More women are joining corporate boards but very few get the corner office

Every Women’s Day (8 March), companies of all hues and stripes run campaigns showcasing their commitment to gender equality. Some also get chocolates and flowers for women employees. But when it comes to appointing women to senior management positions, most companies fail to walk the talk, shows a Mint analysis of gender data across top listed firms.

Across Nifty-500 firms, only 15% of board members were women in 2019, data sourced from NSE Infobase shows. Among CEOs, less than 5% were women. The Nifty-500 index is a rough proxy for listed firms across the country, as it accounts for roughly 96% of free float market capitalization on the National Stock Exchange (NSE).

It is worth noting that even the share of women directors was a lowly 5% at the end of fiscal 2013. But then a gender quota introduced in the new Companies Act forced listed and large companies to appoint more women on boards. The share of women directors has tripled after the law came into force in 2014.

Yet, a majority of firms have not cared to go beyond the mandated requirement. 60% of the Nifty-500 firms had just that one woman on board that the law mandates as of fiscal 2019.

31% had two women on their boards. Only 5% had three women. And only eleven companies, or 2.2% of the Nifty-500 firms, had more than three women on board.

As of fiscal 2019, not a single Nifty-500 firm had more women than men on their board, the NSE Infobase data shows.

Only three firms had equal representation: Apollo Hospitals Enterprise Ltd (5 men and 5 women directors), Crisil Ltd (4 men, 4 women), and Vinati Organics Ltd (3 men, 3 women). Perhaps it is not a coincidence that the managing directors in all three firms are women. Apollo is run by the Reddy sisters, Crisil by Ashu Suyash, and Vinati Organics by Vinati Saraf Mutreja. Crisil though has one woman less on its board now, after Martina Cheung resigned last year.

Ten firms did not have a single woman director at the end of fiscal 2019 but eight of them have a woman director now, according to the latest information on their website. Two of them, Bharat Heavy Electricals Ltd (BHEL) and UCO Bank still don’t have any woman on their boards according to their websites.

Sectors such as healthcare, telecom, consumer goods, and construction have a relatively larger share of women directors, the data shows. Mining, metals, banking and finance have a relatively smaller share of women directors.

Across sectors, few make it to the corner office. When it comes to positions such as the Chief Executive Officer (CEO), or the Chief Financial Officer (CFO), the gender gap is yawningly large.

Among independent directors, the gender gap is lower. A gender quota introduced by SEBI in 2015 that mandates large firms to have at least one independent woman director on board could explain the relatively better gender balance when it comes to independent directors.

Globally, the picture is not too different when it comes to women CEOs. Among advanced economies belonging to the Organization for Economic Co-operation and Development (OECD), roughly 5% of CEOs were women, as of 2016.

The share of women directors in OECD countries is however significantly higher than in the case of India. Most OECD countries had introduced gender quotas in boardrooms several years ago, and that seems to have pushed up women’s participation in corporate boards.

Most of India’s emerging market peers have a smaller share of women board members compared to India. Again, the gender quota may explain the difference. Very few emerging markets other than India are mandated to have women on their boards . Among emerging market peers, South Africa and Turkey have a relatively higher share of women board members compared to India. In Turkey, the capital markets regulator had mandated the inclusion of at least one woman board member in 2009, and in 2013, asked firms to set and disclose a voluntary target level of women on boards (with the minimum floor set at 25 percent) by a target date they specified. South Africa does not have gender quotas but the Johannesburg Stock Exchange made it mandatory for listed firms to disclose gender and race representation in 2016.

A growing body of research suggests that having more women on board can be financially rewarding. A 2016 study by researchers at the International Monetary Fund (IMF) showed that across two million European firms, there was a strong positive link between return on assets and the share of women in senior positions.

And yet, the force of law has proved to be more powerful than the logic of profit-maximization. Across countries, companies have tended to induct more women on their boards only when prodded by regulators and lawmakers; rarely on their own.