Gender Diversity Feb 2022

BUSINESS MANDATE

fountainhead of excellence

1 FEB 2022

BUSINESS MANDATE

fountainhead of excellence

41 FEB 2022

The need for an inclusive and diversified culture in an organization is indispensable. In India, the Companies Act 2013 and SEBI regulations mandate the presence of at least one woman on the Board of Directors in certain companies. Many Indian companies have taken only symbolic actions to evade penalty.

What are the probable solutions to increase the effectiveness of D & I initiatives? Excerpts from the address by Dr Amarnath Ananthanarayanan in the Special Session on D & I.

T

he role of the board is to provide direction to

aspects as well. 50% to 70% of retail consumer demand

the ship, steady the ship and when issues come

comes from women. If they don't have a place in the

up, it must do course-correction. They don't

board, you will probably never get their perspectives

get into day-to-day operations or set targets. They set

to address your consumers. McKinsey and Grant

the direction and make sure the team achieves it. Why

Thornton studies have shown that companies which

should the board be gender sensitive? Why should there

have women in the board tend to do better than those

be gender diversity? First, obviously to get different

that have all-male managed boards. Credit Suisse

perspectives. Women are sympathetic. There are other

reported that share prices of women-led companies are much higher. Many studies have shown that there is a higher rupee value or dollar value of having women on the board.



There are two aspects: one is

The glass ceiling and glass wall

diversity, which is getting

42

FEB 2022

The challenges that women face can be categorized

women a seat on the board

into two: the glass ceiling and the glass wall. The glass

table. The other is inclusion,

ceiling is a sort of roof or benchmark beyond which

which is making sure they have

women may not get promoted or move higher in an

a say in the things. Why is there

organization and more so, up to the board level. That

a lack of inclusiveness,

is because of gender stereotypes. We generally have a

especially at the board level?

masculine corporate culture. The glass ceiling is easy to fix by changing our mindset.

BUSINESS MANDATE

fountainhead of excellence

The other thing which is not so easy to fix and will

getting women a seat on the board table. The other is

take some time is what is called the glass wall. Women

inclusion, which is making sure they have a say in the

are in senior level positions in organizations; they are

things. Why is there a lack of inclusiveness, especially

pretty much in HR, Finance, Legal or other primarily

at the board level? One is the unconscious bias. There

support functions. But there are exceptions. If they

may be one woman and seven or eight other men in the

have to reach the board level, they need to have a

board who know each other for 20 or 30 years, who

rounded perspective, working across an organization,

would have played golf or tennis together and would

rather than being put in certain functional silos.

have gone to concerts together. They may go out for a party and not include the woman, not because they

Labour to labour

want to exclude the woman but it is natural for them

The other challenge they face is when they return

to go partying. They may have informal chats and close

from labour (maternity) to labour force. This is a fact

some board related matters and the woman may not

of life and you have to face it. What organizations can

be involved. To overcome this unconscious bias,

do is to facilitate with changes like flexible working

training has to be given to make sure that people reach

hours, working from home and a lot of other solutions.

out to women.

Women can't run away from family commitments. My mother was a working mom and the breadwinner when she got married. Once I was born, she called it quits, to take care of me.

The second thing is a more serious and a bigger problem, which is the conscious bias. The regulatory quota may be filled but women board members are deliberately not allowed to speak nor placed in

There are two aspects: one is diversity, which is

important committees. This is where the impact of the

BUSINESS MANDATE

fountainhead of excellence

43 FEB 2022

regulatory controls and legal framework can come in



You may have old‐school and new school thoughts and

to help us out.

conflicts can affect

Quotas

performance. For instance, in Norway, they brought a

The next question is, should there be quotas for women at the board levels? The plus point is, it helps

regulation that 30% of the

women to break the glass ceiling and get a seat in the

board members need to be

board. Once the woman member goes to the board and

women, for listed companies.

performs, it can change perceptions about women, not

Lots of companies delisted or

necessarily within the board but across the boards of

became unlisted companies.

companies, as many of the board members are there in other boards as well. Women as role models can inspire other women to emulate them, just like P V

just happen. Even with quota or reservations, various

Sindhu and Saina Nehwal could do in badminton. If

studies reveal that wage parity across genders and

women are able to get to the top of the board, other

women moving to higher levels in the organization are

women will realise that they too can run the race. It

not really happening. To make quotas sustainable, we

encourages people. It makes them work hard and take

have to make sure that you have proper evaluation and

the extra rigour to succeed.

criteria to ensure that women get on the board on the

What are the flip sides of the quota system? With

basis of their credentials and not just because of being

any quota, the stigma of incompetence can come in and

a woman, more so, from a long-term perspective. In the

others may say, 'You are here because you are a woman;

short term, quotas can help.

it's not that you're good enough to be here.'

