The document discusses corporate governance and the role of women on company boards. It defines corporate governance and outlines its key pillars. It discusses how gender diversity, particularly having women on boards, leads to better company performance and decision making. It provides perspectives on how women directors can positively impact board dynamics, governance, and stakeholder relationships through qualities like inclusion, social awareness, and risk aversion. Statistics on women directors globally and in India are also presented. The document advocates expanding the pipeline of women directors through various measures.

1. Dolly Dhamodiwala
CEO, Business Beacon Management Consultants
Women Economic Forum, 2016
May 16, 2016

2. What is Corporate Governance
 Corporate governance is the System by which
Companies are Directed and Controlled ( Sir Adrien
Cadbury, UK, 1992)
 Corporate Governance specifies the distribution of
rights and responsibilities among company’s
stakeholders and articulates the rules and procedures
for making decisions on corporate affairs

3. Corporate Governance Defined
 Corporate Governance provides the Structure for
defining, implementing and monitoring a company’s
Goals and Objectives and Ensuring Accountability to
all its Stakeholders
 The shareholders or the owners of the company
appoint the Board of Directors to put in place an
appropriate Governance Structure

4. The Four Pillars of Corporate Governance
 Accountability – Ensure that management is
accountable to Board and Board is accountable to
Shareholders
 Fairness – Ensure protection of shareholders and treat
all shareholders equally
 Transparency – Ensure timely and accurate disclosures
on all material matters including financial situation,
performance, ownership and governance
 Responsibility – Encourage cooperation between
company and all its stakeholders in creating wealth,
jobs and economic sustainability

5. Benefits of Good Corporate Governance
 Good governance leads to :
 Better Access to External Finance
 Lower cost of Capital due to better knowledge of company’s
performance
 Better Company Performance due to good management
supervision, better allocation of resources and
improvements in productivity
 Higher firm valuation and share performance
 Reduced risk of corporate crisis and scandals through
Enterprise Risk Management and Disaster Recovery
Systems
 Key to all these benefits is a Well Informed Board fully
aware of its functions and responsibilities

6. Role of Directors
 The Role of Directors is important when the Owners
of the Company are different from its Managers
 Managers act as Agents in whose hands the company’s
capital is transferred by the shareholders or owners
 Directors are the guardians of the company’s assets
and are appointed by the shareholders to act on their
behalf and supervise the managers
 The Board of Directors thus serves as the Conduit
between the Shareholders or owners of the company
and the Managers who run the company

7. Board of Directors holds the Key to Good
Corporate Governance
 The Board provides the leadership which is at the
Centre of Corporate Governance ( Merwyn King,
leading Corporate Governance practitioner from South
Africa)
 Leadership which is transparent and accountable and
necessary for Efficiency, to compete effectively and
create jobs
 Leadership for Probity and Integrity in the interest of
shareholders and other stakeholders
 Leadership for Responsibility as companies have to
increasingly address Social Concerns

8. Specific Responsibilities of Directors
 Develop the company’s Purpose, Vision and Values.
The entire organization must understand the
company’s strategic direction
 Establish and monitor the implementation of
corporate objectives
Approve the strategy, annual budgets, risk policy and
business plans
 Oversee, motivate and appoint the CEO and put in
place an effective succession plan

9. Specific Responsibilities of Directors
 Board is responsible for monitoring the company’s
governance framework, policies, procedures and
practices
 Board should ensure appropriate controls for
Accounting and Financial Reporting systems,
Independent Audit, Risk Management systems,
Financial and Operational Controls and Compliance
with law and operational standards
 Board should Oversee Transparency and Disclosures
and other Communications relating to the company

10. Board Composition – At the Centre of Good
Governance
 The Performance of the Board and the performance of the
Company depends greatly on its Board Composition
 The Board’s Size, Constitution, Expertise, Tenure and
Independence should be in tune with the nature of the
company’s business and its subsidiaries and the expertise and
experience desired to implement its strategies
 Board members must act critically and independently of one
another
 Number of Independent directors should be in keeping with the
regulations of the country, each an expert in his own field
 Board should be diverse in terms of Gender, Age, Expertise,
Skills, Experience, areas of Specialization and Accessibility
 All these add up to better governance of the company

