Although many scientific studies have examined the relationship between the
gender gap and appreciable economic performance, their results are similar. Many
countries have political and social debate in promoting gender equality and the
representation of women in business. The gap has yielded no clear evidence of a
link between female representation and firm performance has generated
uncertainty among investors, policymakers and executives around the world.
financial success is an inherent component of any organization, economic impact
of increasing the representation of women on boards of directors can be
determined if, and how, regulations promote women in higher positions.
Therefore, this article explores the general relationship between performance
and female representation.
The activities of the company or organization is supervised by the board of
directors. It hires and supervises senior management, serves as the company's
main corporate governance and sets corporate strategy. The actual performance is
affected from defining business strategy by board of directors. The positive and
negative effects of diversity depend on whether they are mutually exclusive or
how they are managed.
Diversity is often seen as a double-edged sword, which
means that there are more positive and negative effects of increasing diversity.
Furthermore, preliminary studies have shown no clear consensus on the
effectiveness or harms of gender diversity.
At first glance, corporate boards
show a relationship between female representation and economic performance, with
diversity and overall performance being positive negative or non-significant.
Therefore, it is not clear to what extent the increased representation of women
on corporate boards correlates with the observed performance.
For gender equality, leadership positions should be considered for women.
The goal is to ensure greater female representation, but not to increase
performance. Therefore, business performance may not be associated with
proportion of women on boards, but more women on boards reflect "real world"
also financial results contributed by gender-related factors.
indicates that a better performance is associated with higher proportion of
women as group has heterogeneous directors with varying economic growth and
success. An end result not shown in the last two cases is a negative correlation
between a high proportion of women and good performance.
Objectives of the Study
The objective of the study is to try and identify the correlation between
the performance of the company and having female representation on board of a
There has been a debate about the representation of women in business over
years. "Global Gender Gap Report 2020" states that "there would be still 100
years to achieve gender equality based on current progress."
Is it possible to have gender equality in companies and whether is it
useful to have women on board?
- What is the condition of women on board of companies?
- Is there any provision in the law to safeguard the position of women on board?
- What is the relation between having women on board and the company performance?
My study is based on "Doctrinal Method.
" There are many concepts or
doctrines in this regard. The resource materials are secondary. I have used
secondary assets like books, articles, and journals, and Internet-based
"A woman with a voice is by definition a strong woman, But the search to find
that voice can be remarkably difficult."- Melinda Gates, Cofounder and Co-Chair of the Bill and
Melinda Gates Foundation
People have dreamt establishing of a just and equal society by destroying of all
forms of inequality in society, tearing of all borders.
Why focus on the women on the board?
The women on the board is measured as an indicator of gender performance,
therefore it is focused. Also, having more women in the group is detrimental to
other employees. For example, it breaks stereotypes about women in leadership
positions and encourages women to live lives they don't think they can achieve.
By nurturing women's "professional imagination", and increasing their ability to
lead by example and express themselves in leadership roles, barriers to greater
diversity in the board can be broken. Many of the women in the board have a
strong identity and are inspired by cultural change which suggests that women
can become leaders.
It is financially material to have the board with more women. The
"McKinsey & Company Diversity Wins report 2020" found that "companies whose
boards are in the top quartile of gender diversity are 28 percent more likely
than their peers to outperform financially and found this relationship
However, other research indicates that gender
diversity is important in the boardroom, as they allow more skills, perspective,
and experience to make better decisions. A significantly statistical
relationship with overall growth globally is found as more companies are hiring
Having more women in the group prevents them from taking more
risks, reduces aggressive tax strategies and improves company reputation,
revenue levels, and performance consistency. Companies and their shareholders
should not ignore these decisions, especially when faced with a global pandemic
that is forcing companies to differentiate themselves from their business
For companies with more women in the group, the average number of women
with different responsibilities is slightly higher. These companies is highly
diversified and gender-sensitive, or they may employ more women on their boards
However, it is not clear whether companies with a diverse
workforce are hiring more female directors, or whether greater diversity in
boards of directors contributes to this trend. Therefore, it is not surprising
that companies with women on their boards of directors have women in the
workplace and since this relationship is not significantly statistical, it is
not reasonable to make a comment about the relationship between the two.