D&I: The Indian Scene

The other thing is, there could be splits in the boards which could affect board performance. You may have old-school and new school thoughts and conflicts can affect performance. For instance, in Norway, they

Coming to the Indian scenario, two things were driving D&I and these came rather slowly. One, in 1979, the United Nations held a conference in which it wanted to promote equality for women.

brought a regulation that 30% of the board members need to be women, for listed companies. Lots of companies delisted or became unlisted companies.

Two, the Constitution of India, in 2013 proposed that for certain kinds of companies, there should be a woman board member. In 2015, SEBI ruled that the top

The golden skirt

500 listed companies need to have one woman as an

One more problem which I see slightly in India but

independent director. In 2020, this was increased to

more outside is what is called the golden skirt

cover the top 1000 companies listed on the stock

phenomenon. This refers to a few women who are very

exchange. This is a regulatory thing that happened in

well qualified but they are the ones in all the boards.

India. With nomination or quotas, the change happens

With this, the dispersion or the trickling down does not

slowly. With the requirement of just one woman on the

44

FEB 2022

BUSINESS MANDATE

fountainhead of excellence

board, the critical mass required to make a change happen, is not generated. For example, in Germany, 40%



When it comes to inclusiveness,

of the board members need to be women. While the

the conscious bias prevents

India quota system is a step in the right direction, it

women directors finding their

has not really addressed the problem of the critical

place in important committees

mass.

like the audit committee. No doubt, a woman director on the

Jugaad

board is a good step. Now,

Let's look at the reality. There is something called

there is some positive

as jugaad, which India is very good at. There are huge

movement and we are able to

positives from it. During these times of Covid, jugaad

see some green shoots.

made a huge difference. Also, it has negatives. In India, when the regulation for woman director came, a lot of family members suddenly became board members.

Many women on the boards are around 30 years of age.

of the board.

There's nothing wrong in being on a board at 30. A lot of startups are like that. But if you are in a more mature

• Women directors must find a place in

manufacturing industry with a 50-year history and with

important

committees

like

the

audit

other board members with 30 plus years of experience,

committee and remuneration committee. Can

having someone 30 year old is always questionable.

we make sure that one of the members is clearly a woman? There are things that we can

When it comes to inclusiveness, the conscious bias

do from a regulatory perspective to make sure

prevents women directors finding their place in

that women not just get to the board but they

important committees like the audit committee. No doubt, a woman director on the board is a good step.

actually have a say in things.

• The glass wall by which people get stuck to

Now, there is some positive movement and we are able

various functionalities needs to be broken. No

to see some green shoots. But again, avoiding

regulator

inclusiveness and the stigma that someone is there on the board just because of regulations are still real in

can

do

this.

People

in

the

organizations must make it happen.

• We really need to look at post maternity

India. You can't be a rubber stamp for someone else.

evaluation to see what happens once people come back from maternity.

The potential solutions?

• We have to sensitize employees.

From a legal or regulatory perspective, how can we

• Creating quotas for women drives both the

give more teeth to make that gender diversity and inclusiveness happen?

men and women away from the organization, which is not a positive outcome. We must

• Instead of one person as a woman director, we can specify the requirement as a percentage BUSINESS MANDATE

make sure that women are doing good job and get their due respect.

fountainhead of excellence

45 FEB 2022

The GE way

that people enter at certain levels. We can follow

I have spent a decade or so in GE, which was really good at Diversity and Inclusion. The processes and practices which GE still follow are very good. They had something called GE Women's Network which gives all women an opportunity to get mentored or trained and to prepare themselves for the next role. After I left GE, I was in Bangalore during 2010-11 running an insurance

something similar but it needs to be clear that women get to the board because she is good and not just because of a quota. Normally, many women directors get appointed due to personal acquaintance and contacts and without any real headhunting. We need to move out of that and follow normal HR practices in appointing women directors.

company. GE still called me to one of their annual GE

Finally, apart from regulations, we need to address

Women’s Network and asked me to speak about various

the question of mindset. Unless we are willing to

things that are happening in my organization, so they

change our mindset, nothing is going to change. Instead

can also learn from it. It's a very nice platform to share

of waiting for the targets to be set based on regulations,

best practices and learnings. We have to retool to

organizations need to have voluntary diversity targets.

rescale. There has to be some criteria for women



entering the boards. RBI has a policy for making sure

46

FEB 2022

BUSINESS MANDATE

fountainhead of excellence