More Women on Company Boards, but Top Management Representation Falls Short: Study

While the representation of women on corporate boards in India has seen a positive increase, their presence in top management positions remains significantly lower than the global average, according to a recent study by the National Council of Applied Economic Research (NCAER).

Boardroom Diversity Shows Improvement

The NCAER study reveals a notable rise in female board members, jumping from just over 5% in fiscal year (FY) 2014 to nearly 16% in FY 2023. This growth can be partly attributed to the implementation of a mandate requiring companies to have at least one woman director by April 1, 2015.

Top Management Lacks Parity

However, the picture gets less encouraging when looking at senior leadership positions. Despite a rise from nearly 14% to about 22% in the same period, India still falls behind the global average of nearly 33% women in middle and senior management roles (as of 2019).

A Cause for Concern:

The National Council of Applied Economic Research (NCAER) study further highlights a concerning statistic – almost 60% of the companies surveyed did not have a single woman in their top management teams as of March 2023. This lack of diversity extends even to the top ten NSE-listed firms by market capitalization, with five having no women at all in their top management ranks.

Breaking Down the Numbers:

• Board Representation: Increase from 5% (FY 2014) to 16% (FY 2023)

• Top Management Participation: Increase from 14% (FY 2014) to 22% (FY 2023)

• Global Average in Senior Roles: Nearly 33% (as of 2019)

• Companies with No Women in Top Management: Almost 60% (as of March 2023)

Quote:

Ratna Sahay, lead author of the study, emphasizes the positive impact of female leadership: "Having at least one woman on board is associated with higher economic performance and lower financial risk, and this effect is significant for large and medium-sized firms."

Conclusion

The NCAER study paints a mixed picture of gender diversity in Indian companies. While the increase in women on boards is a positive step, the lack of progress in top management roles remains a major concern. Here's a quick recap:

• Boards Show Improvement: The mandatory requirement for at least one woman director has led to a significant increase in female board representation.

• Top Management Stalls: Despite some growth, India falls behind the global average for women in senior leadership positions.

• Diversity Gap in Leadership: A substantial number of companies, including large corporations, lack any women in their top management teams.

The Road Ahead:

The study by NCAER underscores the need for further initiatives to promote gender equality in leadership positions. Here are some potential areas for focus:

• Mentorship and Sponsorship Programs: Providing guidance and support to talented women can help them climb the corporate ladder.

• Unconscious Bias Training: Addressing unconscious bias in hiring and promotion processes can create a fairer playing field.

• Flexible Work Arrangements: Offering flexible work options can help women balance work and personal commitments, making leadership roles more attainable.

By implementing such measures, Indian companies can unlock the full potential of their female talent pool and reap the benefits of a more diverse leadership team. As Ratna Sahay suggests, having more women in top management can lead to improved financial performance and lower risk for businesses. Closing the gender gap at the top is not just a social responsibility but a smart business decision.