Will nepotism solve India’s women problem?

Nita Ambani moves centre stage. Image: Reliance Foundation. 
Nita Ambani moves centre stage. Image: Reliance Foundation. 

In June last year Reliance Industries appointed its first ever female board member. A breakthrough for diversity and equality in Indian businesses? Not really, said critics, as the woman in question was Nita Ambani, the wife of Reliance’s CEO Mukesh Ambani. Even worse, she was only appointed because the Securities and Exchange Board of India brought in a rule saying that companies have to have at least one women board member.

“It shows corporates are not ready to diversify in the true sense of the word,” said one sceptic. “They don’t want any dissent on their board and want to remain an old boys’ club.”

Well, almost a year on Mrs Ambani’s appointment looks positively progressive, as very few firms have complied with SEBI’s rule. Of 15,004 directors in Indian firms, just 1,283 are women. The deadline to comply has been extended by six months.

In fact, it is pretty patronising to suggest that Nita Ambani is a token appointment. Her ascension had been mooted for years, and she has long been seen as the “soft power” in the Ambani family. The chairs the Reliance Foundation, headed the greening of Reliance’s factories, and is also on the board of Reliance-owned East India Hotels.

So what if she got the job because of her husband? There is a history of able women assuming power in family firms through their male family members. Some took over when they were widowed – such as Barbe-Nicole Clicquot-Muiron, who took over her husband’s champagne house when he died. It became Veuve Clicquot – veuve means widow in French.

Charlene de Carvalho-Heineken took over her father’s brewing business. So what? Susanne Klatten inherited her father’s shares in BMW and pharma company Altana. So what? It might be better if society were more equal and women got a better shot to make their own fortunes, but it is odd to want women to attain positions of power, and when they do to complain that somehow the way they did it is not good enough.

Family businesses are a wonderful route for women to attain wealth and power. In 2011 research by the UK’s Institute of Family Business found that 44% of UK family businesses directors were women, compared to 32% for non-family firms. Over a third of family businesses in the Gulf have one of more female members.

Women often have other roles in family firms. Women who are wives and mothers are often the “glue” that keeps a family together, or can be seen as the “chief emotional officer”, says Christine Blondel of Insead business school.

That said, it is still important to get women into official positions of power. The real challenge is making sure that women are equipped for the job when they get there. “For these business to truly benefit from the presence of women they need to ensure women are not placed on boards as a form of tokenism,” says Shaheena Janjuha-Jivraj, co-founder of Boardwalk and an Associate Professor at Henley Business School. “This means women need to have appropriate board leadership and governance training.”  

Having one women at the top table is not enough, Janjuha-Jivraj adds, saying that “gender diversity for boards is effective when there is a critical mass of 30% women on boards to challenge assumptions around business decisions.”

It might take a while for Indian firms to reach that level. For now, though, board members at Reliance will get used to seeing a woman in the room. That has got to be a step in the right direction. More power to Mrs Ambani – and here’s to more nepotistic appointments in Indian businesses before October.