Indian boards need to embrace diversity for innovation

Experts are calling for a change in how boardrooms in India operate. They believe companies need to embrace diversity to unlock innovation. Change is necessary as the demands of employees have shifted since the pandemic. Issues like diversity, equality, and inclusion are now more critical than ever. A recent discussion organized by Mint and JSA focused on improving diversity in corporate governance in India. Experts agreed that board diversity is essential for generating new ideas. They emphasized the need for a different approach when selecting directors, advocating for input from all shareholders rather than just dominant ones. A significant point made was the separation of the roles of managing director and chairman. This would prevent conflicts of interest and promote better corporate governance. Independent directors should be genuinely independent, ensuring that they can voice their opinions without fear of reappointment. Gender parity remains a challenge, as highlighted by U.K. Sinha, former chairman of the Securities and Exchange Board of India. He noted that a strong pipeline of women leaders is necessary to achieve gender balance on boards. The discussion also touched on the effectiveness of compliance, with experts urging companies to go beyond just meeting requirements. Diversity is linked to better innovation, making business sense. However, there are concerns about whether companies are truly committed to diversity or merely checking boxes. A recent survey found that Indian companies plan to maintain their diversity initiatives, despite shifts in attitudes abroad. Several experts pointed out that there is a lack of skilled workers in India, which companies must address. A comprehensive approach is needed to reform the education system to be more skill-based. Additionally, there was a consensus that AI will create more jobs than it displaces, but it requires collaboration between government and industry to maximize its potential. Overall, while India has made progress in achieving gender diversity on corporate boards, there is still a long way to go. Current data shows that as of August 2024, 26.8% of board directors are women, a marked increase from 16.8% in 2016. However, this is still lower than countries like France, Germany, and the UK, where the figure is around 40%.