Friday, April 01, 2011

Quotas for women on corporate boards

The ministry of company affairs proposes to mandate at least one seat for women on boards of companies with five or more independent directors. I think this is a great idea but not for the reason put forward, namely, gender equality or social justice. I would argue in favour of the move from the point of view of introducing diversity on boards.

Boards suffer from group-think because their members are drawn from a small club- businessmen, corporate executives, retired bureaucrats. Anything that broadens the membership and introduces diversity should be welcome. Are there enough qualified women? Will it compromise the quality of the board? Well, you don't need extraordinary qualifications to serve on boards. Any reasonably educated person can contribute on a board if he or she wants to- and to improve on the present set of people, who shuffle in and out of board meetings without making any contribution, will not take great effort.

Critics are right in saying this won't do much for empowerment of women. For that it is important to have more women executives. But having women on boards should not be seen as a favour that companies do to women. It is more a favour to their own shareholders. It is important, of course, to get more women on board, but it's also important to have them on the board.

More on this in my ET column, Say yes to board seats for women.

1 comment:

Anonymous said...

Aptly said. Diversity in the Board is welcome; as they are subject to GroupThink syndrome and more often to Abilene's Paradox.

But one can not have diversity merely by adding more members (whether male or female). Qualitification also shouldn't be the criteria. The criteria should be INDEPENDENCE - ability to constructively challenge the management, courage to stand alone and conviction to evaluate each decision skeptically. Courage of Conviction('COC') is something that I would propogate. And more so - there cannot be any checklist to measure Independence, which makes Independent Boards, an intricate exercise.

Employability of women is required at lower level of pyramid, where there suffering or inequality is the most.