11. Greater Board Diversity, Better Company
Performance
 Traditionally Corporate Directors formed “a cozy club of
insiders, or friends of existing board members.”
 Boards now reach out to seek greater diversity - imbibing
New and Relevant Skills and Competencies,
Demographics, and Networks – To generate Thought
Diversity
 Diversity at times also entails representation of Minorities,
Disabled people, LGBT, Ethnic groups and others
 Accessibility to Board members is equally important for
Investors and Active Shareholders
 Independence of Board Directors is Imperative for effective
decision making

12. Gender Diversity is the most Critical
Element of Board Composition
 “Women are the largest reservoir of untapped talent in
the world” – Hillary Clinton
 Presence of Women on the Boards is the biggest
differentiator for Company Performance
 This has been proved by a raft of research studies
conducted at leading Institutes globally
 Peterson Institute of International Economics in its
research study has concluded that ‘Presence of women
on corporate boards and C-suits can contribute to
better firm performance’

13. Women on Boards and Company
Performance
 Among profitable companies a move from zero women leaders to
30% was observed to have increased net revenue margin by 30 %
- Peterson Inst. For International Economics
 A Credit Suisse Gender 3000 study in 2013 shows that companies
with gender diversity recorded excess stock market returns and
higher valuations and payout ratios – Average RoI stood at 14%
compared to 11.2% for companies without women leaders
 Fortune 500 companies with the highest representation of
women on Board attained significantly higher financial
performance than those with the lowest representation of
women on Board
 A Report by Catalyst ‘The Bottom Line : Corporate Performance
and Women’s Representation on Boards’.
 Return on Equity was higher by 53%, Return on Sales higher by
42% and Return on Invested Capital by 66%

14. Women on Boards and Company
Performance
 “Empowering women is not only the Right thing to do
. It is also the smart thing to do” – Jingdong Hua, IFC,
VP and Treasurer
 “It can add trillions of dollars to global GDP, boost
productivity, generate higher returns on investment
and promote greater organizational effectiveness”
 Over the past decade, Fortune 100 Companies have
added an average of 2.7 women directors on Boards,
while Fortune 500-1000 have added an average of 1.7

15. Women on Boards – Views of Male
Directors – IFC Paper
 Presence of even one woman on Board changes the Board
dynamics
 Women tend to be more careful and conscientious in their work
of supervision and scrutiny. Women have no qualms in asking
questions when they don’t understand. Men are constrained by
their egos.
 Women have specific inherent qualities that enable boards to
function better – More Inclusive, Detail driven, Patient, Prudent
in their reviews and have better Communication skills. This
leads to better board interactions and better performance.
 By nature women are better qualified to lead companies in
Environment related businesses, Consumer goods, Food
products, Fashion garments, etc.

16. How do Women make a difference to their
Boards and to Governance
 Women have different perspectives and style of conduct
 Women tend to be more holistic, think more broadly and be
more attuned to environmental and social concerns. They voice
issues relating to implications of company strategies on their
Employees, Consumers and other Stakeholders, Environment
and Society at large
 Women are thus more competent for decisions regarding HR
policies, CSR policies, Marketing Strategies for Consumer
goods, Advertising and PR and now increasingly on Compliance
related issues
 Women see themselves as more in tune with relationships with
stakeholders while men perceive themselves as more
independent focusing more on Company Strategy and
Performance

17. How do Women make a difference to their
Boards and to Governance
 Women on Boards being highly educated and experienced
are perceived by other women stakeholders and consumers
as Role Models and Cultural Change Agents
 Successful Women encourage Women at all levels to
challenge their situations and empower them to grow in
their chosen field. They groom future directors from within
 Mindset of Women is generally less overconfident and Risk
averse. This leads to better procedures and policies for
crosschecks, double-checks, second opinions and
consultations which result in perfection

18. How do Women make a difference to their
Boards and to Governance
 Professionally women have always had to work harder to prove
themselves and not to be criticized.
 Hard work leads to better scrutiny of issues facing the company,
more wholesome discussions of the issues, considering all
aspects ( even unanticipated), better results and hence better
company performance
 Women have an Emotional and Nurturing Mindset and are more
sensitive to Environment and Sustainability issues ,so vital today
 Women sensitize their Boards towards certain vulnerable
sections of Society, SMEs, Female employees and
Underprivileged persons
 An IFC Study has affirmed that women can bring about long
term Sustainable Growth in their companies

