Healthier gender mix at the top is good for business prospects

One cursory look at the global gender equality map reveals that, invariably, the most prosperous and peaceful countries are the ones where gender equality is high, and where women participation in economic spheres is substantial.

Be it Scandinavian countries, such as Norway and Sweden, or a South American country like Chile, they have been able to foster and sustain high economic growth by ensuring greater gender equality through legislations and progressive social practices. Within Europe, low-income countries, such as Albania and Ukraine, are the ones that have lagged behind their European counterparts in terms of gender equality.

India ranks low in the gender equality index and scores lowest among BRICS countries. Therefore, it should not come as a surprise that we have the lowest per-capita income among the BRICS nations. Women constitute nearly half of India's workforce, but their participation in economic processes is far below their male counterparts. But the real disappointing aspect is that even in the corporate sector, which one assumes would have taken a proactive approach to gender assimilation, women's participation remains low, both in terms of absolute numbers as well as positions held.

The chasm is only wider at the top of the pyramid! A joint study by Khaitan & Co and Biz Divas released last year revealed that among the 1,470 public listed companies, the number of women directors on board were 350, representing only 4 per cent of the total number of independent directors on board! Another study by Anupama Singh of Lal Bahadur Shastri Institute of Management said that only 5 per cent of working women in India make it to senior leadership positions in the corporate sector, compared to the global average of 20 per cent.

Nonetheless, the good news is that sub-section 1 of Section 149 of the Indian Companies Act 2013 makes it mandatory for companies having a minimum paid up share capital of Rs 100 crore or an annual turnover of at least Rs 300 crore to appoint at least one independent woman director on their board. This translates into more than 900 positions to be filled. However, this good news is mitigated by the fact that legislative provisions are not backed by punitive measures in case of non-compliance. So, in practice, the provision becomes more of a guideline rather than an obligatory clause.

Going by the experience around the world, it is amply clear that countries, such as the US, Japan and China, which do not have strong legislative sanctions for women directors, lag behind in assimilating them in top decision-making processes, reinforcing the view that unless pushed, change does not occur. In contrast, countries like Norway, France and Italy have seen a number of women representatives on board jumping many folds ever since the respective governments implemented compulsory legislations. The case of Norway is exemplary as women representation in companies' boards increased dramatically from 7 per cent in 2003 to 41 per cent in 2013. Reason being Norway imposed serious penalty clauses, including dissolution of a company, in case of non-compliance. Countries that have not implemented penalties have seen far less encouraging results.

Nonetheless, India needs to be lauded. We are the first among developing countries that has put in place a legislative framework that could act as a roadmap for better gender representation at the top level. Still, corporates need to look beyond the provisions of legislation and actually look at the spirit of such laws with an open mind, as it is designed to help them perform better and not act as a constraint.

A simile can be drawn with the concept of CSR which faced stiff resistance when the idea was first mooted, as it was seen as a dent on profit and purpose rather than as a business facilitator and source of stability. The idea took some time to sink in, but now that it is part of established business practices, corporates have begun to discover and appreciate its intrinsic value. Similarly, corporates need to understand that if they wish to remain competitive, they need to capitalise on the tremendous advantage and potential that women leaders bring to businesses, and that greater gender mix is a boon and not a bane for business prospects.

It was with this understanding that the United Nations Entity for Gender Equality and Empowerment of Women (UN Women) and the United Nations Global Compact (UNGC) in 2010 came out with the 'Seven Principles of Women Empowerment'. The principles are designed to facilitate greater gender assimilation in economic processes and businesses with the objective to build stronger economies, achieve internationally agreed goals for development and sustainability, and improve the quality of life for women, men, families and communities.

First two of the Women Empowerment Principles (WEPs) exhort businesses to establish high-level corporate leadership for gender equality and to treat all women and men fairly at work. UN Women and UNGC believe that the private sector is a key partner in efforts to advance gender equality and empower women. It wants to drive home the point that ensuring the inclusion of women's talents, skills and energies - from executive offices to the factory floor and the supply chain - requires intentional actions and deliberate policies.

This, in practice, means adherence to legislative provisions is appreciated but moving beyond legislative tokenism is the call of our time, as years of research about business practices around the globe have conclusively settled the point that greater gender mix means better business and greater stability. Women empowerment definitely makes for a strong business case!

(The author is CEO, CARE India)