Number of women in top roles rises slower than number of women in company boards

The government's mandate to include women on corporate boards has increased their representation to 15.7% and improved financial health in large Indian companies. However, there hasn't been a corresponding rise in women occupying senior management roles, a ToI report (by Sidhartha) said on June 2.

A paper by NCAER economists Ratna Sahay, Navya Srivastava, and Mahima Vasishth has documented these findings while highlighting the progress and shortcomings in gender diversity since the April 2015 mandate, the report said. This paper will be presented at the India Policy Forum.

According to the report, the share of women directors has more than tripled since the mandate, a significant jump from the nearly stagnant period between 2007 and 2014. Despite this, women in top management roles have only seen a modest increase from 13.8% in FY2014 to 21.8% in FY23, it says.

India still lags behind the global average of 20% women on corporate boards and falls far short of the 43% seen in France, the top-performing country. The paper also notes that companies founded after 1991 generally have higher female representation, both in boards and senior management.

Interestingly, small-cap firms listed on the NSE have outperformed large-cap firms in board diversity, with women making up 16.5% of their boards in 2023 compared to 13.5% in large caps. This could be attributed to smaller board sizes, as small-cap firms averaged 2.5 women per board, while large caps averaged 4.7 women.

The paper analysed data from over 2,700 NSE-listed companies and found that women directors are typically younger, with an average age of 57 in 2020 compared to 65 for men. Additionally, women held more board positions on average, at 1.2 compared to 0.8 for their male counterparts.

The paper concludes that appointing more women in top corporate positions has clear benefits. Large companies with at least one woman director showed better economic performance, higher financial stability, and lower financial risk. It states:

In the paper, the authors said: "We find that higher shares of women in board positions are positively associated with employee ratings and sentiment scores, but the relationship is significant only when there is at least one woman in top management positions."