The other half in the workforce
India's GDP growth rate could jump 4% if women participation rates rose to 70% - UNDP 2010 Asia Pacific HRD Report
Empirical surveys indicate that display of social status by means of female workforce withdrawal is still a widespread trend in India
In a talent-deficit environment, tapping women into the workforce represents a significant opportunity for growth and scale. People Matters takes an in-depth look and talks to companies about their practices for attracting, nurturing & retaining women talent.
The working-age population in the 15 to 64 age group in India is expected to increase from 780 million in 2010 to 915 million by 2020 and to a staggering 1 billion by 2030. More importantly, half of them would still be under the age of 28 in 2030. This broadly constitutes India's much trumpeted demographic dividend, which is often lauded as its competitive advantage over the long run. The demographic dividend story may be a good selling point while pitching for investments, but when seen through the statistics and reality of women at work, it paints a contrasting picture.
Considering the latest data released by the National Sample Survey Organization (NSSO) in terms of declining labor force participation by women over the last five years, it is apparent that the so called demographic dividend is an illusion when it comes to this half of the population. Statistics from the NSSO show that while labor force participation rates have fallen for both men and women, the decline in the rate is much sharper for women in the 15 to 59 age group. In the five years up to 2010, the work participation rate of women (both rural and urban) has been on a decline, coming down by 6% since 2004-05. Interestingly, in the decade from 2000 to 2010, the population of women aged 15 years or more increased by 86.5 million but only 8.9% of them joined the labor force. It is ironic that during a period of economic growth when, ideally, labor participation rate should have increased and as a result the dependency ratio should have decreased, the contrary holds true. Women form close to one-half of the human resources of the country and the sheer decline in work participation rate of this major chunk of human resource, poses serious concerns as it undermines India's demographic dividend theory.
The fundamental question - given the target of the 11th Five Year Plan to create 500 million skilled workforce by 2022 (by annually increasing the skill development capacity by 15 million) - is how will India achieve this target when the work participation of the "other half"; of the demographic dividend is declining?
Dr. Sonalde Desai, University of Maryland and NCAER, in her paper,"The other half of the Demographic Dividend"* states categorically, “India is unlikely to realize its demographic dividend’ to the fullest extent unless significant strides can be made to increase women’s labor force participation through an increase in employment opportunities and a reduction in labor market disadvantages.” For India Inc, which is grappling with the problem of talent deficit and employability of candidates, the underlying message is the need for the creation of balanced gender-diverse workforce. Maybe, creating a gender diverse workforce is an opportunity for some to build scale in the near-term and differentiate from competition over the long run.
The "Gender Dividend"opportunity
As organizations become increasingly talent driven, the greatest hurdle they face is the lack of an employable workforce. Yet a majority of the organizations are underutilizing and in some cases, are downright ignoring the other half of the talent pool - women make up 42 percent of college graduates in India; Census 2011 pegs the effective literacy rate for females at 65 percent. As talent becomes the most valuable resource for business, it makes sense to invest in women, create levers for competitive advantage and leverage on the "Gender Dividend". With less than 25 percent of women in India as a part of the workforce (compared to 50 percent of men), they represent a huge untapped potential which can help bridge the talent deficit. In terms of numbers, organizations in India seem to be overlooking the 250 million women talent pool below the age of 30.
Reports from research bodies and media corroborate that women representation in the IT/ITeS workforce ranges between 24 to 26 percent at entry levels and gradually declines as one moves to middle, senior and board levels. For new age private sector banks women at the entry level form roughly 20 percent of the workforce. The TCS-People Matters Gender Inclusion Survey 2010-11, found that though women are relatively well represented in the services and the IT sectors, they are mostly concentrated at the entry levels. In the IT sector, 70 percent of the respondents claimed that they have between 15-30 percent of women in their total workforce, while in the finance sector 73 percent of the respondents claimed that the women share of their workforce was up to 15 percent.
