Breaking The Glass Ceiling: It’s Time India Inc Made Way For More Women In Boardrooms

There have been some moves to give more representation to women, but they have been largely inadequate. According to a November 2022 study put out by consulting firm Institutional Investor Advisory Services (IiAS), women accounted for nearly 18 per cent of all directors in top 500 companies listed on the National Stock Exchange; it was 32 per cent for the S&P 500 companies listed on American stock exchanges.

The study notes that "the current numbers seem more compliance-driven than evidence of corporates embracing gender diversity for the benefits that it brings." While the role and representation of women in Indian and global companies have been rising gradually, a lot more needs to be done.

Ten years after the Companies Act 2013 mandated at least one woman director on the board of listed companies, a recent India Briefing article says only 223 companies on the Nifty 500 index have at least one woman director on their board. According to Prime Database research of 2023, of the total 4,783 directors on Indian companies, there are only 885 women directors in Nifty 500 companies. Contrast this with one in three companies on S&P 500 that have women directors.

In India, Apollo Hospitals, Nestle India, Cummins and Zomato are leaders in having more women on their boards. According to a March 2023 study of 134 companies for FY 2021-22 by the CFA Institute, India’s IT sector had the highest female participation of 30 per cent and financial services had 22.4 per cent. The FMCG and Industrial sectors were at the bottom end.

Over the years, global and Indian studies have demonstrated the importance and contributions of having more women in the workforce. But, now, a new working paper from the US-based investment company BlackRock has gone a step further: it has shown a direct link between women’s participation and a company's superior financial performance.

There are many key takeaways from the paper titled, Lifting Financial Performance by Investing in Women. There is a mid-way “sweet spot” for women representation that gets maximum financial performance. In other words, it is neither under-representation nor over-representation of women that matters but an optimum level.

Surprisingly, women’s representation tends to fizzle out with seniority to the detriment of performance. Instead, in companies where there was a strong middle management generated 36 basis points ‘higher risk-adjusted monthly returns compared to peers’.

A survey of more than 350 startups showed that women-owned startups delivered twice as much per dollar invested compared to those founded by men, the paper said. Finally, the length of average maternity leave led to a better ‘women-friendly workplace culture’ that boosted returns.

The Scene In India

In India, while many HR managers recognised the positive impact of onboarding women managers, it is apparent the business and societal landscape is not that mature to see or measure its impact on returns.

“In spite of all the data being passed around, I have not seen any “validated correlation” between women in the workforce and superior financial performance of a company. For an economist like me, correlation data is important,” said Poonam Barua, Founder and CEO, Forum for Women in Leadership.

“However, what we do know is that companies that do not leverage the talent pool and unique skills of women, do not bring different styles of leadership in the workplace, diversity of thinking, rational and public spiritedness in governance that will blunt innovation, competitive edge and response to future markets,” Barua said.

That said, there are many challenges still in 21st century India that inhibit the growth of women managers. These include limitations in travel, work locations, maternity, family and societal situations and prejudices.

“Work-life balance is an oxymoron. This despite the fact that perhaps the human resource function has more women leadership and members than men. The best-case situation in many companies is that only 25 per cent of the total workforce are women,” said Samra Rahman, Head of People and Culture at Hero Vired, an edtech company.

In fact, there have been cases in some companies where women are first to be pink-slipped when they are looking at retrenching,

This is despite the fact that women leaders bring a lot to the corporate table. They are good at decision-making, conscientious and dependable, said Thomas Mathew, Senior Partner (HR), Mindleaders Learning India, a skilling consultancy firm. They also have a high level of empathy and are great at multitasking, added Rahman who has previously worked with HCL, Bharti Airtel and IBM.

The Way Forward

India has seen the introduction of some gender equality measures over the last decade. On maternity leaves, the central government mandated by law to increase maternity leave from 90 days to six months and the availability of creches in or near office premises was made compulsory for companies with over 50 people. Further, the Companies Act (2013) provision for women board members has brought in gender diversity to corporate strategy and financial results.

Rahman would bat for training young women leaders, providing greater career opportunities within companies and menstrual leave for women’s well-being. According to Mathew, companies like NIIT where he worked more than 20 years ago had 40 per cent women employees even then. Others like Bharti Airtel have mandated 30 per cent of the workforce be women. Anecdotal evidence suggests that many multinationals that have a global lead in this tend to bring this to India before Indian conglomerates.

With evidence that women's participation could have a strong correlation with corporate performance, it is high time the glass ceiling was brought down in India, making way for more women to go up the ladder.