author's own.