Barely 5% of directors on boards of public sector firms are women but new law makes women’s representation mandatory. What’s the real scenario?
Jasleen Kaur | April 9, 2014
Public sector undertakings – more specifically, their boards of directors – could be a fit case for politicians to build their spiel on women’s empowerment in this election season. Statistics do not always portray a tale in the right light – remember the “lies, damned lies and statistics” refrain? – but more than jest, it is tragedy that is borne out by statistics in this case.
Sample a few:
It can go on. But there seems to be light at the end of the proverbial tunnel. With the new Companies Act making it mandatory for companies to provide for women’s representation on their boards, the vista has certainly become brighter for women, especially in public sector enterprises (PSEs).
The Act requires every listed company to have at least one woman director within a year, and others reporting minimum revenue of '300 crore have three years to comply.
But many experts are questioning whether the purported light is for real. For, the Act does not clarify whether the women directors on the board have to be ‘functional directors’ – implying they are hands-on officers and part of the company – or can be ‘independent’ ones as well. Experts believe most organisations would try and take the easier way out by appointing ‘independent’ directors on their board once the new Act is enforced from April 1.
Another aspect to watch out for is whether companies play the game in the right spirit and desist appointing renowned figures or government nominees to their boards in the name of diversity.
The search is on
Among listed navratna companies that do not have a single woman director on their board are Bharat Electronics Ltd, Bharat Petroleum Corporation Ltd, National Aluminium Company Ltd, Neyveli Lignite Corporation Ltd, NMDC, Power Finance Corporation Ltd, and Rural Electrification Corp Ltd.
The scene is nearly similar in five other maharatna companies. While the numbers can be counted on one finger, these women representation are either nominees of the ministry concerned or are retired bureaucrats.
According to Prithvi Haldea, chairman and managing director of Prime Database, which lists information on all capital market offerings, there are very few women functional directors on board of PSEs, and women directors represented as ‘independent director’ are mainly retired bureaucrats, who should not be seen as women representatives. Once the new law kicks in, PSEs will either have to appoint woman functional directors, which is not immediately possible, or get them from outside in the form of retired bureaucrats or “well-connected women”.
“The point is to have good directors on board – be it a woman or a man,” Haldea says. “It is good to bring gender diversity to get the other perspective but that perspective should be robust and independent in nature. Diversity is important but how that is brought is equally important; otherwise the appointments would only be in letter and not in spirit.” To address this, he suggests a separate policy to define norms for appointment of women on board to get quality.
With the Act in place, companies are spreading their net far and wide to tap good candidates. Some believe that the rush will intensify as companies have a limited pool to search from, while others say it is all about changing the mindset of the corporate world.
Jatinder Peters, who was once the managing director of ONGIO International, a joint venture of Indian Oil Corporation (IOC) and ONGC, and retired as group GM (chief corporate affairs) of ONGC in 2012, says both parties are equally to be blamed for such a situation in PSEs. She says while many women opt for softer options and short working hours, equally the environment is not supportive.
Peters believes the scenario can change if the new Act is followed in its true spirit.
Reena Ramachandaran, who has headed Hindustan Organic Chemicals and is now member of the ad-hoc task force at the department of performance management, Cabinet Secretariat, also says while companies are keen on fulfilling the letter of the law there doesn’t seem to be much evidence that they are making an effort to nurture talented women into positions of leadership. Ramachandaran says there was no woman executive when she headed the Mumbai-based PSU.
Tough for women
Jatinder Peters says making it to the top is never easy for women in any field but it’s particularly difficult in the public sector, where women are held back from taking up more challenging roles for multiple reasons.
“Sometimes even if women are willing to take up a job they are not allowed to,” she says. “Besides, there is a limited talent pool to choose from, unlike in the private sector where the agenda is flowing more from the West. Thus, only a handful of women reach the boardroom (in PSUs).”
Peters believes that empowerment initiative by the government, aimed at giving women a stronger say in running companies, will give them more authority, which has not been ensured in the past. Stressing that this lack of empowerment reflects the societal mindset, she says though PSEs offer equal opportunities for both genders at workplace, little can be achieved unless that mindset changes.
“Cancellation of transfers, for example, is asked for by men as well as women but women are in minority and thus have higher visibility. So it affects their promotion,” Peters says.
She admits walking that extra mile at every step to prove herself during 35-year career at ONGC: “But when you perform consistently no one can ignore you for long. You should keep trying.”
Though not in favour of any kind of reservation, Peters says: “People do not look at women as professionals. So if women are promoted through reservation they will be seen as getting positions through quota. But on the other side you have to begin somewhere. This way (reservation), at least competent women will get a bit of edge; otherwise they are overlooked.”
Reena Ramachandaran says even if reservation is done in the right spirit, it can go against women.
The opinion is divided even at the Forum of Women in Public Sector (WIPS), working under the aegis of SCOPE. Women who have reached higher positions, Ramachandaran says, feel reservation would act as a ‘stigma’ but others feel it would bring an opportunity for those who have been left out. “The company law mandates 50 percent of board positions for women even in some advanced countries. Women’s representation on board will not only bring gender diversity but also (steer a) new thinking and decision-making process with better analysis.
“It has worked for MNCs.”
Emphasising that a woman leader brings a different perspective and makes the board more gender sensitive, Ramachandaran says, “When Chanda Kochhar was on board of ICICI Bank, 50 percent of functional directors were women. They rose to leadership positions with adequate opportunity to move up the ladder.”
Ramachandaran says while many women, however capable, refuse promotions because they involve moving to far-flung areas and leaving their families, another stumbling block is the perception that they lack the necessary skills and drive to make it to the top. She also says a large number of women take up softer skills – like public relation and coordination activity – which do not lead to board positions.
“There is a lack of adequate critical mass of women in PSEs at a level from where they can get to board positions,” she says. “In general, PSEs are sensitive and there have been deliberate efforts to make the work environment gender-diverse but there is hardly any company which would tell them that they have better chance to enter board.”
Indicating lack of data on the number of women in PSUs, she says it shows the casual and non-serious attitude of the authorities concerned toward the issue. “When WIPS was set up in the early 1990s, we had to put a lot of pressure on the authorities to include data on women’s representation in the annual survey of the department of public enterprises. It was introduced quite late and has been discontinued from the last two years.
“They are not paying the kind of attention they need to.”
The Companies Act’s mandatory provision for employing women directors on the boards is a welcome move, indeed. But this calls for strong action on part of the government authorities to make it difficult for PSEs to ignore the true spirit behind it.
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