Women Economic Forum - 2016

Women’s Voices Completely Ignored in Governance - Why aren’t more Women Leaders coming up

Dolly DhamodiwalaCEO, Business Beacon Management Consultants

Email: [email protected]

Women Economic Forum, 2016May 20, 2016

What is Governance in the Corporate SectorCorporate governance is the System by which

Companies are Directed and Controlled ( Sir Adrien Cadbury, UK, 1992)

Corporate Governance specifies the distribution of rights and responsibilities among company’s stakeholders and articulates the rules and procedures for making decisions on corporate affairs

The Four Pillars of Corporate GovernanceAccountability – Ensure that management is

accountable to Board and Board is accountable to Shareholders

Fairness – Ensure protection of shareholders and treat all shareholders equally

Transparency – Ensure timely and accurate disclosures on all material matters including financial situation, performance, ownership and governance

Responsibility – Encourage cooperation between company and all its stakeholders in creating wealth, jobs and economic sustainability

Transformation of Businesses in IndiaTill the introduction of Structural Reforms in India in 1991,

Indian Industry was highly regulated. Compulsory Govt. Licensing to start and expand business. License Raj

Government Control on Industry was highReforms in Industry and Trade sectors under Manmohan Singh

Govt. ushered in several path-breaking and positive changes – Liberalization of Industry and Trade, Deregulation of Foreign

Investments and Imports led to rapid development and growth in Indian industry and Trade and the Economy as a whole.

Indian Industry and Services sectors were made globally competitive.

Reforms in the Banking and Financial Sector followed which strengthened the financial system

Women EmpowermentEmpowerment is Control over one’s life, ability to take

decisions and act upon those decisions – A sense of Independence or autonomy

Empowerment is a function of an individual’s attributes – Education and Economic Security

It is also a function of the Environment – Economic, Political and Cultural

The struggle for India’s independence provided an active role for women

The constitution also gave Equality to WomenOther movements followed triggered by local labor and

other issues like Dowry and Rape. Yet the impact has been limited

Local Governance under Article 243 of Indian ConstitutionThe Article Introduced democratic , decentralised

decision making and implementation of govt. policies at grass root level.

In spite of extending reservations to the marginalized sections, including women especially rural poor women their political and social participation has remained low

Indian society lends asymmetric power . Perpetuates exploitation of the marginalized sections like rural poor , uneducated rural women and landless laborers by the powerful landowners or private sector businesses .

Reasons for Exploitation and Suppression of Women’s Participation Lower level of literacy and Patriarchy hindering participation in planning,

decision making and implementation Inadequate devolution of powers – political, functional and financial Land, a major source of livelihood at grass root level is controlled by dominant

landlords In urban areas, the slum areas where majority of the economically weaker

sections live are owned by slumlords- Slums are vote banks for the politicians and voices of the weaker sections are suppressed

Low level of awareness about political and legal rights especially among women A colonial legacy of unchallenged govt. authority. Propensity to exercise power

arbitrarily against the marginalised sections perpetuates exploitation Weaker Implementation of legislations – Only on paper Reservation of Women in local governance Panchayati Raj Insts., (PRIs) at one-

third of total is only on paper.

Factors Constraining Voices of Women

Female literacy rate at 53.7 still below the 75.2 for males; Work participation at 25.6 is below the 57.9 recorded for

men Only 22.6 % representation of women in Panchayati Raj

Institutions (PRIs) and just 9 % - 10% in Parliament as against the stipulated 33%

Women are rarely members of organized groups and lack experience of formal training and negotiating skills Problem solving is rarely outside their homes. Too dependent on men

Most of all, active control by men over mobility and opinion inhibits the development of an autonomous voice for women.

Institutional Machinery for Women

The Department (now Ministry) of Women and Child Development (MWCD) set up in 1985 to look after advancement of women and children.

Lays down a set of structures and systems mandated to develop and implement programmes and policies for advancement of women

The National Commission for Women, NCW constituted in response to demands from various women’s movements. To play a lead role in lobbying and advocacy for gender equality in all spheres

They contribute an enabling environment within which women’s voice could be better heard.

In Industry, all major Chambers of Commerce and Industry Associations have a Women’s Wing.

Leading Public and Private Sector Banks and Financial Insts. like SIDBI and MUDRA have started special financing schemes for women. A special Bank for Women has been set up

Family Managed Businesses in IndiaHistorically over 75% of Indian Businesses

have been Owned and Managed by Families. Usually promoted by the Patriarch of the Family

Among the Listed companies, The Birla group, Reliance group, Godrej group, Mahindras, Bajaj group, the Piramal group and the list goes on.

The Tata group has been somewhat an exception. Largely Professionally managed and governed.

Majority of the unlisted companies which are medium sized are Family owned

Family Managed Businesses in India

Family ownership led to dominance of men on board with the Founder Owner and Patriarch of the Family as Chairman

Family Culture of male domination extended to Business Enterprises

Chairmen appointed their brothers and sons as Executive Directors on Board

In some cases wives and daughters on Board if no sons.

The women usually Non-Executive Directors – Rubber Stamps of Chairman. To help him pass all board resolutions unopposed

Roles Most Suited for WomenWomen can perform most of the roles on Board

that men can perform.Women if groomed could contribute greatly

in: Accountability - Ensuring that Board is Accountable to

Shareholders or Owners and Management to BoardFairness – Ensure Protection of Shareholders and treat all

Shareholders equally Transparency – Ensure Compliance, Transparency &

Disclosures Currently very important as shareholders are active. Zero tolerance to Non-compliance

Responsibility - Encourage Co-operation between Company and all Stakeholders. Protect interests of all Stakeholders – Employees, Customers, Suppliers, Creditors, Society at large and Environment

Functions that Women can perform more EffectivelyCommunication with all Stakeholders,

Risk Management , Business Ethics, CSR and Sustainability

In some sectors women can contribute even to Strategy and Performance – FMCG, Hospitality, NGOs, Environment related industries, et al.

