Why India needs a female boardroom revolution4 min read . Updated: 24 Mar 2016, 02:53 AM IST
BSE 100 companies with women on their boards experienced double the level of return on working capital
We are only a week away from International Women’s Day, the global celebration of the immense strides which have been made to further gender equality. However, this also provides a perfect time to reflect on the amount of work still needed to ensure gender parity in every aspect of the business world.
Context in India
Despite India being the second country in the world to have a female head of government, corporate firms have been slow to follow this example. Article 16 of the Constitution is clear in stating that “there shall be equality of opportunity for all citizens in matters relating to employment or appointment to any office".
However, this has not manifested itself in equal representation at the highest level. If you gathered together the women CEOs from India’s BSE 100 companies, you would be able to fit them in a car—there are only five. The situation is equally concerning among the BSE 500 firms, with only eight women leaders. This should be of concern to all businesses; not just because gender parity is morally right but because it has a financial benefit as well—which ultimately is how businesses measure themselves.
Different skill sets
I have been a search consultant for 15 years, helping my clients look for highly competent leaders to transform their companies. There are times when my clients will ask me to specifically look for women candidates, as they value the diversity they bring to their often all-male management teams.
Women bring a different perspective to leadership, and can form more widely skilled and creative executive teams. Research from the Commonwealth of Nations has shown that women have a more participative management style, and tend to be more inclusive and collaborative in their decision-making. They are also likely to have greater social sensitivity and are less willing to take impulsive risks.
As a professional and a mother of two, I frequently have to juggle a range of professional and personal tasks—simultaneously responding to demanding clients, managing events and organizing school bake sales. With the added pressure that comes with today’s always-connected world, a leader’s ability to multitask is invaluable, and women are more naturally adept at this. Blending women’s skill sets across organizations and leadership teams can create a more innovative culture that fosters greater loyalty between employees and their company.
India has only 26% of women represented in its workforce, among the lowest percentages within Asia. On the other hand, women significantly impact purchasing decisions and their spending power is increasing. The earnings of women globally are higher than the total earnings of India and China combined. Women are responsible for a majority of worldwide consumer spending. Considering that women also make up such a huge percentage of Indian customers, it seems illogical not to ensure female perspectives among a company’s management team.
A significant endorsement that I personally received from a male colleague was that when I joined the hitherto all-male team, he appreciated the diversity I added and more open culture that prevailed after I joined the team. To quote his words: “Having a lady colleague forced me to modify behaviours, be more considerate and inclusive. I also appreciated the multifaceted talents of a mother working full-time much more."
Leadership teams that contain women are more likely to be receptive to issues such as flexible working hours and maternity leave, which can easily be neglected by male-dominated organizations. Many of the barriers to female progression lie in outdated policies, as well as cultural and societal barriers.
For example, after I had my second child, I was back at my desk after only three weeks—albeit with flexible hours! Luckily I had a supportive employer and spouse, but not all women are so fortunate in having the conditions they need to succeed. Unless women are encouraged to break through the “glass ceiling" and achieve proper representation, businesses will be unable to create the conditions and culture to ensure greater female progression.
Enlightened companies rightly view developing women leaders as a momentous business opportunity. There is a significant body of research that suggests gender diversity can have a positive impact on financial performance as well as brand perception. Our own research shows a correlation between diversity in leadership, including women leaders, and superior business performance.
In addition, a recent study by charity firm Catalyst showed that the BSE 100 companies with women on their boards experienced double the level of return on working capital. Research from McKinsey has also shown that companies in the top quartile of gender diversity are 15% more likely to financially outperform those in the bottom quartile.
Other surveys have also linked companies with more women on their boards to better corporate governance and more ethical behaviour, while one claimed that firms with at least one woman on the board have a 20% lower risk of bankruptcy. These stark figures should encourage all businesses to see female representation as a commercial imperative.
Looking to the future
It is clear that getting female talent to the boardroom has a solid business case, as well as an ethical one. We want to be a part of this workplace revolution and our forthcoming Leaders & Daughters global initiative will play a major part in making this a reality.
We’re bringing together India’s renowned leaders and their talented daughters to discuss the opportunities and challenges young women face today in their professional lives. This International Women’s Day, we want to show that diversity and inclusion isn’t just a box to be ticked, it’s a critical way of ensuring a happy and successful business.
The author is co-head of Asia financial services practice at Egon Zehnder.