BUSINESS MANDATE
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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
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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
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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
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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
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BUSINESS MANDATE
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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.
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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
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