19. How do Women make a difference to their
Boards and to Governance
 Women are more diffident and take time over their
decisions. Are even ready to ask questions at Board and
senior management meetings
 This leads to greater Transparency in the decision making
process and hence better Compliance with Regulations
 Better Compliance creates greater Value for the company.
 Women’s inherent nature for 100 per cent Compliance also
makes them better Supervisors. Better supervision
mitigates the risks of Non-compliance which if overlooked
can result in very serious consequences

20. How do Women make a difference to their
Boards and to Governance
 Women are more Inclusive. They attract high quality talent
from all quarters especially female talent, enhance and
encourage creativity and innovation and facilitate greater
market penetration and acceptance
 Women are always eager to discuss strategies at the Board
level and introduce new processes and encourage
management to do so
 Women are more effective on Boards of companies in the
FMCG sector , Hospitality, Entertainment or Environment
related industries or NGOs.
 In these industries they need the freedom to innovate and
bring in newer processes and strategies as their
understanding of the industry is superior to that of men.

21. Some Statistics on Women Directors
 In 2010, Savitri Devi Jindal was the only woman
chairperson among India’s top BSE 100 listed companies
 Presently 5.4 per cent of 923 directors in top BSE 100
companies are women. The average age of women is 56 yrs.
compared to 62 yrs. for men.
 In South Africa the percentage of women directors to total
number of directors was 16% in 2010.
 In UK, only 12% of boards of companies comprise women.
The aim is to increase this to 25%.
 In USA, 70.8% of the 1763 companies rated by Governance
Metrics International (GMI) had at least one woman
director in 2011, but only 9.7% of these had at least three
women directors.

22. Some Statistics on Women Directors
 Very few companies in India have at least three
directors.
 Apollo Hospitals, Axis Bank, Godrej Consumer
Products Ltd., Idea Cellular, Bharati Airtel, Tata Global
Beverages, Titan company, Hotel Leela Ventures, etc.
 According to Prime Database, 175 women from
Promoter groups are on Boards as Executive Directors
and 100 as Non Executive Directors. This includes
women who have set up their own businesses like
Kiran Mazumdar Shaw of Biocon

23. Expanding the Pipeline for Women
Directors
 In the selection process for directors, boards are now moving
away from the Nomination approach to a more systematic
selection approach aided by Consultants
 Shareholders are more active and expect the Directors to be
actively engaged in all Board related issues and bring in fresh
ideas to contribute effectively to the company’s strategy.
 The Companies Act 2013 under Section 149(1) has stipulated that
a Public Ltd. Company should have at least one woman director
to be appointed within one year of the commencement of the
Act. Other companies with paid up share capital of Rs. 100 crore
and above should do so within five years
 Public companies to have a minimum of three directors and
private companies to have two and a maximum of 15.

24. Expanding the Pipeline for Women
Directors
 Are quotas the best approach to getting more women on Boards?
 Acc. to a Study by a Cambridge University Professor, for 1000
companies from Forbes Global 2000 list the more influential
factors are:
 Female Economic Power, defined by,
 i) Expected no. of yrs of schooling for girls ( Primary and Higher
Education)
 ii) Percentage of women in the work force along with
iii) Well documented Corporate Governance Code of the
company that emphasizes on Gender Diversity
 Political power of women in the country also plays a role
 They also need to stay for longer periods on the Boards
 Study conducted in 2013 for 1002 companies from Forbes Global
2000 list.

25. Expanding the Pipeline for women
directors
 Women need greater visibility. This should be encouraged
from middle management level itself. Building effective
networks within and outside the company is important
 Women must be proactive and seek advice and guidance
from Senior Management and Directors
 Tenure of Non-Executive directors also needs to be
reduced. It is usually 6-11 yrs and at times even 15 yrs. In
India it is now reduced to three years with the option for
reelection for another three yrs.
 Special training needs to be provided to women especially
for companies in the Social Sector, NGOs and
Environment related sectors to take on greater
responsibilities

26. Expanding the Pipeline for Women
Directors
 Women need to plan their career after retirement and seek training in
corporate governance, risk management, internal controls, financial
management, et al.
 Mentoring by Chairmen is very important to groom women to rise from
senior management levels to directors
 Women must consider the skills and experiences that are valued highly in
the boardroom today.
 Gain better knowledge and expertise in the key risks and challenges facing
organizations and boards.
 Cyber security, technology disruption, customer segmentation, market
competitiveness, talent retention, are some of the emerging challenges