There is no dearth of research which demonstrates that a gender diverse workforce in today’s talent deficit scenario is a sound business practice which bears a strong correlation to growth. A report by Future Capital Holding, ‘The impact of working women on India's growth, incomes and consumption; estimates that increasing women’s participation in the workforce could be one of the most powerful ways to boost economic growth, incomes and consumption over the long run. More women entering the workforce could make Indians 5 percent richer, than otherwise projected, by 2015 and 12 percent richer by 2025. The report states that consumption gains can be felt in financial services, educational services, retail and entertainment. The United Nations Development Program (UNDP) 2010 Asia Pacific Human Development Report cites that the country’s annual GDP growth rate could jump 4 percent if women participation rates were raised to 70 percent, closer to the rate of many developed nations.
The World Economic Forum’s 2010 Global Gender Gap Index shows that the educational attainment gap has almost disappeared (in the Indian context the gap has reduced to 16.7 percent in 2011) but this is not translating into women being retained, developed, and advanced in the workforce. In fact these numbers look dismal. Despite two decades of economic renaissance, India is the worst among the 6 top Asian economies (including China, Hong Kong, India, Japan, Malaysia, and Singapore) when it comes to representation of women in the workforce at junior and middle-level positions, according to the Gender Diversity Benchmark for Asia 2011 Report. A comparison of percentage of women representation in total workforce shows that while China has the highest percentage of women represented in the total workforce (50%), followed by Malaysia (47%), Hong Kong (45%) and Singapore (43%); the lowest percentage of women are employed in India (24%), with Japan (37%) being the second lowest. Worse, at 48 percent, India has the most significant drop from junior to middle level positions. These numbers mean that the pipeline is either leaking or is stuck. Either way, it is not good for the bottom line. Churn has a steep price a conservative estimate of the cost of turnover for knowledge workers ranges in 200 percent of salary (Deloitte: The Gender Dividend –Making the business case for investing in women). Besides this, women are the Market; they roughly control $20 trillion of total consumer spending globally and the number is predicted to rise to $28 trillion by 2014. As businesses prepare themselves to serve a diverse customer base, a gender diverse workforce helps in understanding women as consumers and their impact on the bottom line.
There is no doubt that if India Inc is to meet its business objectives amidst the war for talent and talent crunch, it has to prepare itself in terms of scaling up its workforce and acquiring the right talent mix. Besides, they need to question as to how prepared they are in attracting and retaining this significant talent pool, where there is an equal risk of competitive attrition and of withdrawing from the workforce entirely. Failure to capture the full economic potential implicit in its demographic (gender) dividend could mean that either large number of prime-age talented individuals are unemployed, underemployed, or otherwise not constructively engaged.
Are women shying away from work?
Whatever the efforts by companies in attracting and retaining women it takes a beating when one analyses recent findings of NSSO; on the declining work participation ratio of women. While the data can be looked at from a positive perspective to conclude that the decline is primarily due to women choosing to educate themselves for longer periods instead of joining the workforce at the very first opportunity, other corollaries can neither be overlooked nor ignored. It is quiet intriguing that despite increasing levels of higher education in women and the talent crunch across industries, the women participation ratio in total workforce has declined. A number of socio-cultural and labor market factors could also be responsible for this.
The socio-cultural argument suggests that women's withdrawal from labor force is associated with advancement in the social status of the family. "Higher wealth-status families" choose to educate their daughters, but at the same time, restrict their independence with labor force withdrawal and ask them to conform to the paradigms of "ideal daughter/wife/mother/daughter-in-law"; While one can scoff about such social norms as the relic of another generation, a quick empirical survey conducted by People Matters among white-collared professionals indicates that such display of social status by means of female workforce withdrawal is still a wide-spread trend even in Tier-1 cities.
However, the hand of gender discrimination in earnings cannot be ruled out in reducing female employment. Indeed, women in India earn 53 percent of that earned by their male counterpart in the private sector and 73 percent in the public sector. The problem is further compounded by the lack of safety for women in public spaces in urban areas, something that inhibits them from working in jobs that demand longer hours or in industries that require night shifts.
In this backdrop, if India’s government and companies are to realize benefits from its demographic dividend, then along with a strong push for education, a comprehensive policy for encouraging job opportunities for women and ensuring income parity and safety are equally important. While the government can initiate steps to address the structural and systemic problems in its training and education system, India Inc should not only implement some "feel good" policies but rather opt for fundamental change in the overall ecosystem of the organization. By metamorphosing themselves into an equal opportunity employer, organizations can reach their required levels of scale. With a growing number of well-educated women entering the workforce, it is but a necessity to find better ways to attract, engage, and retain them.
