Why We Don't See Enough Women in Boardrooms?
Despite efforts to include more women in boardrooms, it's a challenge for most companies as the availability of board-ready women is still scarce
Research has proved time and again that organisations with diverse talent have performed much better than their counterparts, and more and more corporates are becoming sensitive to and making the diversity and inclusion agenda a part of their strategic priorities. Yet the old question still remains relevant - Why we don't see enough women in boardrooms?
But, change is here. The Indian law under the Companies Act 2013 has made it mandatory for all listed companies to appoint at least one woman director on their boards and the good news is that it's proven to be effective. Industry experts, however, feel that getting women to be part of the board should not be done just for statutory requirements but because it makes absolute business sense.
According to a 2016 research report by Grant Thornton on "Women in Business", diversity in leadership teams reduces the risk of 'group-think' and opens new opportunities for growth. "Diversity improves the bottom line," the research stated. It also shows that listed companies with male-only boards in the UK, US and India alone are foregoing potential profits of $655 billion.
Yet despite overwhelming evidence of the benefits of gender diversity in leadership, we have made little progress. As per Grant Thornton statistics, globally the level of women in senior roles has risen just 3 per cent in the past 5 years, to stand at 24 per cent. The proportion of businesses without any women in senior management has remained static over the past 5 years at around 33 per cent. That means a third of companies still have no female input into executive decisions and no women helping grow the business at a leadership level.
Last year in the Indian CNX200, 176 companies had a female board member. "This is progress but for the most part, these women are employed as non-executive directors. Just 127 of the 1,050 companies we looked at in India, the UK and US employ women as executives," says Francesca Lagerberg, global leader - tax services & Europe, Grant Thornton.
So where does the challenge lie? Several women leaders, who participated in the Nasscom Diversity and Inclusion Summit this year, believe that often the limitations could lie within the woman's mind. "There is a subconscious bias that women themselves feel they can't," says Vidya Lakshmi, MD & Head HR, Goldman Sachs.
While corporates are trying hard to include diversity right from the entry-level, the pipeline seems to grow thinner as they move to the top. "We hire 40-45 per cent women at the entry-level but the percentage comes down gradually," says Meenakshi Dewan, Centre Director & Sustainability Leader, HSBC India. "However, our policies such as the increased maternity leave of 6 months have created a big impact on a 75-80 per cent success rate."
There's little doubt that organisations are doing every bit to address the boardroom gap. Accenture's 'High-Tech Women' programme focuses on women who aspire to be technologists. The company also has a returning mother's programme specially designed to allow mothers returning from a maternity leave to join work seamlessly.
Last year, the Ministry of Labour has proposed a legislation under which it will be made compulsory for all organisations with a minimum of either 30 women or 50 employees, to have a crèche inside their premises or one within a distance of 500 metres. The initiative is expected to be a big boon for working mothers and lead to fewer women dropping out of work post motherhood.
Despite organisational efforts to include more women in their boards, experts feel there is a shortage of board-ready women and the demand far outweighs the supply. "With the legal and regulatory push in the form of the Companies Act, 2013 and Revised Clause 49 of the Equity Listing Agreement, many Indian companies have started introducing women directors to their boards. However, as most of these women are first-time directors, they will need to participate in appropriate training and onboarding programs facilitated by the nomination and remuneration committee and supported by the full board," says Abhay Gupte, Senior Director, Deloitte Touche Tohmatsu India.
Companies should do their bit by creating internal mentoring programs; mapping and identifying high potential women both within the business and externally; investing in training and coaching, and engaging male champions of change to be mentors. Organisations should support men who recognise diversity as an issue and encourage them to act as sponsors and mentors for women within the business.
Experts have suggested that there is a pressing need for training women to be board-ready and organisations like Nasscom should take the initiative. More women on the boardroom should not be seen as a compliance issue but as business sense. After all, available statistics have shown that the return on equity (ROE) is 3 times higher for companies that have 3 or more women as board directors. That's clearly more business sense than mere compliance!
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