In a welcome move towards ensuring gender-balanced boards, the Companies Act 2013 made important provisions to modernise India’s corporate governance system, including employing women directors on the boards of certain companies. But while the proportion of women directors between 2013 and 2016 has increased by 180 per cent, a recent study conducted by KPMG in India’s Board Leadership Center and Women Corporate Directors India (WCD) notes that there is still is room for greater diversity. To achieve that goal, there needs to be a change of mindsets, voluntary diversity targets, alignment between board composition and strategy, and looking beyond personal networks for director appointments.
Stressing on the need to go beyond simply complying with a corporate governance mandate while hiring women board directors, Mritunjay Kapur, Partner and Head Risk Consulting KPMG in India said: “In today’s constantly evolving and volatile business world, decision making in boardrooms has become extremely complex and dynamic. As a result of the broad range of challenges faced by companies, the need of the hour is a more diverse set of board members to lend it balance and mix of skillsets. Gender diversity is a significant aspect of a balanced board, and while the legislation has played a significant part in institutionalising it, lot more needs to be done to ensure substance over form, to fully reap its benefits.”
Most men agree that their women counterparts are enough capable, but there is still a dearth of women leaders in boardrooms, the report said.
"According to our survey, while 85 per cent men feel women are capable enough and contribute equally to boardroom discussions, we still see a dearth of women leaders in boardrooms beyond the regulatory mandate. While the mandate has given women a voice in the boardroom, we still have a long way to go for a truly gender-balanced board," said KPMG India Partner, Governance Risk and Compliance Services Pankaj Arora.
The need to comply seemed to be a stronger motivation than the belief that diversity adds value, as more than half the respondents indicated that companies are hiring women directors primarily to comply with the regulatory mandate.
Only a third of the respondents agreed that the regulation should have specified that the appointed women directors have to be independent, the survey revealed.
The survey was conducted among corporate directors and independent directors.
As much as 89 per cent of the women respondents considered 'expertise in a particular domain' as a pre-requisite for their board membership. Only half of these women identified 'business contacts and networks' as a pre-requisite.
About 86 per cent of respondents indicated that companies leverage internal networks to hire new directors, and women with strong professional networks tend to have an advantage.
Most respondents agreed that women improve the board dynamics by creating a positive environment (68 per cent) and are better at providing inputs in a constructive manner (51 per cent), which helps in decision making.