In addition, there has been an increased representation of women in sectors
such as hospitality or catering that have been hit hard by the pandemic. These
inequalities affect certain groups of women based on race, religion, ethnicity,
ability, gender, and etc.
Companies Law, 2013
The Companies Act, 1956 provides no opportunity for female directors and
the Companies Bill, 2011 was referred to Parliament for examination and
report on the Companies Bill by the Standing Committee on Finance. The "Standing
Committee on Finance" recommends "Appointment of at least one-woman director has
been proposed to be mandated in such class of companies as may be prescribed.
The class shall be prescribed through rules. This is likely to be in line with
the policy of the Government for encouraging more and more women participation
in decision making at various levels."
The "Ministry of Corporate Affairs"
"It is hoped that such indicative provisions will make the companies
more alive to giving salience to the female gender in the realm of corporate
governance. It is also in line with the Government policy to encourage women's
participation in decision making at every level in the society."
In other words,
with the enactment of this law, the government has encouraged more companies to
add female directors to their boards of directors, thus reducing gender
inequality and decreasing gender inequality in India.
As per "S. 149 of the Companies Act, 2013" read with "Rule 3 of
Companies (Appointment and Qualification of Directors) Rules, 2014", the
following class of companies shall appoint at least one-woman director:
- Every listed company.
- Every other public institution having:
- Paid-up capital of Rs 100 crore or more; or
- turnover of Rs. 300 crores or more.
In the event of a vacancy in the position of a woman member of the Board of
Directors, such vacancies shall be filled at the next direct meeting of the
Board of Directors or three months after the date of the vacancy of the
Paid up share capital or Turnover is as of the closing date of the
last audited financial statements.
Corporations incorporated under the Companies Act, 2013 are required to
comply with this section within six months from the date of incorporation. For
corporations incorporated under the Companies Act, 1956, corporations must
comply with the rules within one year of enactment of the Companies Act, 2013.
With the enactment of the Companies Act 2013, the inclusion of female
directors in a particular class or classes of companies has raised a bar, so the
governance. In order to make fair and ethical decisions, they make decisions
based on the interests of stakeholders. This not only creates a public image but
also attracts more production and sales. It's not just a matter of media
attention but also financial return. Failure to address gender diversity could
lead to economic consequences in the future.
Asia-Pacific: Percentage of women on the board
An industry-specific approach helps to show positive trends and identify
underdeveloped areas. Basically, most companies that deal with clients have
better female representation in the workforce and at the junior management
level. The financial, healthcare and real estate sectors are doing well. The IT,
industrial, utilities, energy and materials sectors are lagging far behind.
"Gender stereotypes that emphasize the role of women as the main
caregivers and that of men as the main breadwinners remain deeply ingrained in
some regions." Investing in women's skills at an early stage reduces
organizational risks. Having more women in leadership positions reduces the cons
of issues of inequality and gender pay gaps and female competence. Companies
facing these issues can benefit from lower compliance costs in the future based
on expectations of transparency and improved regulatory frameworks around
Equal employment opportunities for women and men in the
workplace allow companies in a competitive environment to differentiate
themselves from their peers. In addition, fair compensation systems and
representation improve employee engagement, talent attractiveness, retention,
Regulatory frameworks in companies are the driven force towards increasing
gender equality. Since 2012, the European Union has been working in this field
and the Council is proposing a decree in favor of equality on corporate boards.
As a result, the six-member states of the European Union, namely Portugal,
Italy, Germany, France, Austria and Belgium have adopted a mandatory provision
for gender board diversity.
The other countries - The UK, Spain, Denmark,
Luxembourg, Sweden, the Netherlands, Poland, Finland, Slovenia and Ireland -
have agreed to soft and non-binding quotas. Greece, which previously held a
small stake, by the end of 2020 announced a 25% binding effect. Malaysia in 2011
adopted a policy stating that companies having more than 250 employees must have
at least 30% female directors by 2016. India introduced the Companies Act in
2013, to have at least one female director in public companies.
of women will be at least 30% by 2022 in state and mixed-cap companies of
Brazil. The United States, California approved a quota for public companies in
2018 that will be reached by 2019 or 2021, depending on the size of the board.
