Once a quarter, 50-year-old Spandana Reddy* in Bengaluru takes a break from her regular chores and high-profile kitty parties to attend a corporate meeting. That’s because she’s on the board of a company that her husband founded almost two decades ago. Reddy not only attends the meeting, she also plays the gracious host, overseeing the décor of the boardroom, finalising the menu and arranging chauffeur-driven luxury cars for the independent directors. Last but not the least, she makes her presence felt by approving all the board decisions. All this is not surprising. Till March 26, more than half of the 1,074 women directors of NSE-listed companies, like Reddy, belonged to the family or promoters’ group and had been brought in, primarily, to fulfil the fair-sex quota requirement.
More than 1,000 listed companies, the 395 NSE-listed and 1,590 BSE-listed ones are yet to find female directors and comply with capital market regulator Sebi’s diktat to have a women director on the board of the company by month-end. With the deadline nearing, experts say, the number of ‘quota women’ will only rise.
“Hiring women directors is largely done to ensure compliance. Few companies have invested in a director from a consulting or research background, who can be independent and add real value,” says Kunal Sen, senior vice president, TeamLease Services, an HR recruitment services firm.
Consider the line-up. While Nita Ambani joined Reliance Industries Ltd, Century Textiles and Century Enka has Sarala Birla, Godfrey Philips India has roped in Bina Modi, Kirloskar Oil Engines Ltd has got Gauri Kirloskar and the Raymond Group has Nawaz Gautam Singhania. Asian Paints Ltd has brought on board Amrita Amar Vakil, Jindal Drilling & Industries has Saroj Bhartia and Cera Sanitaryware has brought in Deepshika Khaitan. All the appointments in the last two-three quarters only drive home the point that it’s all in the family.
“Board membership can be either based on ownership or take the professional route. There’s nothing wrong in having a family woman director, even if she doesn’t actively participate in routine developments. She can still add her perspective,” says Falguni Nayar, founder, FSN E-Commerce Ventures, who was roped in by leading corporates Tata Motors and Dabur as an independent director for her valuable insight and subject knowledge. Nayar is among the 471 (as on March 26) independent women directors on NSE-listed companies, who are storming the male bastion in corporate boardrooms.
Not everyone agrees. “Family is not the right place to look for directorship when it comes to women, unless they have professional experience. It defeats the spirit of an independent director,” says Annie Mathew, director-alliances and business development, BlackBerry India. Mathew serves on the board of Startup Village, a PPP initiative, which has so far incubated over 800 start-ups.
“Women bring a fresh perspective, trust and help build consensus. If everyone is thinking alike, someone isn’t thinking. Women have the tendency to question whenever a situation demands,” says Suchitra Ella, joint managing director, Bharat Biotech International Ltd. She also serves on the board of Innova Agripark and Century Biologicals.
A recent ISS Governance study found that 81 per cent of S&P 1,500 global companies have at least one female director. In fact, countries like Norway are a step ahead, insisting on three female board members. On the other hand, according to Ranstand, women hold just a per cent of all board positions in the BSE 100 Index. Of this, private companies with professional management have 11.02 per cent women representation, while family-run companies have 7.21 per cent.
According to Indiaboards.com, a joint initiative by NSE and Prime Database, between March and June 2014, 59 first-time women directors were appointed, of which 33 were from the family or promoter group. While most of them do have professional qualifications, experts say they lack industry experience and knowledge to offer valuable inputs during board decisions.
“Women from the family echo the voice of the promoter, defeating the very purpose of an independent director, whose role is to represent minority shareholders, improve corporate performance and corporate governance,” explains Pranav Haldea, managing director, Prime Database.
But not all family members lack experience. For instance, Apollo Enterprises’ Sunitha, Preetha, Shobana and Sangeeta Reddy all joined the company in senior executive positions before joining the board. Likewise, the Godrej Group has Nisaba Godrej and Tanya Dubash while Lupin Ltd has Vinita Gupta. HCL Technologies made founder Shiv Nadar’s daughter Roshni Nadar Malhotra a director only after she had worked for the company for a few years. “Women directors who have built and own large businesses bring to the board an entrepreneur’s perspective and will resonate with and understand the MD’s problems more than independent directors who haven’t run a company. We have a hands-on approach towards the business,” explains Shobana Kamineni, executive vice-chairperson, Apollo Enterprises.
Corporates are increasingly looking at hiring professional women, either from within the family or from outside. “Such a move will lead to career growth of women who will see existing women directors as role models. It will also have a cascading effect on creating women-friendly HR policies,” says Moorthy K Uppaluri, CEO, Randstad, an HR recruitment services firm.
While physical presence at board meetings is easy, the actual challenge lies in determining the organisational aspirations, understanding the rationale behind the management’s moves and taking part in decision-making with operational and research-based inputs.
Currently, companies are largely getting female directors to fulfil guidelines. But going forward, the board constitution is likely to become more professional. Corporates like TCS have already taken the lead by grooming non-family senior executive Aarthi Subramanian for a board position. Not just every man, but every successful enterprise needs the efforts of a woman behind it.