Over 25% of India Inc’s directors have an MBA

Given the popularity of an MBA degree in India, an MBA/MBA-equivalent is the most commonly held qualification among directors on boards of companies. A study by executive search firm Executive Access India — done exclusively for TOI — says more than a quarter (26%) of directors, on an average, hold an MBA/MBA-equivalent degree, followed by a non-MBA master’s degree (22%). An engineering degree comes in third with only a fifth of board members holding such an educational qualification.
In terms of subjects of specialization, economics stood out with around 10% having either a graduate or higher degree in the subject. In what reflects poorly on diversity on boards, nearly half the directors (47%) across industries were specialists in their respective fields. Retail and financial services have close to 67% of directors with significant experience within their respective industries.
While most corporate boards are seen to be taking measures to move the needle with respect to gender diversity, the Executive Access study covering 1,095 directors across 106 companies from across industries reveals a lack of general diversity on boards with respect to education, age and region. Auto industry had the highest composition of engineering graduates (30%) as directors, while in FMCG, 34% directors had MBA degrees. In banking, chartered accountants (CAs) held almost 30% of board positions.
Retail saw the lowest percentage (11%) in master’s degree (not including the MBA), while it was the highest for the MBA/MBA-equivalent (38%), indicating a strong preference for MBAs on the boards of these companies. Hotels, on the other hand, saw the lowest MBA degree holders (14%), engineering degree holders (6%) and PhD holders (2%).
Ronesh Puri, MD, Executive Access India, said, “Moving towards diverse boards is the next stage of evolution for organisations as they face bigger challenges of disruptions going forward. Boards need to prepare themselves with diversity of different kinds to withstand disruptions and look ahead. Boards need to help the management to innovate more and faster as shelf life of any product or service is reducing fast. For ensuring this, boards will get better outcomes when they have more diversity of backgrounds and mindsets.”
Among companies with greater board diversity, Dr Reddy’s Laboratories (DRL) had the highest representation of people from different industry backgrounds. As against the industry average of 35% of board directors with non-pharma background, DRL has 60%. Bajaj Finserv has a mix of 80% directors from the non-finance space while the industry average is at 35%. ICICI Prudential’s board is composed of 42% engineers while the industry average is only 15%.
As against the FMCG industry average of 5% CA directors, Nestle has almost 30% of CAs on its board. A Nestle India spokesperson said the company’s policy is to have broad experience and diversity on the board of directors, which embraces knowledge and understanding of relevant diverse geographies, people and their background, diverse culture, personality and work-style.

Source: TOI- times of India