Corporate Governance In VUCA World

Yesterday, the World Bank announced #EaseOfDoingBusiness (EODB) rankings. Riding high on improvements in the of trading across borders, registering property, paying taxes, getting electricity connections and starting a business, India moved up 14 places to Rank 63 from last year which manifests a remarkable improvement. The remaining three parameters — getting credit, protecting minority investors, enforcing contracts – did not show an equally impressive improvement. India’s proposal is to include two more cities – Kolkata and Bengaluru – from next year in the ranking index in addition to the present system of covering Delhi and Mumbai.

Earlier this week, Finance Minister Nirmala Sitharaman shared that India will prepare a blueprint for foreign companies that are looking beyond China to make India as their preferred investment destination. Improvement in EODB ranking coupled with the proposed blueprint will help boost India’s chances of wooing companies that are planning to wean away from China in pursuit of another investment option. At least, the FM’s statement represents a more proactive approach in finding suitors to invest.

India’s unemployment rate fell from a three-year high last month as rural India employed more laborers in the agricultural sector. The unemployment rate fell to 7.2 percent in September from 8.2 percent in August, according to data released by the Centre for Monitoring Indian Economy (CMIE). It will impact consumption positively and will add muscle to the momentum of reviving the economy.

Corporate governance has been in the spotlight ever since the Enron debacle. India too has become aware of strengthening norms around corporate governance. Skeletons have been tumbling from the cupboards of one bank or the other regularly. No amount of infusion of money into the banking system is going to be of any help if the corrupt malpractices are not nipped in the bud by design. Customers will suffer. Jobs will get hit. Economy will get derailed. As conscience keepers, board members have a fiduciary responsibility. And most of them clearly are not doing their job in the right spirit.

In order to institutionalize stricter norms, the Union Government has decided to introduce a qualifying exam for aspirants to become independent directors of boards in companies. The Indian Institute of Corporate Affairs (IICA), shall conduct exams starting December this year to assess aspirants for board positions. Going a step further, listed companies have been asked to disclose the rest results of each independent director in their annual reports. The landmark proposal has already become contentious with critics flaying it. Companies should aim at instilling diversity in boards. The participation of women in boards in India is dismal with just 12.4 percent against a global average of 15 percent.

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The four labor codes have been discussed and deliberated at various platforms by all stakeholders for a bit too long. Recently, the draft social security was sent to the PMO by the labor ministry for approval. The Prime Minister’s Office has sent back the draft social security code again to the labor ministry asking it to rework the proposal, unifying all social security benefits under an umbrella scheme. It is understood that the draft merely contained provisions from EPFO as well as ESIC Act whereas the objective was to rationalize and harmonize them into a leaner, more effective structure. This is the opportunity to include elements of structural reforms in the draft codes for a wider, positive impact on organizations, enabling them to operate profitably and create jobs.

We are proud to share that #IndiaEmployerForum hosted the IEF Conclave on ‘Reimagining Human Capital’ in Mumbai on October 16, 2019. It was a full house with nearly 100 Mumbai-based HR professionals attending the conclave. HR Leaders – Yogi Sriram (L&T), Rajesh Padmanabhan (Welspun), Gautam Chainani (JSW), Mohit Kumar (Hindalco), Dev Deepika (Fiserv) and R Rajgopal discussed various facets of the topic in a panel moderated by Rituparna Chakraborty (TeamLease). Manish Sabharwal (TeamLease) delivered an impactful opening address introducing the topic. TeamLease was the knowledge partner for the conclave.

Editor – India Employer Forum