The following is a summary of other countries have also adopted binding and
Countries with regulations or recommendations of European companies have a
greater number of women on the board the average percentage of women on the
board is higher than the regional average. In fact, when analyzing the
performance of companies as part of the company's sustainability assessment
across the country, we see that countries with binding quotas performed better
than countries with a gender gap.
Why are the benefits low?
To achieve gender equality in business, it is not enough to focus on having
more women on boards of directors. but why?
There are many factors:
- Women have been discriminated against in business for decades due to
their limited experience in the industry, undermining their legitimacy.
- Including women as non-executive or independent directors does not lead
to the desired results because the executive members have more say. This
works well not only on boards but also on two-tier boards with both boards
and attention is being given to gender representation just on the
supervisory board and not executive boards.
- Women often face negative situations in the workplace that make them
feel inferior to men, their opinions not being treated equally in the
- Just because they are women doesn't mean they are diverse and part of
- Having more women on the board does not mean that there are more women
on the board overall. In some countries, on average, women have more
directorship than men, which means that many companies have the same women
increasing the board diversity numbers for multiple companies rather than an
increasing number of individual women taking up these positions.
Therefore, to measure a company's gender performance, the percentage of
women on the board cannot be used. The gaps can be identified in a more
meaningful way given the broader representation of women within the
Less attention is paid to the number and leadership of women at the
executive level and given attention only to position in board. This has led to
positive growth and the proportion of women in board has increased in all
sectors in recent years.
How can companies ensure that women retain talent and bridge this gap
between the proportion of women in senior and junior management? It's a way to
explore family protection policies because women take on more workloads and
responsibilities in their personal lives. The biggest challenge is when they
don't leave the workforce to advance in their career. Therefore, companies
should ensure gender equality in the workplace by focusing on improving
work-life balance policies.
Female directors are "more likely than their male counterparts to probe
deeply into the issues at hand" leading to robust intra-board deliberations by
asking more questions. Women bring different viewpoints, experiences, ideas, and
perspectives than men. Women think about the people behind the value of company.
Women are better at conveying their expectations and ideas as compared to men
with more emotional intelligence and more systematic board work.
Companies need to hire more women for leadership positions. Diverse teams
work better, allowing companies to learn new skills and drive innovation and
efficiency. Having more women in senior management helps to ensure skill and
experience to become a board member, companies align with the increasing number
of regulations and fulfil their role of reaching their quotas, adapting to the
increasing proportion of women on the board and hiring team members.
There is a weak correlation between the junior management positions and
percentage of women in the workplace. However, the proportion of women in
leadership positions has improved over the years. Progress is slow, and there
are setbacks along the way, but it takes time to overcome addiction on so many
levels and build skills and experience, and this trend is encouraging.
- World Economic Forum (2020). Global Gender GAP Report 2020,
- McKinsey & Company (2020). Diversity wins: How inclusion matters.
- Mca.gov.in. 2011. COMPANIES ACT, 1956. https://www.mca.gov.in/Ministry/pdf/Companies_Act_1956_13jun2011.pdf
- World Employment and Social Outlook � Trends 2020, https://www.ilo.org/global/research/global-reports/weso/2020/lang--en/index.htm
- www.mca.gov.in/. 2011. The Companies Bill, 2011. https://www.mca.gov.in/Ministry/pdf/The_Companies_Bill_2011.pdf.
- The Companies Act, 2013, Section 149, No. 18, Acts of Parliament, 2013
- Companies appointment and qualification of directors rules, 2014, Rule
3, 2014 (India)
- Froehlicher, M., Knuckles Griek, L., Nematzadeh, A., Hall, L. and
Stovall, N., 2021. Gender equality in the workplace: going beyond women on
the board. https://www.spglobal.com/esg/csa/yearbook/articles/gender-equality-workplace-going-beyond-women-on-the-board
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