The purpose of reservation is to correct the exclusion of capable and qualified women from corporate boards, and not to provide yin to the existing board’s yang
The response that we have seen so far to the new law mandating reservation of board seats for women has been disappointing and shows how far we are from real inclusion. Ironically, this applies to both those supporting and opposing the move. There has been jugaad in the best Indian tradition to comply with the new but to continue with the old way — a telling comment on the governance standards of boards which managed to do that well. The plethora of well-meaning men and organisations that have sprung up to “mentor” and “train” potential women directors are more patriarchal than progressive in their prescriptions, reflecting a poor understanding of what inclusion is really about (more on that later). They have tried to justify what doesn’t need to be justified — does equal rights for equal qualifications need to be justified? Some have put forward data in support, correlating women on boards with higher market cap (giving the sex in Sensex a whole new meaning), and some have asserted that the mere presence of feminine energy on boards will make boards work better.
To be absolutely clear, the purpose of introducing reservation for women on boards was simple and singular — to correct the exclusion of capable and qualified women from corporate boards. It was not meant to provide yin to the existing board’s yang or to bestow boards with wonderful feminine qualities of mothers and maids. Reservations came into being because existing boards were making little effort to include qualified women. “We would love to, but we can’t find any” was the refrain. The answer, of course, lies in the poor governance of how nomination committees function.
The search for new board members typically begins with the question “who do we know who fits the bill” (whatever the bill may be that needs to be fitted). And, predictably, given the gender ratios in the world of work at senior levels, the obvious answer was almost always a man.
What is the real story on how India Inc has complied with the reservation law? Professor Neharika Vora of IIM-Ahmedabad has done a study on this for FICCI, due to be released next month. Here is a tiny preview of her findings: women now comprise 14% of board directors, a big jump from five years ago. Women directors from the family are a popular choice for promoter businesses. While this is a good and fairer outcome for gen-next daughters — nowadays as well educated as sons — it doesn’t improve board governance for obvious reasons.
The other finding is that there is the phenomenon of companies complying by appointing women below 30 years of age who are not related to the promoters, have fairly ordinary education and virtually no business experience. Clearly, boards that have done this have scant respect for the quality of their own boards and its ability to govern, leave aside the spirit of inclusion. Interestingly, the study shows that male directors below 30 are far better educated and, typically, members of the promoter family.
Board membership entrusts onerous fiduciary responsibility on a person to supervise management that is smart and in control of the business. Hence, a well-established selection criterion for potential board members is that they should have had substantive senior-level experience in their chosen work arenas and should have demonstrated success in their “regular careers”. In the case of women, that basic criterion seems to be considered less important. Training outfits and well-meaning mentors are pushing women candidates who have not had the kind of “regular career” experience that equips them for the judgment calls that boards need to make, or the confidence to call out the management where needed. In fact, women are being told that being a board director can be their “regular career”. If we persist down this track, the universe of male directors will always be better qualified for the job than the universe of female directors, loading the deck against women directors in terms of contribution to the board.
A lot of the training and mentoring advice being given to women is producing “board clerks”, not real directors — the accent is on board procedures rather than on processes, on the rituals rather than the religion, on rules rather than on roles. It also tends to be about equipping women to follow the existing rules of the boardroom — fitting in rather than being themselves. It is the dishonest ticking of the diversity box, having people who look different but think and act the same way as everyone else.
Real inclusion also needs chairmen who know how to run inclusive boards having members with diverse styles (men and women do have diverse styles. This is well-documented by research around the world). Whenever I have suggested to any women director training shops that they will do better to train the board and the nomination committee chairs on this, I have found that the same enthusiastic trainers of women are nowhere as eager to mess with men in power!
The good news is that we are seeing wonderful green shoots of genuine inclusion as a wider pool of very talented women directors is making its way into the more professionally run, board-managed companies. They are women who have already proved their mettle during the course of a substantive career, and have already had experience at holding their own even while in a minority. They place performance ahead of “fitting in” and don’t hesitate to challenge group-think or the status quo when needed. My hope and ask is that they will frame the debate better and take charge in laying down the rules of what genuine inclusion and diversity mean.
Rama Bijapurkar – The writer is one of India’s most experienced independent directors and an independent management consultant