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Women in the Boardroom: Strengthening Governance through Gender Diversity
The participation of women in the Board room reshapes Board dynamics, provides a different perspective to the deliberations, strengthens oversight, enhances risk management, and fosters a more balanced view of various matters that constitute the Board agenda. Gender diversity signals a commitment to inclusivity and accountability-values that resonate deeply with investors, consumers, and society at large.
The first step for women appointment on Boards in specified companies was introduced in 2014 by the Companies Act, later SEBI mandated that by April 2020, the top 1000 listed companies in India should appoint an independent woman director. Quotas and tokenism are double edged swords, while it provides an impetus, it undermines their competence and at times confidence by signalling that they are chosen more for their gender and regulation.
Companies are experiencing the real benefits of diversity not only in increased governance since women excel equally at soft skills and empathy and professional talent but in order to build a pipeline of talent, one needs to start with developing leaders in executive positions. When Boards are diverse, the quality of institutional investors improves, discussions in the Board room on ethics, values, integrity and social issues become more relevant and purposeful. More women on Boards are catalysts for broader organisational diversity beyond women alone and a gender neutral culture attracts and retains the best talent by providing a conducive workplace, higher productivity, loyalty, commitment, in turn leading to better returns and profit.
When companies go beyond tokenism and women are represented for their true worth, Board processes go through significant changes and readjustment, for example;
- Involvement and active engagement on oversight
- Asking the hard but right questions, constructive criticism
- Decisions on informed basis, having considered different views and aspects
- Increased cycle of respect, trust and candour
- More honest evaluation of performance and effectiveness
- Fluid portfolio of roles without any typecasting
- Improved checks and balances: reduces risk exposure
- Preparing well for meetings, better individual accountability
It is considered politically correct to advance the cause of women in Board rooms but there is at times, still a subconscious and subtle bias that many Boards with an overwhelming majority of men are not even aware. There is no intent to exclude but there is no equitable nomination in committees, lack of genuine influence and there is still much to learn in valuing and appreciating differences. This happens even in family-owned enterprises where women are learning that access to education alone is not enough, a change in patriarchal mindset is required to acknowledge the difference in leadership styles. Especially when home is not an equal opportunity employer.
The fundamental truth is that empowering women is not about fairness or better governance but building a stronger and more resilient organization. It is not a CSR initiative. The real success will be seen when boards stop asking “How many women are here?” and start asking “How are women shaping governance outcomes”
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Vijaya Sampath
Independent Director on Multiple Boards
Owned by: Institute of Directors, India
Disclaimer: The opinions expressed in the articles/ stories are the personal opinions of the author. IOD/ Editor is not responsible for the accuracy, completeness, suitability, or validity of any information in those articles. The information, facts or opinions expressed in the articles/ speeches do not reflect the views of IOD/ Editor and IOD/ Editor does not assume any responsibility or liability for the same.
