The call for gender diversity in Indian boardrooms has gained momentum over the past few decades. To fuel this change, India introduced the Company Act in 2013, which acknowledges the importance of gender neutrality in boardrooms and mandates the appointment of at least one female director in the different classes of companies. However, including women in boardrooms is more than just a matter of numbers. Instead, it concerns what companies and societies need to acquire the diverse perspectives women can bring.
Following a report titled ‘Women on Boards’ published by the International Labour Organization, increasing women’s participation in the business sector would increase the world GDP by $5.8 trillion by 2025. The report further discusses the advantages of having women on board. Because women make most consumer decisions in households, they develop a deeper understanding of customer behavior and needs. Consequently, they are most likely to bring this knowledge to the commercial board, improving the standard of commercial decisions and transforming them to be in touch with customer requirements.
How Gender Diversity Can Be Achieved in Boardrooms?
It is the need of the hour for organizations to focus on acquiring diverse candidates. They need to correspond with other institutions that can help them find suitable candidates through new pipelines. Companies need to identify the flaws in their existing systems that have prevented boards from being diverse and introduce new practices and approaches in the future. For instance, companies can curate a matrix of current board members and their characteristics to identify gaps.
Enterprises must adopt a new paradigm to establish gender equity in leadership positions. They can develop effective strategies to establish gender equity on the board. Companies should actively strive to ensure that women candidates are included in the pool for board positions. They can identify senior women executives within the organizations who have the potential to become board members and encourage them for board membership.
Furthermore, firms need to set targets for diversity, such as the introduction of numerical goals for female representation on the board and at the executive level. Also, they need to ensure that women in the organization feel accomplished, valued and competent in contributing to its success. However, this change cannot be achieved overnight. Only after continuous and sustained efforts of companies to develop mentorship and leadership opportunities for women can this be accomplished in the long run. The government and regulatory bodies can also play a colossal role in driving this change by implementing quotas for women’s representation on boards and investing in early childhood education and care.
While a large section of society still perceives women as caretakers and homemakers, there has been a considerable improvement in India’s ranking in terms of gender parity. In 2022, the country ranked 142 among 146 countries in gender parity but now stands at 129 as of 2024. However, the country still has a long way to go to fill the gender gap.
One reason women are still a minority in boardrooms is that the boards are primarily composed of men. These members then hire individuals like them, which leads to a self-perpetuating cycle. Also, owing to the corporate culture in India, women who tend to take time off from work are not considered suitable candidates for executive positions. The burden of childcare, policies, and working hours prevent women from balancing work and home life in a way expected of a corporate board member. Furthermore, there is a lack of awareness about the significance of establishing gender diversity on boards. Many organisations do not condone the benefits of gender diversity, thus boards rarely address this issue.
The current lack of gender diversity in corporate boards is appalling. While numerous studies have pinpointed the benefits of having diverse leadership, India needs to move faster in addressing this issue. Both private bodies and federal policymakers should work to cultivate equitable systems to improve board diversity. It is essential to identify suitable candidates, reform the selection criteria, and institute regulatory and legislative measures to direct board rooms to reflect the diversity of India. Data from a leading financial advisory company, Deloitte, reveals that women only account for less than a quarter of boardroom seats worldwide, i.e., 23%. Despite the extensive efforts to diminish gender disparities in boardrooms, it is difficult to anticipate when the world will be ready to implement gender neutrality in these settings.
Manjari Das is an Associate Vice President at WD Partners (I) Pvt. Ltd.