Once again, evidence is mounting that companies that have higher representation of women in governing boards and senior management perform much better than their peers who do not. Released last week in New York, the Credit Suisse Research Institute's bi-annual report on gender diversity shows that 50% Club companies (companies which have women comprise more than half its senior management) systematically out-performed their peers by 25-50% better financial returns. It claimed that "gender diversity in both board and particularly senior management is a tremendous benefit to companies and their shareholders".
While several European countries show that more than a third of their Board comprises of independent women directors (France, Norway, Italy, etc.), the situation in Asia is rather pathetic (less than 10% in China and about 11% in India). The percentage in India has doubled between 2010 and 2015. Why?
Because companies in India are now being mandated by law to include women on their boards. Nearly 1500 companies listed in SEBI have been pushed to do so for the past four years. The new Companies Act 2013 has mandated all companies so registered to have at least one woman on the Board.
What is the situation today?
A recent report based on analysis of Indian companies concludes that "after the recent appointments of women, there are currently 1,356 women presently occupying 1,668 directorship positions, representing 13% of the total 12,370 directorship positions, up from 5% in February 2014. Of these, more than half i.e. 658 women are holding 721 non-independent directorship positions. Only 36 companies have a woman chairperson/co-chairperson, of which nobody is an independent director" .
Indian companies cannot find, or do not want to find independent women directors for their governing boards. The situation of women in senior management positions in Indian companies continues to be worse, except in banking companies.
Prithvi Haldea, Founder Chairman of PRIME Database argues that women's meaningful representation on corporate boards brings diversity of perspective, values-driven, decorum and discipline in board meetings and perspectives of consumers in board deliberations.
Therefore, gender matters in improving corporate financial performance, provided inclusion of women in senior management and board is not tokenism. 50% representation makes all the difference .
The Indian mind-set of treating women as "token decoration" is not merely reflected in corporates, but also in public sector and non-profit organisations too. Even female representation in local health and education committees of panchayats and municipalities suffers from similar fate and mind-sets.
It's time we realise that gender matters. And no, it is not tokenism.
