By TV Mahalingam, ET Bureau | 23 Jan, 2015
Meet Mr Imaginary Gupta, 58 years old, B.Com graduate & an average Indian board member, who is pushing sixty & doesn't have an Ivy League education. CD recommends 3 things that India Inc can to do to revitalise its boards.
Corporate Dossier recommends three things that India Inc can to do to revitalise its boards:
More Diversity
Thanks to the New Companies Act, women constitute nearly 9.5 per cent of India Inc's board strength. But, take a look at the list of most common surnames of Indian board directors. It's the Guptas, Jains, Agarwals, Shahs, Singhs, Patels — communities that have traditionally dominated Indian business.
"Trust and compatibility are cornerstones of Indian business," says R Suresh managing director, RGF Executive Search. "If you want a new board member, why not look at a partner or the founder of a professional services firm or a member of a family business not competing with you? That's how most Indian promoters think."
Only 3.5 per cent of Indian board directors are foreigners, a number that should grow as India Inc goes global.
Get Younger
The average Indian board member is 58 years old and ageing. "You have a scenario where CEOs are getting younger, while board members are getting older. What we need is a fresh infusion of talent," says ISB's Ramachandran. The problem is compounded by the fact that everybody is hiring from the same small pool.
Why is it important to get a right mix of age? "Older board members are often unwilling to back the futuristic bets that CEOs want to take, simply because they don't understand new businesses,"says an executive. Adi Godrej, Chairman, Godrej Group, says that a balance between youth and experience must be struck. "We have people in their 30s and 40s on our boards," he says.
More Management Professionals
Less than 3 per cent of directors are IIM graduates. Only 0.7 per cent have both an IIT and an IIM degree - a stark contrast with a study by EMA Partners which found that IIMs produced nearly half the CEOs in the top 200 companies.
"Indian companies tend to hire professionals with IIT/IIM qualifications in roles which involve execution. They look at boards as entities that bring in wisdom and perspective,"says Mohinish Sinha, Director, Hay Group. Then there's the skew towards finance professionals.
"Typically, board chairmen tend to have people who educate them on issues like accounting, taxation. That's why boards are filled with CAs, ICWAs," says Kavil Ramachandran, professor specialising in family businesses at ISB, Hyderabad. Ramachandran urges Indian promoters to look at boards as not just ornamental bodies set up for fulfilling regulatory guidelines but as engines that can drive strategic growth.
Data Source: www.nseinfobase.com (developed & powered by PRIME Database)
More Diversity
Thanks to the New Companies Act, women constitute nearly 9.5 per cent of India Inc's board strength. But, take a look at the list of most common surnames of Indian board directors. It's the Guptas, Jains, Agarwals, Shahs, Singhs, Patels — communities that have traditionally dominated Indian business.
"Trust and compatibility are cornerstones of Indian business," says R Suresh managing director, RGF Executive Search. "If you want a new board member, why not look at a partner or the founder of a professional services firm or a member of a family business not competing with you? That's how most Indian promoters think."
Only 3.5 per cent of Indian board directors are foreigners, a number that should grow as India Inc goes global.
Get Younger
The average Indian board member is 58 years old and ageing. "You have a scenario where CEOs are getting younger, while board members are getting older. What we need is a fresh infusion of talent," says ISB's Ramachandran. The problem is compounded by the fact that everybody is hiring from the same small pool.
Why is it important to get a right mix of age? "Older board members are often unwilling to back the futuristic bets that CEOs want to take, simply because they don't understand new businesses,"says an executive. Adi Godrej, Chairman, Godrej Group, says that a balance between youth and experience must be struck. "We have people in their 30s and 40s on our boards," he says.
More Management Professionals
Less than 3 per cent of directors are IIM graduates. Only 0.7 per cent have both an IIT and an IIM degree - a stark contrast with a study by EMA Partners which found that IIMs produced nearly half the CEOs in the top 200 companies.
"Indian companies tend to hire professionals with IIT/IIM qualifications in roles which involve execution. They look at boards as entities that bring in wisdom and perspective,"says Mohinish Sinha, Director, Hay Group. Then there's the skew towards finance professionals.
"Typically, board chairmen tend to have people who educate them on issues like accounting, taxation. That's why boards are filled with CAs, ICWAs," says Kavil Ramachandran, professor specialising in family businesses at ISB, Hyderabad. Ramachandran urges Indian promoters to look at boards as not just ornamental bodies set up for fulfilling regulatory guidelines but as engines that can drive strategic growth.
Data Source: www.nseinfobase.com (developed & powered by PRIME Database)
CAclubindia
