Not just women, a good mix is needed for an efficient board
ON BOARD The right combination of skill and experience is necessary for any organisation to succeed, say experts
Appointment of a womanoncompanyboardscould be a brilliant idea but that alone may not solve the problem of not having a good mix to address different challenges of a business being run.
Some of the other set of skills or personalities that form a competent board include background, age, geographical experience, expertise, and personal characteristics, which are essential to bring in broad and innovative thinking to create an effective boardroom, according to experts.
“While what form and level of diversity is appropriate is based on an organisation’s needs, what is clear is that boards should assemble a group of directors that together comprise a range of skills and experience that will best assist the organisation in achieving its goals,” said Preety Kumar, managing partner at executive search firm, Amrop India. “Desire to have an effective board is fundamental to a company thinking on ‘how to create an effective board’. This will lead them to recognise that board composition and quality of directors is a key factor that enables boards to be effective.”
Effective boards are assembling wide ranging backgrounds to create genuine diversity – academicians, not for profit, artists, and customer group representatives apart from business leaders.
For example, Rekha Sethi, an independent Director on multiple boards including Sun Pharmaceutical Industries, Sun Pharma Laboratories Ltd, CESC Ltd (the flagship company in the RP-SanBut jiv Goenka Group) and Hero Steels Ltd (steel sheets and products manufacturers) said that as a person from the non-profit background, unlike corporate.
“I am trained to look beyond a company’s financial bottom line. I bring to the table a different viewpoint by looking at profitability while ensuring a positive social impact. I am expected to be able to balance any initiative in terms of its good impact on the organisation and its staff and also the society overall,” said Rekha Sethi, director-general, All India Management Association.
The debate to have a good mix in board originated from Securities and Exchange Board of India (Sebi) and The Companies Act, 2013, which mandated listed companies to have at least one woman on their respective boards by April 1, 2015.
“Getting on one woman mandatorily is just the first step in the direction of improving overall diversity. The objective of the guidelines was to encourage corporate to look aggressively for female qualified independent directors to come on board,” said Sonal Agrawal, managing partner, Accord Group India, emphasising that boards should increasingly look at encouraging diversity and go beyond meeting the gender criteria.
A latest study by consulting firm KPMG and Women Corporate Directors India (WCD) conducted among more than 100 tenured corporate leaders revealed that over 50% firms are hiring women inboards just to comply.
Government agencies, academic and research institutions, non-profit organisations, and audit firms are some of the nontraditional hiring grounds that search firms are now tapping to meet the increased demand for women directors.
there are challenges there too, as companies and headhunters have to spent considerable time preparing first-time directors for their new roles.
But, experts say that mandate has served its basic purpose – of helping women crack their first entry to the boards.
“Companies prefer qualified candidates who are already serving a board over those who don’t have any board level experience. Cracking the first board is critical,” said Pankaj Arora, partner, governance, risk and compliance services, KPMG in India.
The annual board index of executive search firm Spencer Stuart published last year showed that 33% of the BSE 100 companies surveyed had at least one foreign non-executive or executive director; up from 20% in 2009. On metrics evaluating diversity in the boardroom, 94 percent of the companies surveyed had at least one female director compared to 47% in 2009.
“Now, firms need to stress upon improving the same both by external hiring at the board level and building diversity in the executive pipeline,” said Ritu Kochhar who leads the financial services and private equity practice for executive search firm Spencer Stuart in India.
But, to have multiple women in the board, we need a lot more women coming into the pipeline.
“It goes without saying that if board composition is driven in a structured and well intentioned manner, there is a sufficient pool of diverse accomplished leaders, both in terms of nationality and ‘board ready’ women leaders that can add significant value to the Board,” said Amrop’s Kumar. Pocket is one of the best offline libraries on smartphone and PC for saving online articles, videos and images for offline access. It is compatible with a various news aggregators such as Flipboard and even allows one to save content from mobile browsers such as Firefox or Chrome. It has a premium version which offers a permanent library, where you can keep permanent copy of what you have saved and provides an ad free experience for an annual subscription of ₹535. It also has a dark mode for night reading.
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