This article by Hetal Parikh, Rangam Co-founder & President, was originally published on LinkedIn.
Quotas for at least a minimum representation of women on corporate boards have emerged as a key tool for policymakers to implement gender equality in the workplace. The movement started in 2003 when Norway mandated 40% reservation for women in corporate boards. Austria, Finland, Spain, Iceland, Israel, France, Kenya, Belgium, Italy, Germany, and Portugal followed suit through their respective quotas. In March 2020, the European Commission (EC) set a target of 50% gender balance in its own management structure by 2024. California, meanwhile, became the first US state to institute a gender quota in publicly listed companies. But questions remain on whether these top-level actions have led to any actual change, or are they merely symbolic?
The prospect of even a symbolic action in appointing women members to a corporate board is largely silent in several emerging markets because of weak institutions, lower organizational transparency, and a less progressive attitude towards gender equality. India, however, is one of the emerging markets that have embraced gender quotas. According to the Companies Act (2013), it’s compulsory for all listed companies to have at least one woman director on board.
The India picture
Most organizations in India, for long, ignored the importance of gender diversity. This is in stark contrast to several studies highlighting that teams with a ‘balanced’ gender mix perform much better on a number of critical parameters like growth and revenue. According to Statista Research Department, women comprised about 20.7% of the overall labor force in India in 2019. The 2018 India Skills Report stated that economic participation of women in the workforce was 23% in 2018, a drastic fall from 32% in 2016.
It’s universally acknowledged that closing the gender gap in India is fraught with challenges like work-life balance, workplace conditions, choice of appropriate jobs, and most importantly, a change in attitude of both employers and employees. India ranked 151 out of 156 countries in economic participation and opportunities, according to the 2021 Global Gender Gap Report of the World Economic Forum (WEF). The ranking is a grim reminder that the country’s women workforce needs a much greater participation to inch towards the global average of 49%.
The benefits
Sectors like manufacturing, construction, mining, heavy engineering, and oil and gas have been male-dominated largely because of the physically demanding nature of the jobs. On the other hand, there are traditionally female-dominated jobs like nursing and primary education. Global studies have consistently pointed out that organizations practicing greater gender diversity report major benefits because they fully leverage the available talent.
- Better financial performance: Companies with a pervasive presence of women across the rank, including leadership and board level roles, have shown better financial performance.
- Better branding: A gender diverse organization earns a positive and progressive reputation in the industry and attracts top talent.
- Retention and customer growth: A gender inclusive workplace boosts employee morale and retention while attracting more customers.
- Shift in quality-focus: Diverse teams are usually more creative and have better problem-solving skills. A higher gender mix indicates the shift from quantity to quality.
Towards achieving greater gender diversity
Gender equality and gender diversity are different. Diversity doesn’t mean simply having a 50-50 mix of men and women in the organization. Rather, it means a fair representation of qualified talent from both sexes. The human resource (HR) team of an organization must have an open mind while recruiting talent.
Transitioning towards a more gender diverse organization needs the following changes:
1. Shift in ‘human capital’: Gender diversity should be strongly tied to a company’s hiring strategy. Using gender-neutral language in job descriptions is a good starting point.
- Thrust on internal communication: It’s extremely important for a company’s leaders to have an inclusive mindset, identify and eliminate deep-seated prejudices, and embrace diversity.
- Championing diversity: The top management has to take up the cause of gender diversity. When the employer creates an inclusive and open culture, the employees usually respond favorably.
- Walk the talk: Gender diversity shouldn’t be limited to spoken words and company PR. It has to be reflected in actual hiring practices.
Small and simple steps can be a great asset. A report titled The power of parity: Advancing women’s equality in Asia Pacific by McKinsey Global Institute states that addressing gender parity could lead to an 18% increase in gross domestic product (GDP) for India ($770 billion) by 2025. Having more women in the workforce will have an immense impact on the Indian economy with far-reaching implications.