Women can be Excellent Brand Builders and Brand Managers

What Inhibits Women from Assuming Role of Directors Recruitment and Nomination Policy of the Company Insufficient Encouragement by Chairman. If related to Chairman as in most

Indian companies , they choose not to voice their opinions Insufficient Networking and PR within and outside the company Lack of Confidence in speaking up at Board meetings despite domain

knowledge and ideas as women in minority Insufficient knowledge of Financial Parameters – It is usually the most

important Board agenda Preconceived notions about women being Oversensitive, Sticklers for

details, Risk averse and at times blunt and not diplomatic Women are at times Biased, Fixed in their views and Opinions, Unwilling to

adapt, Over-conscious about rules and regulations and adamant Get bogged down by Transactional Issues At times women are pulled down by their women colleagues

Some Facts in favor of Women in GovernanceAmong profitable companies a move from zero women leaders to 30%

was observed to have increased net revenue margin by 30 %

A Credit Suisse, Gender 3000 study in 2013 showed that companies with gender diversity recorded excess stock market returns and higher valuations and payout ratios – Average RoI stood at 14% compared to 11.2% for companies without women leaders

Fortune 500 companies with the highest representation of women on Board had attained significantly higher financial performance, on average, than those with the lowest representation of women board directors, according to a study by Catalyst

Return on Equity was higher by 53%, Return on Sales higher by 42% and Return on Invested Capital by 66%

At present only 5.4 per cent of 923 Directors in top BSE 100 companies are women

Women Directors in IndiaIn India, companies with at least three Women

directors are: Apollo Hospitals, Axis Bank, Bharti Airtel, Godrej Consumer Products Ltd., Hotel Leelaventure, Idea Cellular, Taj GVK Hotels and Resorts, Tata Global Beverages and Titan

Some are Family Managed Companies and some like Tata Group companies are professionally managed

According to Prime Database, 175 women from Promoter groups are on Boards as Executive Directors and 100 as Non Executive Directors. This includes women who have set up their own businesses like Kiran Mazumdar Shaw of Biocon

Prominent Women DirectorsChanda Kocher, ICICI Bank, Shikha Sharma,

Axis Bank, Zarine Daruwala, Standard Chartered Bank, Arundhati Bhattacharya, SBI, Homai Daruwala former MD of Central Bank. All in financial sector

Leading Independent directors in manufacturing companies are Rama Bijapurkar, Strategy Expert, Anita Ramachandran, HR Expert, Anu Aga of Thermax, etc.

Prominent Women in BusinessNita Ambani Chairperson and Founder of

Reliance Foundation and Non-Executive Director of Reliance Industries, Kiran Mazumdar Shaw, Chairperson Biocon, Dr. Swati Piramal, Vice Chairperson Piramal Enterprises, Radhika Piramal daughter of Dilip Piramal and MD of VIP Luggage, Meher Pudumjee daughter of Anu Aga, Non-Executive Chairperson of Thermax, Chitra Ramkrishna, Managing Director and CEO of the National Stock Exchange, Priya Nair and Geetu Verma of Hindustan Unilever……

Increasing the Pipeline – What should Women do?

‘Women are the largest Untapped Reservoir of Talent in the World’ Hillary Clinton

Women should Define themselves and NOT let Others Define them’

‘The Question Isn’t Who is going to Let Me. The question is Who is going to Stop Me’. Ayn Rand

Advantage with women is that they are more in tune with Relationships while men function more independently. Men more technology driven. This goes in favor of women

Increasing the Pipeline – What should Women do?Must create Greater Visibility. Should start their grooming

from Middle Management Level and be visible to all Stakeholders

Women at middle management levels particularly in the social sector and NGOs should undergo formal training to assume Directorial Responsibilities

Women must bring to the table different perspectives, styles and educational background

Career planning after Retirement is very essentialWomen must work hard, specialize in their domain

knowledge and acquire workable knowledge of financeWomen should get themselves mentored by their seniors

instead of competing with them.

Increasing the Pipeline – What should Women do?Women must focus on their Strengths and not on

ShortcomingsWomen must work at greater acceptance and

penetration in the marketsSenior women should share their experiences and

mentor other womenThey have better communication skills which they

should capitalize onWomen should combine their detail oriented

nature with broader industry focusMust try to review their personal attributes to

best fit with the company’s culture

Increasing the Pipeline – What should Women do?New Regulations must be passed. As per Company’s

Act 2013, all Listed ( Publicly Traded ) companies in India should appoint at least one woman director within one year of the passing of the Act and other companies with paid up share capital of Rs. 100 crore or more, within five yrs of the Act.

Simply appointing a woman is not enough. She should stay on and her voice must be heard.

Should be in the capacity as an Independent DirectorPolitical Regulations must be implemented in letter

and spirit

ConclusionWomen have to work hard to overcome the

challenges faced by themThey themselves can upgrade and uplift

themselves through education and experience in their chosen field

Support of other successful women can be sought

Must strive to reach Senior Positions to make their Voices heard.

Leadership can be inculcated and developed to make their voices more effective

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