Egon Zehnder International, an executive search firm, is getting three times as many calls as last year at its Mumbai office from Indian companies seeking women for board positions, spurred by a new law.
Enacted in August by India’s parliament, the Companies Act requires every listed company to have at least one female director within a year, while others reporting minimum revenue of 3 billion rupees ($49 million) have three years to comply. The legislation and a scramble for qualified candidates are spawning girls-only networking forums through which they mentor and recommend each other, much like their Wall Street peers.
“Hiring women has become more important,” says Namrita Jhangiani, a Mumbai-based partner at Egon Zehnder, without revealing the clients who have been calling her. “Companies saw the legislation coming and began aligning themselves in anticipation.”
Almost half of the top 100 companies traded on BSE Ltd., including the biggest two by market value, don’t have a single female member, according to data compiled by Bloomberg. As many as 6,000 women directors will be needed as firms look to fill the seats, estimates Preeti Malhotra, who helped draft the law. Groups similar to those labeled the “Stiletto Network” by author Pamela Ryckman in her book with the same title are bracing for the surge in demand.
Chicks in Charge
In her book, Ryckman found how groups such as the Brazen Hussies, Power Bitches, Chicks in Charge and SLUTS, or “Successful Ladies Under Tremendous Stress,” were wielding clout and brokering deals.
The Spencer Stuart 2012 India Board Index found that women accounted for 7 percent of directors on Bombay Stock Exchange 100 companies in 2012, less than half of the 15 percent in the U.K. and 17 percent in the U.S. Firms that don’t have a female board member include billionaire Mukesh Ambani’s Reliance Industries Ltd., Dilip Shanghvi’s Sun Pharmaceutical Industries Ltd., Asia’s largest generic drugmaker, and Tata Consultancy Services Ltd., the continent’s No. 1 software exporter by value.
Spokespersons for Reliance and Sun didn’t respond to e-mails seeking comment. TCS spokeswoman Harsha Ramachandra declined to comment.
The Companies Act, which replaces its almost six decade-old predecessor, introduced class action suits, one-person companies, capped auditors’ tenures and increased the number of independent directors on the boards of listed companies in an effort to improve governance.
The law seeks to ensure more female oversight on how companies are run in the world’s largest democracy that is battling the worst sex ratio since independence in 1947. A 2007 study by McKinsey & Co. found that European companies with women in senior management reported higher return on equity, better earnings and steeper stock price gains than their peers.
A study of 556 firms published in December 2012 by American Accounting Association’s journal ‘Accounting Horizons’ found that U.S companies run by boards with even one female director were 38 percent less likely to restate financial results due to errors or fraud. “A more diverse board might be a more activist board,” wrote the authors led by Lawrence J. Abbott at the University of Wisconsin, Milwaukee.
Heavy-handed enforcement could subvert the spirit of the law, according to Abbott, as some family-controlled companies choose to plug wives, mothers or daughters as board directors. The Indian law doesn’t specify if women directors have to be independent.
“Tokenism and nepotism clearly have the potential to diminish the benefits” found in his study, Abbott said in an e-mail reply to a query. “If the CEO’s wife is appointed to the board, I can’t really see too much benefit in that type of action.”
Susan Stautberg, who co-founded Women Corporate Directors around her dining table 13 years ago, said in an e-mail that her organization nurtures “boardable women” on “everything from what questions you could ask the investment banker trying to sell a deal, to where to sit, to when to ask a question or make a comment.”
WCD in India, headed by Ranjana Agarwal, is building a database of qualified female candidates for board positions.
“Corporates complain they can’t find women willing to be directors and our database can fill that gap,” she said in an interview. “The new law is definitely a catalyst. It will make companies look beyond the old boys club while hiring board directors.”
The local chapter of WCD also holds networking lunches and conferences, including one-day boot camps where women are coached to prepare their “elevator pitches,” which are typically 40-second speed conversations to best market a business idea if they were to find themselves in an elevator with an influential person.
Stautberg’s organization will have 58 chapters across 30 countries by the end of the year. Its members serve on more than 3,500 company boards with a market capitalization of $8 trillion.
She is also the co-founder of Belizean Grove -- a part sorority, part think tank, part job-creation “Stiletto Network,” mentioned by author Ryckman, who herself has worked in strategy for Merrill Lynch & Co. and Goldman Sachs Group Inc.
Modeled after the old boys club “Bohemian Grove,” this group takes off on annual retreats to places such as a 17th-century Colombian monastery, dons wigs and bustiers and discusses everything from military strategy to face lifts.
Nana Luz, an entrepreneur who started the management consultancy Softype Inc., also established the Mumbai chapter of “85 Broads,” which is a global network of 30,000 corporate women. Started as a mentoring platform for and by female executives of Goldman Sachs, the group picked on the former address of its New York headquarters, 85 Broad Street, and has since spread to alumni and students of Ivy League universities.
“I don’t hear women recommending or mentoring other women in India unlike the developing countries,” said Manila, Philippines-based Luz, in a telephone interview. “They are more reticent.”
85 Broads, which has 140 women in its Mumbai cell, hosts talks, dinners and even an annual trek during rains around the city. Luz is currently planning a round table in India early next year on preparing women for board memberships.
Egon Zehnder’s Jhangiani too hosted a dinner last month for 20 of her fellow women alumni from the Wharton Business School and finds that such platforms are still evolving in India.
“After office hours, women prefer to be back home with their families at the earliest,” said Agarwal. “We hope to provide platforms at such times where women can network without all the stress.”
Malhotra, who served as a member of a government-appointed panel to draft the bill and is an executive director at the $2 billion Spice Global, said the one- to three-year window offered by the law could be used by women to prepare for openings.
Karnataka Bank Ltd. appointed its first woman on its board, according to an Aug. 8 exchange filing. Billionaire Azim Premji-owned Wipro Ltd. brought in former McKinsey & Co. partner Ireena Vittal on Oct. 1. Wipro spokesman Vipin Nair declined to comment. Vittal has also been on Indian Hotels Co.’s board since Aug. 7.
India is following Norway, which enforced a law a decade ago requiring publicly-traded companies with over 10 employees to be run by a board with at least 40 percent women. Spain, Germany, the Netherlands, France and Iceland either plan to, or have already implemented similar gender quotas.
“A company is more successful if it has a multi-talented, multi-generational, multi-regional and multi-gender board,” said Stautberg. “Boards need the best people, not best friends.”