Article (January-2019)


Enforcing corporate governance is an unfinished agenda!

Dr. GP Rao

Designation : -   Founder & Managing Partner

Organization : -  GPR HR Consulting LLP, New Delhi


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Corporate governance aims at ensuring the rightful interests of the stake holders i.e. investors, shareholders, management, employees, trade unions, employee associations, customers, suppliers, financiers, business partners, industry members, trade bodies, academia, consultants, Government and the community. This is met through designing and regulating systems, rules, practices and processes, backed by a foundation of values and ethics.
Benefits & Accountability : A company's goodwill, credibility, rating, branding and acceptance are largely dependent upon how well the company ensures governance. While the governance warrants compliance across the organisation and the management is responsible, the board is expected to take the ultimate accountability through the CEO. Therefore, the board is expected to spend time and attention on this important aspect. Another important role is played by the auditors of the company who satisfy themselves that there is an appropriate structure in place and the norms are met.
As per research studies, besides meeting the expectation of the stake holders, good governance helps effectiveness and performance of the company, as it is basically about improving transparency and accountability within existing systems where employees are enabled, empowered and encouraged to imbibe and practice good norms.
Motivators : The research further clarifies that the governance approach is normally guided by three factors/motivators namely Mandate, Barter and Value system. The Mandate flows from the legal requirement; the barter is about the benefits attached to good governance and the Value system drives ethical practices and behaviour free from any expected returns. The distribution of the three factors varies from company to company and individual to individual. Needless to accept and conclude that, the sustainability will be higher where the factor of Value system holds a higher proportion.
Diversity & Inclusion : Over the years, based on the reporting of good and bad cases, the measurement metrics of corporate governance have been evolving. One of the key metrics is Inclusion. It's about Inclusive Culture and Inclusive practices and about empowering diverse segments. It makes an organization effective by capitalizing on all of the strengths of each employee, understanding, valuing, and using the differences in every person.
  • In a global market scenario, inclusive organisations are built on the foundation of an inclusive work culture bringing in benefits viz varied viewpoints, multiple competencies, flexibility in operations, competitiveness, innovation and team working.
  • Diversity is not only about gender or colour, young and old, qualified or not etc.; but the diversity of every individual, on learnability, expressiveness, delegating style, interests, political thoughts, family background, grooming etc. An organization needs a mix of people to deal with diverse work needs. The best approach is to recognise the uniqueness of each individual and leverage the same, instead of trying for sameness. Differences are natural and must be accepted, respected and leveraged.
  • Inclusiveness is more about people and culture, more than systems and processes, through developing diversity mind set and skills, practising inclusive - oriented people policies and enabling line managers in getting the best from diverse. A strong reason that prevents a group from becoming a team is the inability to accept others for what they are. Inclusion embracing diversity is the key.
Gender Diversity : While the scope of D&I have widened, the gender component of diversity has remained the key focus. The legal framework, the company D&I policies, the HR approach, the research, the debate etc. are primarily on gender diversity. Amongst the various parameters, the inclusion of women in the board, non-discriminating employment policies, equal opportunities for growth and implementation of POSH are more important. Obviously the most impacting provision is inclusion of women in the company boards, as that sets the direction and other things will flow.
Reality Bytes :  Unfortunately, the data, status and facts are very discouraging.
  • A number of companies are yet to induct women directors.
  • Many of the Companies prefer to take family members and promoters as the women directors, with due respect to their competence.
  • The percentage of women in the manufacturing, infrastructure and agriculture sector is still very low.
  • We don't see many women as CXOs in the organisations.
  • A few companies sadly avoid employment of women to avoid the compliance of POSH, maternity benefits etc.
  • There is still discrimination in employment, placement and promotions on account of gender.
  • Therefore, the agenda of Diversity & Inclusion remains unfinished.
Possible reasons : Some of the compelling reasons are mentioned below :
  • There is a lack of genuine commitment at the top.
  • Men have not been adequately sensitised about the benefits of inclusion.
  • Many women professionals do not take the extra effort to compete and give up the race a little earlier than desired.
  • The Ecosystem does not adequately support the career women.
Way forward : Based on consultation with D&I champions, it's suggested to take the following measures to complete the unfinished agenda.
Board Diversity : The Government and trade bodies must monitor the women representation in the boards as per Government norms.
  • D&I Policy : Every organisation must have a D&I policy like we have for Quality, Safety, Innovation etc., with clear cut objectives, processes for sensitisation and implementation and accountability.
  • D&I Metrics : There should be a system for enablement, evaluation and reward and penalty for implementation or not.
  • D&I Education and Coaching : Organisations must tie up with academic bodies and consulting organisations to provide quality education, training and coaching for Women empowerment and actualisation of destination boardroom.
While the agenda has remained unfinished for a long time, a concerted effort by all stake holders will certainly help reach destination.