Indian Corporates Keep Women Out Of Company Boards, Finds Study

Highlighting the gaping chasm between the representation of men and women in the corporate boardroom, a recent Deloitte Global report has found that only 17.1 per cent of the board seats in India were occupied by women in 2021. It was marginally lower than the global average of 19.7 per cent, which, in itself, is reflective of a slow pace of progress in this space across the world.

Since 2014, the year Companies Act, 2013, mandated having one woman member on every board, India has been limping. The report titled Women in the Boardroom has found that the number has increased by 9.4 per cent as compared to 2014 when it stood at 7.7 per cent. But when you look at the rate of growth every two years, it is hardly satisfactory. In 2016, the number had gone up to 12.4 per cent from the 2014 figure only to see a marginal rise in 2018 at 13.8 per cent.

The underrepresentation of women at the workplace remains a key area of focus for organizations the world over, but the overall progress remains slow. Globally, the number saw a paltry 2.8 per cent rise since 2018. It is slightly better than the 1.9 per cent increase reported between 2016 and 2018. The report said that if this rate of change were to continue every two years, the world could expect to reach a level approaching parity in 2045.

In terms of the average tenure of women directors, the Indian figure increased marginally from five years in 2018 to 5.1 years in 2021. Globally, the number decreased from 5.5 years in 2018 to 5.1 years in 2021, especially in countries like the US (6.3 years in 2018 to 5.3 years in 2021), the UK (4.1 years in 2018 to 3.6 years in 2021), and Canada (5.7 years in 2018 to 5.2 years in 2021).

"While the Indian regulators have set up a holistic framework to encourage the representation of women in key positions at corporates, the numbers suggest a significant gap between the ideated measures and ground realities. With the continuing disruption and the current pace of change, the case for diverse boards that work with a unified purpose is becoming stronger than it ever was. It is time that gender diversity and gender parity get more focused attention from Indian corporations," says Atul Dhawan, chairperson, Deloitte India.

The report revealed a disconnect between gender progress on boards and in the executive suite. It explored insights on the political, social, and legislative trends behind corresponding numbers from 72 countries and found that only 6.7 per cent of board chairs are women with even fewer women (five per cent) holding the CEO role. Interestingly, companies with women CEOs were found to have significantly more balanced boards than those led by men— 33.5 per cent women versus 19.4 per cent.

The report also found that fewer women hold seats across multiple boards. Deloitte Global deployed a stretch factor metric that examined the number of board seats held by an individual in a particular market. The higher the stretch factor, the greater the number of board seats the same director occupies in each market. 

As per that metric, the stretch factor for women stood at 1.30 in India in 2021, slightly higher than the 1.22 figure in 2018. This indicates that as compared to men, a smaller group of women is taking on more board seats. Men, by comparison, have a stretch factor of 1.20, indicating that women’s requirement in the boardrooms is higher than the available pool of women directors.

The Quota Quandary
Opinions have been divided on the issue of quota, be they national quotas or quota-equivalent for all or certain listed companies. One criticism of quotas is that a small section of the same women will take on a large number of board seats but the report says that the argument does not hold water. 

Countries with a high stretch factor for women—Australia (1.43), the US (1.33), and New Zealand (1.32)—have eschewed quotas and favored voluntary approaches. On the other hand, some European countries that were early adopters of quotas have a much lower stretch factor for women (1.17 in Italy and France and 1.06 in Norway). The report concludes that even though the reasons for this difference are unknown, it is possible that countries with quotas have been forced to cast a wider net than those taking voluntary approaches.

Having said that, eight out of the top 20 countries in terms of the percentage of board seats held by women have some form of quota in place. The top four countries—France (43.2 per cent), Norway (42.4 per cent),
Italy (36.6 per cent) and Belgium (34.9 per cent)—have quotas in place. 

The report also highlights that nearly all countries have local organizations or governments committed to increasing the number of women serving on company boards. Although these joint efforts by the private and public sectors are aimed at achieving parity, the pace of collective progress seems slow.