Express Pharma

‘Gender diversity and corporate boards’— Pharma leads the way!

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Debabrat Mishra, Director, Hay Group India and Sudakshina Tyagi, Senior Consultant, Hay Group India elaborate on the need for more women in leadership positions, including corporate boards

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Debabrat Mishra

Pick up any financial newspaper on any given day and scan through its pages, and you are likely to stumble upon an article which focuses on the merits of gender diversity within the organisations of today. The issue of ‘including’ women has gained a considerable amount of prominence in recent times. While putting in place statistical indicators/ dictates to drive gender diversity is a good step, the true essence of gender diversity in an organisation can only be driven through a change in mindset across the organisation. Needless to say, in a corporate set up, while this change needs to be all pervasive and percolate across levels, it definitely needs to be driven from the top itself. Hence, clearly there is a need for more women in leadership positions, including corporate boards. Also, Hay Group’s research and numerous others studies have pointed out that embracing diversity in the workplace – especially encouraging women to succeed in senior roles – flows through to the bottom line.

The present — We lag far behind

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Sudakshina Tyagi

Let’s analyse the current scenario with respect to our corporate boards. As per PRIME database, there are just 488 women presently occupying 597 directorship positions across all NSE-listed companies. And, if the requirement for boards as per the Indian Parliament’s Companies Act, 2013 mandate was to have independent women directors, as many as 1240 companies (or 85 per cent of companies) still need to meet the norm. Clearly a law/ tokenism can only go so far. There is a need to move towards embracing the spirit or essence behind the law. We need to truly recognise the value that a woman director brings to the board. There is now significant research to show the considerable value that women add to the decision making processes within the top echelons of organisations. While a lot of research has gone towards statistically trying to prove the significant business benefits of having women directors on corporate boards, we would like to look beyond to some reasons why women directors may be adding significant value in their own unique ways.

An indispensable contribution

A company’s board signifies its capability, integrity and veracity to say the least. The board member is the dispassionate individual who is looking out for the interest of the shareholders at all times and enables the organisation to have an unwavering focus on performance with a strong command on the company’s governance. Recently, Hay Group conducted its annual ‘India’s Best Boards’ study. This was underpinned on our Board Evaluation Framework which has been developed using the learnings from our comprehensive studies of more than 100 Indian corporate boards over the past two years. The study involved a rigorous process of detailed onsite audits where our team validated documents, interviewed independent directors and chairman/ CEOs to get a deeper understanding/ assessment of governance processes and principles. The study also drew insights in terms of the effectiveness of women as board members.

Through our study, we found strong evidence to support the fact that the contribution of women board members is significant, in terms of the following:-

  • Being more consistent in bringing in a focused approach to board discussions
  • Being more diligent in their level of preparedness, as well as being relatively more participative in those sessions
  • Having higher self-awareness and an ability to objectively look at , and contribute to board discussions as well as handle conflicts

Pharmaceuticals industry’s step forward

If you look at the pharma industry, through the lens of gender diversity; the sector has, either by design or by chance, managed to show a relatively impressive women representation across the top brass of the organisation including corporate boards. As per PRIME Database, out of the 76 listed pharma companies, 51 of them already have a woman director on the board, with a sum total of 58 women directors. Of these, 32 directors have been appointed prior to the mandate of ‘atleast one woman on the board of directors’ got rolled out, which is noteworthy.

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The crucial ‘emotional intelligence’ factor

Women of the likes of Kiran Mazumdar Shaw, Chairman and Managing Director, Biocon; Dr Preetha Reddy, Managing Director, Apollo Hospitals Enterprise; Dr Swati A Piramal, Vice Chairman Piramal Enterprises testify that the Indian healthcare sector has had successful precedents of women in leadership positions. While technical expertise is something they definitely bring to the table, but more so their leadership ability to manage and steer people stands out. A critical component of managing people as Hay Group’s research shows is the individual’s emotional intelligence. As Daniel Goleman wrote on Emotional Intelligence, “Emotions guide everything we do.” Indeed, emotional intelligence is regarded as a far stronger predictor of success – in work, love and life – than traditional measures of intelligence, with 90 per cent of leadership success being attributed to a high EQ. While there is no research definitively pointing to women having or consistently demonstrating higher levels of emotional intelligence than men, it is fair to say that men and women bring forth different facets of emotional intelligence which are beneficial in their own unique ways. Thus, women representation on boards would definitely provide a more comprehensive perspective on decision making.

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Strive towards ‘real change’

However, the question which rankles in our minds is that by just having women directors on the board, would one be able to have gender diversity in the true sense of the term? Also, would this gender diversity really lead to enhanced business outcomes, which in turn, as a virtuous cycle, would fuel the gender diversity cause? It may not be so in the current ways of work. We would need to break free from stereotypes to realise this vision in entirety.

Consider the following facts:-

  • Is there genuine intent to onboard effective women board members? As we mentioned earlier, 51 of the listed pharma companies have female representation on board with a total of 58 directors in all. The fact is 30 per cent of these women are from promoter families, which makes one wonder if this is a mere fulfillment of a law and not a genuine attempt to focus on building diversity, which would lead to intended business benefits. The ideal scenario that we must all aim for is one wherein women are included on boards to plug an essential skill gap or enhance the group’s overall capability quotient, instead of just meeting a diversity target for the organisation
  • Has age got something to do with being effective as a board member? Here’s fact two. Of the listed pharma companies, with non-promoter women directors, approximately 65 per cent-70 per cent of them are in the age group of around 50+. Is this a norm to go by or are we willing to take chances in terms of bringing in younger female board members too? Yes, age brings in wisdom and experience, but there is enough evidence to show that the representation of younger members on board enables an organization to build its risk appetite and take on transformational changes.

Having said all this, one needs to remember that gender diversity is a fine balance that can only be achieved if everyone does their bit. While the government needs to help through legislative actions, companies need to go the extra mile through efforts like focused and customised recruitment initiatives and tailor-made training and development programmes. At the same time women too must take the initiative to assert themselves. Women should volunteer confidently and not hesitate from promoting themselves. Organisations must work persistently towards getting the right mix of gender representation within the board, so as to ensure an optimal output. We certainly hope that more and more industries take a cue from the pharma sector, and drive gender diversity in its true spirit, rather than just mere symbolism.

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