The Economic Times, July 29, 2014
Lijee Philip, Rica Bhattacharyya & Kala Vijayraghavan, ET Bureau
Serving as an independent director some years ago on one of India's leading consumer companies, a highprofile woman executive caught a glimpse of the ugly side of Indian boards. Everything was good in the beginning. She was given a grand welcome at the company headquarters.
"But when I actively began participating in the discussions, I was most politely given to understand by another board member that my role was to just sign on the dotted line," recounts this woman executive, requesting anonymity. "He told me, "it's is just a governance need, madam, nothing for you to take too much trouble about'." She left that board within a year. "I have been picky about boards ever since." Indian companies too have been picky, extremely picky, when it comes to having a woman on their board of directors. They are poor exemplars of gender equality and diversity. Only 6% of directors on the 1,463 companies listed on the National Stock Exchange are women, according to Prime Database, which operates a joint initiative called indianboards.com with the exchange.
This number is set to increase because of a new clause on women directors in the new Companies Act, which was seconded by capital market regulator Sebi (Securities Exchange Board of India) for listed companies. On February 13, in a vote for gender diversity, Sebi instructed all listed companies to appoint at least one woman to their boards by October 1.
We are at the rough mid-point between the announcement and the deadline, but boards are slow on the uptake. The best women executive talent is in great demand, but the second rung is not finding many takers. As of July 24, as many as 886 of the 1,463 NSE-listed companies were yet to appoint a woman director. Only 101 companies had complied and appointed women to 105 directorships, but 27 of these positions were filled by women from the promoter group.
Much as he has reservations on how companies are approaching this engagement, Arun Duggal, chairman of Shriram Capital, prefers to see this as the equivalent of a foot in the door, an irreversible process that will eventually fling the door open for women. "By and large, most promoters are treating this as an exercise to meet requirements of law and not truly to get the benefit of diversity at the board level and the talent available among professional women," he says. "However, this will change once women are on the board and start demonstrating the real contribution they can make and the value they bring."
It's a view -- give women a meritocracy, give them time and the change will come -- many corporate leaders second. "Women have more patience, a higher emotional quotient, a stated willingness to learn rather than pretend to know all, and they are more inclusive," says Zia Mody, founder and managing partner at AZB & Partners. "They (women) have a mellowing effect in driving board consensus, they add a lot of right-brained thinking and foster innovation," adds Harsh Mariwala, chairman of Marico, which has had a woman director since 2005.
But to demonstrate that, women need to be there first, making themselves heard and implicitly challenging mindsets. It's a journey that mirrors the reclaiming of spaces and the redistribution of power that women have achieved in many other spheres. The road to restoring the natural order in board rooms is a similar journey they need to make, and its time is now.
Geeta Mathur, chief financial officer of HelpAge India, is one of the many travellers on that journey. She joined the Motherson Sumi board in January and the NIIT board in April. "Some of the opportunities I get may be because of my gender," she says. "But I will be happy to take it because once I am there gender will stop playing a role.
Before the meetings, Mathur read up about the businesses and the agenda on hand, and met company officials. In the three board meetings she has attended, she was mostly absorbing the proceedings and the presentations. "Everyone was helpful and forthcoming with information. Gender has not come into play so far," she says, adding, "both boards have had women in the past and are not alien to this culture
But there are many more companies that are not only removed from the concept of diversity, but also insular to it. "As a society, we haven't given women equal opportunities to come up in life just as we did with several other deprived social groups," says Anu Aga, former chairperson of Thermax. She feels the new rule is a step in the right direction, and not just for quantitative reasons. "More importantly, it would tap the latent energy and creativity of one half of our society that has been traditionally confined to the margins," she adds.
When it comes to the boardroom, even corporate high-fliers find themselves on its margins. A recent study by Catalyst India, an organisation that creates opportunities for women at the workplace, on the dynamics of corporate executives rising to directorships illustrated the aspiration simmering in corporate India. Only 18% of 'high potentials' -- qualified executives who aspired to be on boards -- had attained a board seat. Further, only 10% of women surveyed had made the jump, against 20% of men.
Naina Lal Kidwai, who is on global boards such as Nestle and HSBC Asia Pacific, points out that, over time, boards abroad have moved well beyond having just one woman and that's what needs to happen in India too. "However, given that we are starting from such a low base, it is good that we are setting the principle," says Kidwai, chairman India and director Asia Pacific, HSBC.
Code Of Conduct
While most senior women executives approve of the new rule, they want women directors to be appointed on merit alone. "Women should seek positions on boards based on their competence, areas of expertise and track record, and not on the gender card," says Hema Ravichandar of Strategic HR Advisory, an HR consulting firm, who previously headed human resources at Infosys. "Gender walks out of the door when you enter the boardroom," adds Gita Piramal, who is on a break since 2013 to pursue her career as a business historian and joined the boards of Bajaj Finance, Bajaj Holdings and Bajaj Finserv in March.
But the Indian boardroom has a tendency to make women conscious of their gender. Kidwai feels the boardroom is no different than the corporate workplace: women have to be better than men to succeed at the same level. "Women will be like goldfish in a bowl, with people around looking for things they are doing right or wrong," she says. "Men normally are judged on credentials and women on performance. Women come at it with more trepidation," adds Sangeeta Talwar, managing partner, Flyvision Consulting, who is on the board of Religare Enterprises, HCL Infosystems, Manipal Global Education and IIM Calcutta.