Setting the tone
To begin with, organizations have begun building a business case for "gender dividend"; by creating equal opportunities by widening the talent pool, so as to have noticeable presence of women in core functions of business such as sales, services, and customer engagement and developing women for higher levels of leadership. Diversity hiring intent among leading companies has gone up by almost 500 percent since last year, according to a recent study by FLEXI Careers India.
From the perspective of India Inc, a host of companies, like HUL, Godrej Industries, PepsiCo, Genpact, Kraft, P&G, Deutsche Bank and others have all stepped-up gender diversity hiring. With 20,000 employees, the number of women employees in Godrej is a mere 8-10 percent at the senior level and only 5-6 percent in functional-head roles and 20 percent in junior management; reasons enough as to why the company has stepped up gender diversity hiring and for good measure. Kotak Mahindra Bank too wants to increase the lateral hiring of women employees to 30 percent by the end of this financial year from the current levels of 20 percent. Apparently, a few companies have gone one step further and mandated that for some jobs (like senior research engineer, market development manager, legal counsel, etc.) they would prefer women. Kraft, for instance, has started hiring women for what was hitherto seen as "men-specific"; jobs: finance, legal and in frontline, modern trade roles, finance and legal. For IBM, which keeps trying new ways of hiring talented women, it is not merely about filling the numbers but understanding that there is strong correlation between success in the marketplace and having a diverse workforce. There are other trendsetters in the industry like Genpact which feel that women not only make up half the talent pool, but also about 50 percent of their consumers and clients, and hence ensuring diversity impacts their business in a positive manner.
Many organizations are walking the talk and are making investments in their intent to create an equal opportunity ecosystem for women to articulate their talent and skills and define what they can do for the organization. If news reports are to be relied upon then in some cases, companies like Microsoft, Alcatel-Lucent, Genpact, IBM, Schneider Electric, and Cadbury-Kraft Foods amongst others, are paying headhunters 30 percent more for women hires than they would for men. Not only this, with increasing number of women climbing the competitive corporate ladder, companies seem to be leaving no stone unturned to lure them and are even offering existing employees an additional bonus as much as 25 percent for referring a female employee.
While the intent is there, there is a need to define a new ecosystem accentuated by talent deficit coupled with low participation of educated women in the workforce.
A New Ecosystem
The last generation of workplace innovations introduced policies to support women with young children, internal networks to help women navigate their careers, and flexible work options which broke down structural barriers holding women back from entering the workforce. While these must continue; a flexible and innovative workplace which appreciates the needs of women employees would go a long way in creating a nurturing ecosystem. Given the socio-cultural and labor market dynamics there can be no standalone program or initiative to help advance women into senior roles. The organizational culture and ecosystem must change which requires a serious commitment from the leadership team and a sincere intent to put metrics in place.
The change in the ecosystem demands CEOs taking the driving seat and making gender mainstream; it deems its place on the CEO's scorecard. The ecosystem must nurture women within the corporate structure and leverage the power of gender diversity. Organizations must be flexible, agile, support innovation and at the same time enable and nurture talented women to become leaders of tomorrow. There must be programs and initiatives in place which help women employees become more self-aware, develop a personal brand and get a better insight into the larger organizational context. The gender inclusion agenda, hitherto considered the domain of HR and personnel management, must be treated as a strategic concern that demands the time and investment from the CEO and the leadership team. The C-suite has a critical role to play in defining a new ecosystem. The required change must come from the CEO and cascade down to the levels including the women network in organizations.
In the present context, the need for a gender-diverse workforce is vital as it has the potential to address workforce challenges relating to talent pool deficit. Besides the added benefits of diversity in perspectives, and skill sets; the journey to redefine the rules of workforce and workplace ecosystem will help create an inclusive environment where talent can thrive and the organization can reap benefits of demographic as well as gender dividend.
* The other half of the demographic dividend”, Dr. Sonalde Desai, EPW Economic & Political Weekly, October 2, 2010 Vol XLV no. 40