- March 17, 2023
- Posted by: CFA Society India
Authors: Sivananth Ramachandran, CFA, CIPM, Jolly Balva, CFA, and Meera Siva, CFA
This is an excerpt of the report that is jointly published by the CFA Institute and CFA Society India
Recent data indicate that women who want to pursue financial careers in India face significant barriers, including lack of advancement and lagging compensation. This report analyzes the findings and offers recommendations. The contents include Trends and Perspectives on Gender Equality: India, Legal and Social Context, Analysis of Women in the Workplace based on Corporate disclosures, Key Challenges to Achieving Gender Equality in the Workplace, Recommendations.
In May 2021, the Securities and Exchange Board of India (SEBI) released the Business Responsibility and Sustainability Report (BRSR) framework, a comprehensive set of sustainability disclosures covering environmental, social, and governance issues. Beginning in FY2023, for the first time, companies are required to report on a variety of topics, such as the composition of the labour force, pay, turnover rates, and other factors, split by gender. In this report, we analyse the BRSR disclosure data for FY2022 that were voluntarily reported by 134 companies.
We found the following:
- Indian women’s participation rates in the workforce, calculated as the number of women employed as a percentage of total employees, averaged 12.7% across the companies in our sample, or one woman for every eight people in payrolls. India is an outlier when it comes to women’s labour force participation rates—defined as percentage of working age women who are economically active—even within lower-middle-income countries.
- In terms of sectors, information technology companies had the highest female participation rates, at 30%, followed by financial services companies (22.4%). Industrial companies (4.3%) and fast-moving consumer goods (5.5%) had the lowest participation rates.
- The career progression of women in information technology and financial services, which have large workforces and high participation rates, is poor. For example, within financial services companies, women represent 21.7% of employees and only 15.9% of key management personnel (KMP). Within information technology sector, the difference is more pronounced, with women accounting for 27% of employees and only 8.3% of KMP.
- We calculated the ratio of median remuneration of women to men for the companies in our sample. The average ratio was 0.97, suggesting approximate gender pay parity. However, the median remuneration ratio of women to men drops to 0.52 for KMP and to 0.64 for directors. Therefore, it is likely that median remuneration for an overall category such as employees masks systematic differences among job roles, levels of seniority, or years of experience.
- The drop in the ratio for directors could be explained by the fact that most women directors are independent nonexecutive directors, who are typically paid less than executive directors.
- However, the low remuneration of women KMP is a cause for concern. For one, these low numbers may overstate the actual experience because the number of data points is relatively small: Out of 112 companies that provided a breakdown of KMP remuneration by gender, 77 companies (69%) had no women.
- Women had higher turnover—defined as the number of people who left employment in the financial year as a percentage of the average number of people in that category—than men in our sample (18.3% versus 16.1% for men) and higher turnover in all sectors except two. This finding mirrors what happened in other countries during the COVID-19 pandemic: More women than men left their jobs.
- Research conducted in India and elsewhere shows that a majority of women face sexual harassment in the workplace but do not report it, as we cite in our report. Given this context, we found—low reported incidence of sexual harassment complaints in our sample: 71 out of 122 companies, reported no sexual harassment complaints in the past year. We believe acknowledging the issue—as seen in those companies that have reported a few sexual harassment incidents—is a positive aspect in a society where discussing these issues is frequently taboo.
- We found no gender differences in the coverage of skills, and of employees who had performance and career development reviews training conducted by companies. This finding is positive, since training and performance reviews underpin career progression. However, there is plenty of research on implicit biases that influence performance reviews for women and, in turn, career progression. Therefore, the link between performance reviews and career progression is a subject for future research.
1. Companies must improve disclosures, particularly related to median remuneration.
Employees or worker categories are too broad to provide useful information to investors or companies themselves. We recommend additional granularity within employees based on hierarchy of roles and clear definitions on what those job levels mean. Such disclosures provide additional perspectives on participation, career progression, and potential gaps in remuneration. We urge the Securities and Exchange Board of India (SEBI) to increase oversight of this important disclosure, potentially by leveraging technological tools, with an aim to improve disclosure quality over time.
2. Beyond board diversity, there is a pressing need to improve diversity within senior management.
SEBI already requires companies to have at least one woman independent director on company boards. However, as our report highlights, there is very little representation of women within key management personnel (KMP).
In addition to the statistics on participation and remuneration, we encourage companies to provide qualitative disclosures on how they are working toward improving career progression for women. In particular, we ask SEBI to make this disclosure mandatory for large companies and companies that have no women among their KMP.
3. Beyond mentorship, sponsorship is also needed to ensure career progression.
Mentorship is an important aspect for career progression. However, mentorship alone is insufficient for career progression to senior levels; another kind of relationship is needed: sponsorship, where the sponsor or champion uses his or her influence with senior executives to advocate for the person who is sponsored.
We urge senior executives and board members of companies to sponsor women as a part of a structured plan. Such a plan serves to advance both the individuals selected according to rigorous criteria and the strategic needs of the business.
4. There is a need to track the gender diversity of the talent acquisition and talent development pipelines, with a target to increase the diversity of the overall pool every year.
This recommendation is in line with Principle 2, Talent Acquisition, and Principle 6, Monitoring and Reporting, of the CFA Institute Diversity, Equity, and Inclusion Code and is pertinent given the extremely low inclusion of women in Indian workplaces.
Link to the full report: https://www.cfainstitute.org/en/research/industry-research/Mind-Gender-Gap-Indian-Public-Companies
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