India's opportunity to cast out the Caste

Posted on November 24, 2020 by Rosama Francis, One of Thousands of Life Coaches on Noomii.

#growthmindset #diversity #changemangement #opportunities #diversitywins #wayforward #teamperformance #csuite
McKinsey in its recent report, “Diversity Wins” has emphasised how the diversity of gender, ethnicity and race generates benefits for companies. On similar lines, emerging evidence indicates that lack of caste diversity causes losses to companies.

There has not been ample study on how Caste-based discrimination affects business, but various company practices like recruitment, compensation and career progression, consciously or unconsciously, show favouritism for people fitting certain stereotypes. Biases and fears against affected communities mostly manifest through assumptions about competencies and proficiencies, based on ‘notions’ of exposure towards understanding different perspectives and community-based seats reserved for education, leading to ‘assumptions of unreliable merit’. Companies use multiple ambiguous methods to define merit. While technical tests are objective, interviews can be very prejudiced. A study by Jodhka and Newman, 2007 shows that questions about family background often feed significantly into notions of merit. Other inconsequential factors like political affiliations and food choices (religion/caste- based vegetarian and non-vegetarian food preferences) etc. trickle into consideration too.

Discrimination of caste affected communities often plays out in very invisible ways. They are rejected during job recruitment, mentioning vague terms like “culture fit“ leading to caste-affected communities being constantly marginalized, excluded, and discriminated against. Even when a few do get selected, they are kept away from key roles at work. As a result, decision-making positions remain out of reach even for those who demonstrate consistent performance.

It is important to note that despite upper castes constituting only 14% in India’s overall population share, they occupy over 94% of corporate board positions in India. OBCs (Bahujans) account for less than 2% and SC/STs (Dalits and Adivasis) account for a mere 0.01%, according to a 2019 paper by Dayanad. A et al, 2019 at the University of Alaska, Anchorage.

How does lack of caste diversity affect companies?

In a paper titled Firms of a Feather Merge Together: Cultural Proximity and M&A Outcomes, Bhalla. M et al., 2019, that a large percentage of mergers and acquisitions (M&As) in India occur between businesses where the directors belong to the same caste group. These biased decisions result in unjustified acquisition prices and retention of people, which lead to poor performance later on. A simple and compelling argument in favour of diversity is that individuals from diverse groups are raised differently, have very different life experiences, and bring many different skills to the table. The way they would approach a given problem and their attitudes would vary considerably. Minimal diversity in corporate boards leads to sub-optimal recognition of needs in the market, consumer trends and lesser diversity in thinking. While in the short run, for a less diverse team, it feels like a team that works well and has culture-fit, in the long run it is diversity that determines overall group performance.

The example of an advertisement from Facebook, Kent RO, Havells and Shoppers Stop being called back gives us a fair understanding of how having diversity in the team is essential for better decision making, innovation and problem-solving. These embarrassing faux pas could have been avoided if Dalit, Bahujan and Adivasi professionals were part of the decision making teams. Having an inclusive approach to conducting businesses can also lead to reaching a larger customer base. So, firms with no Dalit, Bahujan, Adivasi representation in their leadership ranks are deprived of information from diverse parts of the social system, resulting in low efficacy and reduced output.

However, what needs to be understood is that unlike gender and race, which are more obvious, caste is invisible. Hence it is imperative for an organisation to bring in proactive policies to subvert any issues of discrimination or oppression, as issues may go undetected for long periods of time before it escalates.

Way forward

When these underlying factors of oppression, alienation and discrimination are not understood, addressed and worked upon before it is too late, it can snowball into loss of reputation for the firm or toxic work environment leading to a gradual loss of goodwill and business. Caste clusters have been an integral part of Indian socio-economic interactions since ancient times. Distant villages and some urban locations have been linked to each other through ties of matrimony over many generations. These distinctive social structures have remained in place for 73 years after Independence. Community-based networks are actively present in most markets because the caste system is embedded into the very fabric of its functionality. In general, these networks were meant to work seamlessly, in ancient times, when the economies were smaller and symbiotic. However, in modern times the system has taken more insidious forms, demonstrating various aspects of stigmatization, exclusion, and rejection of certain segments of the population.

Good practices from other developed countries like Ethical Trade Initiative (ETI) take care of developing retailers, brands and their suppliers across the entire supply chain. Developing such holistic practices may be healthy for the communities of different caste and economic status to develop in a symbiotic manner. India has come a long way in its journey and our situation outside the country is favourable and progressive. Some of our biggest challenges are at home. It has become imperative to ensure that large sections of the population are not left out of our story of growth. Large scale inequality will only develop resentment and unrest, destabilising the country and its growth.

More than ever it is important to remember that growth is not an end in itself – but a means to place the largest group of citizens at the centre of development strategies and bring largescale wellbeing. There are several leaders who are ahead of their times in pioneering this work and a few of them are:

Ratan Tata: The (former) chairman of the Tata Group, who spoke of his readiness to back the Government’s initiative to improve Dalit lives and other underprivileged social groups through affirmative action in the private sector making this a “historic breakthrough”.

Venugopal Dhoot: Chairman of Videocon, believes that one needs a change of mind-set, not legislation. They have a policy of 20 percent reservation for Dalits and tribal communities.

Narayan Murthy: (former) Chairman of the Board and Chief Mentor of Infosys Technologies Limited affirmed that the private sector has an important role to play in the social and economic uplift of the Dalits.

And several leading names in the manufacturing sector have signed a commitment to empower the under privileged in their own firms. For example, Anu Aga (Thermax group of companies); Rahul Bajaj (Bajaj group); Kumaramangalam Birla (Aditya Birla group); Naushad Forbes (Forbes Marshall India); Jamshyd N. Godrej (Godrej and Boyce Manufacturing Company Ltd); F.T. Khorakiwala (Switz group); H.F. Khorakiwala (Wockhardt Ltd); Suresh Krishna (TVS Group); Keshub Mahindra (Mahindra and Mahindra); A.C. Muthiah (First Leasing Company of India); B. Muthuraman (Tata Steel); N.R. Murthy (Infosys); Deepak Parekh (HDFC Bank); Azim Premji (Wipro); S. Ramadorai (Tata Consultancy Services); Gurpreet Singh (Continental Devices); and Gautam Thapar (Crompton Greaves), Tarun Das and Sunil Kant Munjal, former chairmen of the Confederation of Indian Industry (CII), A.S. Ganguly, former chairman of Hindustan Lever, and Rafiq Zakaria, academician. How well does the majority of our business leaders understand this, how imaginative are they in making the required changes? How can they build robust systems that are inclusive? How soon can they grasp the reality and act without requiring to wait for a government mandate? These factors will decide if India will capitalise on its opportunities or miss the important bus and bear the losses.

By Rosama Francis, Life Coach and an Educationist in collaboration with Lorna Mcdowell of Xenergie . Rosama has a collective experience of about 20 years. This article is a rewritten version of Dhanaraj C, Bapuji H. 2020 “The Evidence is Clear, Caste Hurts Corporations in India And Abroad”. HuffPost. July 27. AND “Diversity in the workforce: why it is good for business “by Ashwini Deshpande, Professor of Economics at the Delhi School of Economics, University of Delhi. Prepared in collaboration with International Labour Organization (ILO) for the International Dalit Solidarity Network (IDSN).