Article (January-2019)


Take voluntary steps to build investors confidence

Shrikant Lonikar

Designation : -   Director and CHRO

Organization : -  Pernod Ricard for Gulf, SAARC Region and India, Gurugram


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How do you define the good corporate governance?
SL Presently, companies across are practicing sound corporate governance, by astutely following the rules/policies as imposed by the Companies Act. In my view, good corporate governance involves going a step further than just implementation of mandates like ensuring transparency incompany operations among internal and external stakeholders. Companies gain recognition for good corporate governance when they take voluntary steps to build investor's confidence, clearly defining the tasks/roles of various stakeholders while also empowering them with the requisite resources, and demonstrate good corporate citizenship through environmental awareness and sustainable practices.
How do you evaluate the functioning and competence of Indian boards & its directors in present business scenario?
SL The board members of companies are empowered and responsible for the proper functioning of the business, compliance to policies and transparent management. With commensurate compensation and clearly defined controls, the Indian boards and its directors hold major accountability and responsibility for overlooking corporate governance practices. In addition, the government also mandates the appointment of independent directors who add value to the board with their experience and are responsible to closely evaluate the functioning of each board member, and even the whole - time employees. With a view to effectively manage the dynamic present business scenario, transparency in management practices is expected at all levels, by the stakeholders - internal and external.
Why gender diversity on boards matters? Is it limited to compliance mind set or beyond that in India?
SL A corporate board with diverse representation, will surely be more effective in its management and decision making as it is more likely to have evaluated varied opinions, point of views and options before taking a collective action. A gender diverse board holds larger importance in the present industry dynamics, where women are gaining greater share of voice and holding more seats on the table. The new Company Law surely mandates certain reservation for women to be part of the board, for select companies. This is bound to impact the compliance mindset of promoters, and become just a mandate they follow. Women are at par with men, today, gaining instant recognition and proving meritorious across various fields including business. However today, an increasing trend can be witnessed where women are firmly holding major positions in corporate boards, across industries. As women turn out to be the major audiences/primary set of consumers to large organizations, having a woman on board only serves to add the right inputs and valued opinions for better decision making and in turn, profitability.
Do you think that "diversity" and "inclusivity" in Boards can help making governance more transparent and responsible to stakeholders?
SL Any board with diverse representation will surely gain major relevance among its stakeholders, owing to people who represent different backgrounds, experiences and perspectives. Such board is perceived to be well - rounded, informed and respectful to others by the stakeholders. Good corporate governance in such a scenario will be a result of an inclusive and competent set of directors, pro-active in their actions and ethical in their management.
Is it necessary at all to accelerate gender diversity on boards and if yes, how?
SL The government has taken a remarkable step in ensuring gender diversity across boards, with its mandate. This step signifies the large impact a gender diverse board holds in today's corporate scenario. Stakeholders are increasingly demanding more transparency, with deeper dives into the critical functioning of each board member by way of audits and independent directors. Such actions, as mandated by law, will only lead to more and more corporates voluntarily welcoming women on their boards. To accelerate gender diversity on boards, organizations ought to develop programs and training options for potential women directors to get ready for the roles at a faster pace. This will also be in the interest of enterprises, who will have a ready pool of competent gender diverse potential directors. In the coming years, it would be a delight to watch more women take up leadership positions in boards across industries.
Does the presence of Independent woman director impact the corporate governance?
SL An independent board of director is appointed as part of the board to improve the corporates' credibility and governance standards. They are empowered by the government to ensure better governance by actively being part of various committees of the company. They bring an objective view in evaluating the performance of the board and management of the company. Irrespective of the gender, the impact that an independent director makes to the organization is directly related to their competency and experience.