For all the scrutiny, for all the numerical skew, for all the historical baggage that Indian boardrooms come with, there's one piece of advice all women leaders give: be yourself and express yourselves. "Make sure you are not a silent wallflower," says Kidwai. "Go well prepared and make sure the questions in your mind are thought through as first impressions are very important."
That confidence comes partly from understanding the business and partly from leveraging personal strengths. Falguni Nayar -- a former investment banker and the founder-CEO of Nykaa.com, an online website for beauty and wellness products -- is on the boards of ACC, Dabur and Tata Motors. Her engagements here are closely tied to her skill sets. For example, at Tata Motors, she is on the committees that look at valuation, fund raising and audit. She also draws from her experiences in e-commerce and consumer businesses to input into marketing. "If you come from the right background, you are valued," she says.
Similarly, Talwar, who has been on the boards of Tata Tea, Oriental Hotels and NDDB, among others, says she always stays in tune with the industry and tracks innovation, trying to spot trends that can change the landscape for the company. For instance, in HR, she used to look for great places to work and good practices to adopt.
In a company she did not want to name, she suggested the top management and senior leaders engage in spotting talent even at an operational manager level. "They (women) should consciously build business acumen, network professionally and remain relevant in a fast-changing professional world," says Ravichandar.
They are resources women directors can plug into. Last August, Duggal of Shriram Capital started a mentoring programme to bring more women on to corporate boards. He roped in several stalwarts of India Inc -- including former Sebi chairman M Damodaran, Deepak Parekh of HDFC, former SBI chairman MS Verma, GM Rao of the GMR Group, Harsh Mariwala of Marico -- to mentor potential women independent directors.
They identified women who were distinguished in their respective fields, ambitious to move to the next level and keen to contribute to improving corporate governance standards. The candidates were put through a three-month mentoring process. Besides one-on-one interactions with the select group, candidates also attended a few board meetings, committee meetings and annual general meetings (AGMs) after signing a confidentiality agreement. Thus, they got first-hand experience of boardroom functioning, and the roles that boards play in corporate governance, policymaking and strategy.
On completion of the programme, the mentor, programme director and executive search firms help the candidates in joining a suitable board. According to Duggal, the programme has created 40 board-ready women. "Placement has started, and discussions are on with boards and chairmen," he says. "We have so far placed one-third of the candidates mentored."
For the first year, Duggal ran the programme in his individual capacity in partnership with Anjali Bansal, managing partner of Indian business at Spencer Stuart, an executive search firm. Going forward, the programme will become a part of industry association FICCI's Centre for Corporate Governance, with Duggal and Bansal continuing to support it.
Degrees Of Discrimination
Such engagements are essential, especially given the unfavourable data coming out even from more progressive corporate environments. Harvard Business School (HBS) professor Boris Groysberg published a survey last year that showed boards across the world were not leveraging the unique skills of women and that a non-inclusive culture was resulting in them not being heard. Women directors were not speaking up in some cases or were being ridiculed for having a different point of view in others. "Even if women have skills that might be different from those of other board members, boards are not designed, and they don't have the culture, to leverage them," Groysberg told ET in April 2013.
This view of inherent and rampant gender discrimination in the boardroom is one that several leading women directors -- including Sangeeta Talwar, Ramni Nirula, Gita Piramal, Anjali Bansal, Ireena Vittal, Naina Lal Kidwai and Falguni Nayar -- don't share. "I have been the only woman on boards and have never felt isolated," says Ramni Nirula, former CEO and MD of ICICI Securities, who is on the board of several ICICI Group companies, Eveready Industries and Sona Koyo Steering, among others.
Nuancing this argument, Ireena Vittal alludes to a cultural hierarchy in corporate India. "The board culture in organisations is set by those heading it," she says. "I have been luckier than most in that sense since the quality of board members of companies where I sit as independent director is very good. But if there are concerns coming up in this regard from others, I am sure they are very, very valid."
Bansal of Spencer Stuart, hasn't experienced the discrimination personally, but she admits there can be instances. "I was at an event a couple of weeks ago in the US, and certain women there shared experiences of boards where the culture is not that open," says Bansal, who is currently on the boards of GlaxoSmithKline Pharmaceuticals and Bata India, among others.
In India, the nature of the industry also has a bearing on how women directors are perceived. Sector such as manufacturing, where the representation of women is still poor, can have some biases. "However, industries such as technology, finance and pharma, which are used to seeing women and where the working culture is more inclusive, such biases will not exist," says Manisha Girotra, CEO of Moelis & Co India and a director with Technip SA, MindTree and Novartis India.
In India, this line of argument also gets framed in the promoter context. About one-fourth of the women being appointed as directors are from the promoter group. "These women shall have the same voice as the promoter, defeating the very purpose of genuine (independent) gender diversity," says Pranav Haldea, managing director of Prime Database. Adds Shachi Irde of Catalyst: "If women are appointed in token board positions simply to fill the criteria, their efficacy is mitigated in the long run."
What there is near unanimity on is that Indian boards need more women, not just for numerical reasons, but also for business reasons. "In a lot of industries, you need very different perspectives from time to time and that comes in through diversity," says Rashesh Shah, chairman & CEO, Edelweiss Financial Services. Adds Ramni Nirula: "Women are great at task orientation and we have this ability to look at subjects with a wider focus." Whether Indian boards, in general, have the ability to see the presence of women with a wider focus is a question that will be tested in the days, months and years to come.