How can we get more women in the boardroom?

We have made significant strides towards gender equality in the last couple of decades. However, despite this progress, women are underrepresented in the higher echelons of the corporate world. According to the Deloitte Global Boardroom Programme’s Seventh Edition of the ‘Women in the boardroom: A global perspective’ Report, women hold an abysmal 3.6% of board chairs in the country.

Yet, more equitable representation of women on boards is necessary to both foster gender equality as an important societal goal and also for business reasons. Research in management finds that gender-diverse boards have a wider range of unique competencies and help firms create more novel, impactful innovations, gain better access to new markets since they better represent their stakeholders, improve governance through better advisory quality, and improve women’s opportunities and motivations to participate in the labour market.

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Gender diversity in the upper ranks trickles down to achieving different kinds of parity at all levels of the organisation, steadily building a more inclusive work culture, where everyone is valued and there is trust and psychological safety for minority groups.

So, how do we get more women into the boardroom? A popular practice, adopted in countries like Norway, is to effect quotas on boards through regulatory reform. While this reform may be valuable from a gender equality perspective, the business case for quotas is ambiguous with a bulk of research reporting that the economic performance effects of such reservations are negligible. Quotas lead firms to focus on diversity targets rather than the benefits of diversity, foster the assumption that diversity is detrimental and result in tokenism that adversely impacts women members’ legitimacy, effectiveness, and future selection of women into boards. These perceptions are amplified in countries like India, where women's participation in the upper levels is limited, resulting in a narrow pipeline.

The alternative is a three-pronged approach. For starters, incorporate diversity as a key organisational value and measure progress. For example, the widely disseminated Financial Times ranking of business schools highlights schools that are doing the best and worst on diversity in the board, faculty and classroom. Such measurement and dissemination creates institutional pressures for firms to diversify across all levels in the firm and build a broader pipeline of candidates within the firm.

Secondly, reform the search process for qualified female candidates towards greater professionalisation. This includes both expanding the search beyond the narrow pool of current and prior CEOs and directors, and also formalisation of selection methods — wide posting, advertising and vetting processes that look beyond the current board. A study by PwC finds that the most common methods used to recruit new board members are recommendations by existing directors, identification by the board’s nominating committee and by the CEO and other outsiders. Professional search is a distant fifth option. Yet, this is important since women face far more barriers in accessing informal networks at senior levels in their organisations, thereby negating their inclusion.

Finally, diversity without inclusion is moot. Indeed, research finds that in order for boards to circumvent tokenism and derive the real benefits of gender diversity, it is important to have at least three women on the average-sized board. Only then do members feel psychologically safe to voice unique perspectives and break free of groupthink. Therefore, it is important to create an organisational culture that is conducive to diversity of thought and change the circumstances that have historically given rise to inequalities in the firm, through a transformation in policies, practices and organisational structures.

Most importantly, the foundation for achieving greater gender parity in the upper echelons is achieved by us as a society. Beginning with having more role models for our girls that will make women leaders an aspirational reality, and by designing organisations that welcome, encourage and retain more women in the labour force.

(The writer is the Deputy Dean of Executive Education and Digital Learning, and a Professor of Information Systems at the Indian School of Business (ISB).)