Breaching The Boys’ Club

The Economic Times     17th April 2021     Save    

Context: Critical analysis of the performance of the gender quota policy (At least one woman on board) for corporate boards, mandated under Indian Companies Act, 2013.

Positive aspects of the policy: Indian Companies Act, 2013 mandated the presence of at least one woman on boards of public and private companies that meet a certain threshold of paid-up capital or turnover.

  • It was aimed at redressing the long history of overt and covert discrimination women face to reach the upper echelons of companies.
  • Spillover effects: It was believed that once hired, female directors may be able to improve gender balance at other levels in companies through their networks and advocacy.
  • Resulted in higher women representation: 55% of companies did not have any woman on their board before quota regulation, whereas after regulation, 100% of companies complied with the law.
  • Initiated substantive changes:
    • About a third of companies have two or more women on their boards, post-quota.
    • New female hires also have a higher number of qualifications and a higher probability of having advanced degrees compared to their male counterparts.
    • 61% of companies prioritized appointing women with previous experience in senior executive positions, as opposed to women with familial ties.

Criticisms of the policy

  • Anti-meritocratic: As it puts gender over merit in board appointments.
  • Symbolic female appointments: 5% of companies only met the lowest threshold required by the quota of appointing one woman on board.
    • There is a continuance of rigid corporate work culture that relies on old boys’ clubs for director-level recruitment, male-heavy networks of existing board members etc.
  • Reinforcing fiefdoms: One-fifth of companies appointing at least one woman have familial ties to their board.
  • Discrimination in the role: Women directors are often sidelined in committees like nomination committees that are responsible for director- and executive-level recruitment.
  • No positive spillovers: In the form of recruitment of more women at lower levels.

Way forward

  • Improving transparency and reporting standards of board-level appointments: Holding firms accountable through regulatory scrutiny.
  • Shifting focus towards eliminating systemic gender biases in leadership by a change in attitude, as opposed to token adherence to the laid down criteria of quota regulations, may bring about actual intended diversification.
  • Address equality beyond the gender realm: Evidence suggests that other demographic groups based on caste, religion, sexual orientation, etc., also face strong career barriers.