ViewpointsWorkshop for Women on Boards

The EY Workshop for Women on Boards is a platform, which enables existing and potential women directors to be more effective in their board roles. Women on boards – making it count was the subject of the panel discussion at the workshop in New Delhi on 2 June 2016. This edition of Viewpoints pre-sents a summary of the key points raised during the discussion as well as the insights shared by the participants.

Disruption and gender diversity

The panel commenced with the observation that disruption and gender diversity are two of the biggest topics facing business leaders around the world. Both issues are closely connected. To navigate disruption, businesses will need to draw from a diverse range of opinions, ideas and experiences. EY’s latest global study Navigating disruption without Gender diversity, think again?, which is based on a survey, conducted with 350 C-suite leaders from across 51 countries, about how businesses are addressing gender diversity and disruption, shares interesting findings. The majority (69%) of industry leaders believe they will achieve gender parity on their board within the next 25 years despite little progress being made within their organizations this far.

While everyone agrees that diversity in the boardroom can lead to better business outcomes, culturally things have been more male-centric at the board level. To break through the glass ceiling takes time. More than the law, it is the realization that women have made their mark in every other field — so why not in the board room? If men from the promoter family can join the board, why not women? Social structures have changed and women, whether from the promoter family or not, challenge decisions of the board if necessary. Diversity in the boardroom brings various benefits with different points of view, experiences and ideas.

It is imperative to be visible

The Panel observed that it is a general belief that there is not enough pool of women who can be eligible candidates for a board position. A panelist commented that it is more used by

2 June 2016, New Delhi

companies as an excuse than a proven reality. In the light of Companies Act provision, companies are now keen to have women on their boards, there is enough demand and there is enough supply but the two are not meeting and that is why the numbers of women on boards remain considerable low today. The big challenge is how to make it known that women, qualified for board positions, are available to fill slots for women directors. Before the enforcement of the new Companies Act, companies did not even look to have women on their boards; it is just the beginning, so it will be a matter of time before we will have favorable statistics about this. Tapping or creating a database of women who would like to be on boards and have the requisite experience or fulfil the background could be an important step toward making sure that companies are in a position to comply with this mandate. It is all about becoming visible.

What is holding back gender parity on boards?

The panel also discussed what is stopping women from getting onto Boards? Due to social and cultural norms, there is a scarcity of female talent in India at senior levels. While women start off with the same ambitions as their male counter parts, family responsibilities and other social commitments tend to dilute ambitions of the most talented women. Another reason is men dominate board positions. Men tend to sponsor men, it’s a factor of who they network with. It comes back to — who do board members know? Who are they familiar with? The gap falls back to the trusted, familiar people they are comfortable with. A third reason, which is very apparent is the element of risks and liabilities of a board member. While the appeal of Board service is obvious, its demands are considerable. Some women may be concerned about the risks involved with accepting a board membership, and are reluctant to raise their hands to accept a board position.

Workshop for Women on Boards2 June 2016, New Delhi

The panel also voiced that there is a tide of change happening while considering filling up a board position. It is not only a quantitative gap but also the qualitative gap, involving the skill set of a person, which is now becoming important for a board director. For instance, companies today are worried about cyber-security, new ways of reaching out to their consumers and challenges posed by ever changing technology. Therefore, companies are looking at someone who understands digital and technology, and not just finance and legal. However, this tide of change is happening very slowly!

How to steer the path to the boardroom?

During the discussion, one panelist shared some tips a women director can use in her board role. The first thing is, it is necessary that a woman director should objectively assess her readiness and qualifications for a board — is she genuinely ready to meet the demands of significant number of hours spent preparing for and participating in full board and committee meetings, the relentless public scrutiny, and the increasing liability and reputational risk directors face?

Another essential point is whether a woman is professionally active or retired, it is important to network with other board members, with mentors, and with people in her business circles generally. It is also a good practice to discuss some of the complex issues offline before the board meeting. During a quarter it helps to stay connected to the leading independent directors of the company, CFO, CMO etc., to get access to helpful insights to the matters of the company. It is imperative to keep abreast with the ever-evolving business scenario. Finally, the endeavor at the board meeting should be to enhance the value for shareholders, a director should not see board meeting as a platform for satisfying curiosity or for making a point or demonstrating knowledge, it should function according to agenda and follow meeting protocols.

“Adding value” is the game changer

Another pertinent question raised was how a women director can make an impact on the board. How can she add value? The panel discussed that it is not a gender-specific challenge; in fact they have a quota set by law, which works toward their advantage. Most important thing is that a women director should practice independence in her board position. She should not be under pressure that as a woman director she has to prove something. She should do her duties as a board member like any other professional would do. What will make an impact is not the gender of a director, but how effectively responsibilities that come with a board role are executed. Eventually, it is all about visibility, integrity and building trust, which comes with how one performs.

What boards can do to close this gap?

The panel also debated on how the dynamics of the boards affect its functioning. Dynamics in the boardroom can be very different given the different types of company boards. One size does not fit all — there is no single right size for every board. There is a significant impact of the size of the board on the quality of dialog or board dynamics and ensuring balanced participation. Boards need to have teams large enough to represent a diversity of views so the team does not get locked into something solely out of the past experience of one to two people, but small enough for everyone to be involved.

Adding to the discussion about board dynamics, one of the points discussed was How to measure Board effectiveness? Are there any processes in place for measuring effectiveness of boards? Are companies looking to evaluate the performance of board members and therefore, how effectively the board is functioning? One of the panelist cited that though SEBI has mandated that every company needs to do an evaluation but they have left it to the discretion of the company. Companies do internal (people on the same board giving a feedback on how a person was as a board member) and external (or a formal) evaluation. Very few companies take the formal path for board evaluation, where the evaluation is done not only with the help of a simple checklist but also focusing on the behaviors, dynamics and the discussions that happen in the board room.

Geeta Mathur, Independent Director (Motherson Sumi Systems Ltd, IIFL Holdings Ltd, NIIT Ltd )

Meera Shankar, Independent Director (ITC Limited, Adani Transmission Ltd., Pidilite Industries, Hexaware Technologies)

Pallavi Kathuria, Lead, Technology and Communications Practice, Egon Zehnder, Asia Pacific & Co-Lead D&I Practice, Egon Zehnder India

Sudha Pillai, IAS (Retd); Independent Director (Jubilant Life Sciences; Dalmia Cement; International Travel House)

Moderated by: Sonu Iyer, Partner and Leader, People Advisory Services, EY India

The Panelists

Ernst & Young LLP EY | Assurance | Tax | Transactions | Advisory

About EY

EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.

Ernst & Young LLP is one of the Indian client serving member firms of EYGM Limited. For more information about our organization, please visit www.ey.com/in.

Ernst & Young LLP is a Limited Liability Partnership, registered under the Limited Liability Partnership Act, 2008 in India, having its registered office at 22 Camac Street, 3rd Floor, Block C, Kolkata – 700016

© 2016 Ernst & Young LLP. Published in India. All Rights Reserved.

ED None

This publication contains information in summary form and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Neither EYGM Limited nor any other member of the global Ernst & Young organization can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication. On any specific matter, reference should be made to the appropriate advisor.

DK