Lauding the ascent of women into boardrooms in greater numbers is a no brainer. But merely a seat at the table is not enough. This week in our continuing series, we examine the role of women board members in crucial committees.
Indianexpress.com analysed data of the NIFTY 500 maintained by Prime Database. Our aim was to see whether women board members were occupying just a seat, or were making it to powerful positions on company boards? Additionally, is the mandated presence of women in boardrooms translating to a proportional presence on important committees like the Audit, Nomination and Remuneration, and the Stakeholder Relations committees, considered to be crucial corporate governance processes. In short, how is the law (the Companies Act, 2013 that makes it mandatory for companies to appoint at least one female on their boards) being implemented beyond the letter, and in true spirit? Here is what we found out.
3 % of Chairpersons/ Co-Chairpersons of Boards are women
Women comprised 14 per cent of all board members for the NIFTY 500. However, when it came to the chairperson and co-chairperson positions, they occupied 3 per cent of these seats. Women made up about 4 per cent of managing directors, six per cent of directors, and seven per cent of executive directbbbbbors. Positions, where women were represented in proportion to their overall membership, were vice-chairpersons (11 per cent), nominee directors and non-executive directors (both at 16 per cent).
Do these positions really matter, once you are in the company board? Pranav Haldea, Managing Director at Prime Database, explains, “When it comes to voting power, there is no difference based on position. Chairpersons and Managing Directors, however, do drive the boards.” While more women are entering the corporate boardroom, a similar proportion is not making it to influential positions. Harpreet Kaur, Deputy Director at Ashoka University’s Genpact Centre for Women’s Leadership, believes there is a steeper path to leadership that women face compared to men. “Firstly, the number of women on the table is drastically out of proportion as compared to men. It becomes difficult to rise in this paradigm. A factor that plays a very important role when you reach the top but are just a level under, is the kind of networking and sponsorship support that you have access to. Men and women experience these networks very differently. Even though male and female networks may be similar in size, their composition is very different. Often, there are more men in men’s networks–and there are more men in leadership positions. So, the networks pushing them upwards are much stronger,” Kaur adds.
Are women board members part of important committees?
Company boards often delegate specific tasks and functions to smaller groups called committees. The 2017 Kotak Committee report notes how these committees are seen as enabling “effective governance through small-group discussions, focus and diligence on various aspects.” So how do women fare when it comes to committee membership for the NIFTY 500.
The NIFTY500 companies had 3,329 committees combined with more than 11,189 members (as per data accessed on December 7, 2017). Several individuals were members on multiple committees. Women made up 11 per cent of all committee members across the companies. Simply put, 381 women occupied 1,209 committee seats, whereas 2,711 men occupied 9,980 committee seats. The proportion of women thinned down further when it came to chairpersonship of these committees. For 2,797 committees (where chairpersonship data was available), a bare nine percent were chaired by a woman.
Women Board Members & the Big 4
Every company has diverse committees for their specific requirements but four – Audit, Corporate Social Responsibility, Nomination and Remuneration, Stakeholders’ Relations are mandated by the Companies Act. They are also considered more important from a corporate governance perspective. The proportion of women in the big four varied but not very significantly. They made up about 15 per cent of members of Corporate Social Responsibility (CSR) committees, 13 per cent of Nomination and Remuneration committees, 12 per cent of Audit committees and about 11 per cent of the Stakeholders related committees.
“The Audit and Nomination and Remuneration Committees have more power and responsibility, of course the underlying assumption being that the board is truly independent,” Haldea says, adding that a tiny number of women making it to important committees shouldn’t be compared with the larger figure of women entering the corporate boardrooms since 2013. “It would be slightly unfair to compare this statistic with other numbers like that of chairpersons/managing directors because in a lot of cases where compliance (for membership) has been done primarily from a tick box mentality, there of course, the woman would not be playing an active role and neither would she be a Chairperson or a Managing Director– she would be there just to fill the presence mandated by law.”
While there have been studies on presence of women in organisations and on their boards, committee membership hasn’t been as extensively reported and written about. A report by Bloomberg View for Fortune 500 in the USA showed similar trends for committees, with more women made it to the CSR committee, followed by the others. “A lot of companies think that their responsibility ends with mere compliance. For many, this human rights discussion has become more of a human resource discussion but we need to ask what do these numbers do? Do these numbers even have a voice?” Kaur asks.
In the fourth part of this series we put the data to companies that comply, companies that don’t and those who go far beyond the mandatory requirement and have more women on their boards.
(This is the third in our 5-part series on women in corporate boards. Read part one, “The truth about women in corporate boards”, where we find how NIFTY 500 comply with the government’s mandatory requirement even though a bulk of them stick to only the minimal requirement of “one” woman board member. In part two, “Women are paid less. Yes, this is old news, ” we lay out what women board members earn compared to their male counterparts. Read our entire work on #GenderAnd across intersections.)
(Sana Amir contributed to this project.)