close_game
close_game

Rescripting boardrooms: Women in corporate governance

ByRashmi Soni,
Sep 15, 2024 09:00 AM IST

This article is about Rashmi Soni, professor-finance and Hemanshi Kotai, research & teaching associate, K J Somaiya Institute of Management.

In the last decade, how best women can be engaged in governance has become the most debated issue. Much of this refocusing can be attributed back to a pathbreaking rule that the Securities and Exchange Board of India (SEBI) introduced in the year 2013, wherein it stated that every listed company would have to have a minimum of one woman director on its board. Women significantly lacked representation in these positions before the enforcement of the rule. Hence a step in the right direction toward egalitarianism within the corporate world, simply for the fact that it ensured women's views and talents were not wasted.

Corporate women (Images: Shutterstock)
Corporate women (Images: Shutterstock)

Research has shown that participation of women in governance deliberations results in real gains for democracy, entailing the emboldening of greater responsiveness to citizen needs, increased ability to work across party and ethnic lines, and securing a more sustainable future. Firms with women on their boards of directors tend to outperform those without if identifiable measures are used. They appeared to comply with gender quotas by appointing women on merit from outside the organisation still buffer their existing activities through selective appointments to committees. This proves that the SEBI rule brought a sea change in terms of an increased number of women directors within Indian companies.

While a list of second-tier companies includes General Motors, Citigroup, Procter & Gamble, Nielsen, and Merck, all of which report over 40% of the number of women on their boards. Beyond that list are lists of companies on the S&P 500 that represent huge improvements in board-related diversity: for example, as of 2016, an analysis has shown that out of 50 companies, at least 33% of the board seats were held by women.

Truth be told, not all sectors have progressed equally, however. Few areas similar to non-governmental and membership organisations, only reaching 47%, education by 46%, and personal services and well-being to 45% would only start reaching near gender parity levels in leadership in the year 2022. On the other end, we find the energy sector at 20%, Manufacturing at 19%, and Infrastructure at 16%.

The represented growth of women on boards in India has been fast in the decade from 2013-2022, moving from 5.5% in 2013 to 18% in 2022. A report highlights that 95% of the Nifty 500 companies now have at least one female board member. Lastly, chairpersonship by women is executed in less than 5% of the companies which leaves a lot of scope for further development.

Women in governance positions add value through their different perspectives and insights, help in strategising and strategy formulation, function as a report about corporate social responsibility, provide insights into female customers, extend board cohesion, and add to the heightened effort norms of the board.

Though this is far from complete or satisfactory, such a move in the form of the SEBI rule and increased women in governance gives a green signal toward moving on the path of equal opportunities in the corporate world. Success stories of corporations inspire generations to prove what women can do if allowed equal opportunities in governance. It is not just a matter of checking the gender equality box or quotas; it is about being reflective and appreciating the diverse perspectives and talents that women bring to the table. In this point of view, this will be a true sign of a more inclusive, balanced, and more effective corporate world. It is a long and hard journey, but very slowly, step by step, towards a future where every voice will count, every perspective will be considered, and every boardroom in the world will be a real reflection of a diverse world in which each of us lives.

This article is about Rashmi Soni, professor-finance and Hemanshi Kotai, research & teaching associate, K J Somaiya Institute of Management.

See more
SHARE THIS ARTICLE ON
Share this article
SHARE
Story Saved
Live Score
OPEN APP
Saved Articles
Following
My Reads
Sign out
New Delhi 0C
Sunday, October 06, 2024
Start 14 Days Free Trial Subscribe Now
Follow Us On