Wednesday, April 1, 2015

SEBI's women

Securities and Exchange Board of India (SEBI) introduced a new regulation recently to have private companies appoint at least a woman on its management board. The deadline was this week, and companies promptly responded by appointing their wives, daughters, mothers, relatives’ on the board. The regulation has been implemented on paper (1/3 didn't do it yet). Media is filled with those news items as accomplishments. Women have been finally did a favor.

Did SEBI really reach its objective? Hold-on - what is the objective?

It was felt women were not properly represented on corporate boards. This is somehow seen as an insult to the women in India. To represent this section of the people – SEBI, having leverage on these companies had a good intention to fix it, by forcing it. Intentions were good, but end effects have been horrible. Did they want the spouses on the board?

Let’s go back in time for a moment. Historically women have always been out of the labor force. It is only recently they started to work for employers. In most part of the world, usually men worked and women took care of the family. Not until a few decades ago, did women enter the labor force in the western countries like the USA and UK. There was a time, where one income to the family was quite sufficient and the women had the luxury to stay at home and raise a family. Things changed sometime in the 1960s and 70s, where the one income was no longer sufficient. The women's salary was found to be an added advantage. So it started as a choice. The extra money came handy to fund other consumption needs. Right now though, most women work in western countries. It is not a voluntary act or a privilege that women are working. It is more kind of forced labor to make ends meet.

In India, even now – Men are predominant workers. Women raise the family. Some metros may be exceptions, and we can leave them out.

It can be argued I am being biased on gender here. I am not. I am just trying to be realistic.

Barring a very exceptions, everyone in this world works because they have to. Reminds me of a Peter Schiff analogy. The first thing a person does on winning a lottery is – they quit their jobs. They don’t want to work anymore because they have more money than they need. They do not want to wake up early in the morning and get to work. They want to stay home and relax. They want to spend their day with leisure activities. The want to have fun. No one goes to work for the sake of going to work. They do it because they cannot afford, not to do it. This is bread and butter. If the husband made enough money, the wife could afford to stay home. Usually the wife takes care of kids and spends a lot of time raising them. She has a bigger role than her husband at home. Because of this – they don’t have enough time to work in a job. They take long breaks during pregnancies. So they were never trusted to be those kind of persons – who would want to move up the corporate ladder. They always were seen as those who could possibly quit the job, to take care of family needs. Most women treat their job as a means to make a salary (just that) and do not have career paths or ambitions at work. So unlike men, women do not match the count of people in corporate upper management or in dominant designations in companies. It is also true, in real world – men get paid more than women on comparable jobs.

As an entrepreneur or a private company – you want the right talent to be hired and want them to lead the company. If there are women – who are better that their colleagues, it makes perfect sense to make them move higher in the rank and file of the company. More efficiency brings more profit.  All private companies run with an eye on profits. If there are carrier oriented women who is suitable to sit on a corporate board – the company would do it voluntarily. SEBI doesn’t have to say them that. There is more incentive for the company management to get the better performing women to the board. So with this regulation – what has happened now is – spouses have taken a seat in management. Not all of them are qualified to be there. They occupied a seat which would have been occupied by some “smarter men”. So the quality of the board has definitely diminished. Corporate boards are important entity in a business enterprise. Long term goals are formalized, planned and discussed. Having one member “less effective” or “non-professional” is definitely going to have a bad impact on the company’s performance.

The same is true for constituencies in elections that are reserved for women. Seasoned politicians nominate their spouses and remote control them. Even though the objective to have a percentage reserved for women is good, in real-world – they get misused. The society would be better off without these laws.

Almost fifty percent of the people are women in this world. What we need is, rise in human development. Policies must be devised to increase the quality of living in the society. The women who are part of that, will automatically come up.  India wouldn’t be what it is without the role of its women. They add a lot of economic value to the society. They are instrumental in teaching the kids who grow up professionally successful in future. They take care of them 100% right from birth to death. In the process – they create a productive and disciplined society. Each and every day they prepare food, maintain the residence, for the whole family and make sure – the bonding exists and create a healthy environment. It is almost impossible for men to do that work. They do it every single day – all days of the year. Men bring in money – women do everything else. It is very interesting to note – that Indian women excel in sports more than men. They are more physically fitter. They excel particularly in those physically tiring sports like athletics, shuttle, kabaddi, hockey, tennis etc.

The current set-up works really great in our country. We just have to allow these women to evolve with time – so that they can lead corporate boards by themselves and not by some stupid laws.

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