With barely a month to go for appointing at least one woman director on the board of listed companies, time is running out for 23 PSUs, including ONGC, NHPC and NMDC, which are not in compliance with the stock market watchdog Sebi’s directive.
Only three CPSEs?Bhel, Nalco and NBCC?have appointed a woman director after the Sebi issued the directive, said Pranav Haldia, MD of Prime Database. ?With around a month or so to comply, there may not be a CPSE that will be able to appoint a woman director. In comparison, it is the non-government companies that have done well by appointing a woman from the promoters family on the boards and this trend will continue,? Haldia told FE.
What complicates things for PSUs is that it is the administrative ministries that appoint directors, not PSUs.
Of the 840 director-level positions on the boards of 78 listed PSUs, 95% are occupied by men. Experts said there is an immediate need of 2,700 women directors for listed companies within the next 12 months. The corporate governance directives issued by the Securities and Exchange Board of India (Sebi) makes it mandatory for listed companies having five or more board members to have at least one woman director from October 1, 2014 while the new Companies Act, 2013 gives time till March 26, 2015 to comply.
Before the elevation of Nishi Vasudeva as CMD of Hindustan Petroleum Corporation in March, there was no woman on a leadership position in any navratna PSUs. Vasudeva, who had created history in July 2011 when she became the first women ever to make to the board of the cash-rich oil PSU, is also vice president-youth & yender, World Petroleum Council.
Overall, there are about 770 listed companies which do not have a woman director. The new Companies Act 2013 provides that every listed company and every public company with a minimum paid-up capital of R100 crore or a turnover of R300 crore is required to induct at least one woman director on their board within the stipulated time-frame.
According to Indianboards.com, a joint initiative by the National Stock Exchange and Prime Database, as many as 904 companies had not yet appointed a woman director on their board as on June 30. Of the 14,947 directorial positions available on the boards of 1,469 NSE-listed companies, only 950 positions are occupied by women. Conversely, this means over 92% of the directors are men.
The representation of women in senior management positions is slightly better, but is on a downtrend. According to a Grant Thornton study, the proportion of women in senior positions stood at 14% in 2014 as opposed to 19% in the previous year.
According to various studies globally, women directors have not only brought diversity to the board but have also helped companies perform better with their fresh perspectives, intuitive and inclusive leadership styles. ?Balanced boards are imperative both for effective decision making and also for transparency and therefore, better governance, and gender diversity lends one aspect of balance,? said Mritunjay Kapur, partner and head of risk consulting, KPMG in India.
According to Kapur, companies will need to prepare women to take board positions which may require a cultural shift. ?It is thus imperative that companies encourage and build a pool of senior woman executives whose talent can be recognised and groomed over a period of time for elevation to the board.?
The representation of women on the boards of companies is far better in other countries. Norway with 40.5% has the highest share of women on boards, followed by 20.7% in the UK; 16.9% in the US and 7.7% in Brazil. According to a recent paper released by consultancy Ernst & Young, board diversity enhances corporate performance, and failure to address the gender gap can have economic consequences.
With a view to enabling Indian women directors to succeed in their board roles, EY has announced the launch of its board readiness workshops for women in August.
According to the EY paper, increased attention from public officials keeps pressure on the private sector and results in faster change. This has taken the form of governments championing voluntary targets, such as in the UK, and other related initiatives, though mandatory quotas appears to have been the most common move to enhance diversity. More than 20 countries have adopted quotas for women on corporate boards, including India, says the paper.
Said Sonu Iyer, partner and diversity leader for EY India, ?The introduction of quotas will help achieve greater diversity on corporate boards, but it is equally imperative to make significant investments towards enabling women to take on board positions for them to make an impact in these roles. This entails including women in both recruitment and promotion pipelines of organisations, as also providing dedicated learning and mentoring programmes to women.
