Compliance For Profit, Not Rules

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Village panchayat in action

INDIAN INDUSTRY HAS COME A LONG WAY from the days, before Independence, when even a pin was imported – mostly from Britain. The imperial masters deliberately killed traditional Indian enterprises and skills just to promote their own economy.

Mahatma Gandhi’s Swadeshi drive and boycott of foreign goods died with him as none of those who used his name to win power were sincere.   Over the decades the craze for ‘foreign’ goods grew by leaps and bounds.  Owning such goods became a status symbol. The corrupt permit-licence raj and protectionism resulted in many Indian goods being of a very low quality compared to similar ones from abroad.

Profit being the only aim of business, the Quality Circle movement in India remained on paper and a subject for seminars. The predecessors of the present HR (human resources) departments  – Personnel and Labour Welfare  officers – had a single  aim: helping the managements to exploit the labour and extract more work for less wages.

Foreign companies  outsourcing production to Indian factories,  in fields like garments, soon found out that child labour, exploitative work conditions and low wages existed in India. They began insisting on ‘compliance’ with conditions laid down by them. Checks by them or by third party agencies wanted fair labour policies without increasing profit margins, leading to several malpractices.

The government set certain standards (on paper ) and ‘Corporate Social Responsibility’ (CSR) was made compulsory. These led not to much improvement in labour welfare but to more corruption.

Now the new government, perhaps to show it is better than the previous one, made it compulsory for all  company boards to have women directors. “It’s appalling how most companies hire women directors only to comply,” a HR website laments. “The need to comply seems to have become a stronger driver of gender diversity than the belief that it adds value or creates the brand image of a progressive organisation,” it adds.

A  survey among more than 100 tenured corporate leaders conducted by KPMG in India’s Board Leadership Centre and Women Corporate Directors India (WCD) showed that more than half  the respondents  hired women directors just to comply with regulations and not because “it adds value or creates the brand image of a progressive organisation.”

Similarly CSR allocations, the main source of funds for several NGOs (non-profits as they are known in the US)  are made just to comply with the rules. The companies wash their hands off by doling out the money, unconcerned about whether the people really benefit or not. They do not realise that a well-off community means better sales.

It is only when Indian companies ensure  that labour welfare and CSR really benefit the workers that they will be effective. They should know that  happy and contented work force will mean higher production and  better quality, both of which will mean higher profits. This their own self-interest is promoted by proper welfare and CSR activities.

When S. K. Dey India’s first Union Cabinet minister for Cooperation and Panchayati Raj, advocated decentralisation of power through panchayats and pioneered the experiment of a project in 1950, in Nilokheri, Haryana to benefit 7000 refugees, he was  ridiculed for expecting illiterate rural people to mould their future.  Many felt it will only foster “dirty politics”  in  villages.

Though Nehru called it the “Mecca of Development”  Nilokheri has gone  into obscurity. with insincere leadership promoting casteism. Social research is almost non-existent and journalists are more concerned with film stars’ flirtations, than  with finding out why it failed.

Similarly when 33 per cent reservation for women in all elected posts was proposed it was fought tooth and nail by politicians on frivolous grounds. It was said most women elected as panchayat members and sarpanches will only be decorations with the real power wielded by their husbands. This was also proved true in the  early days, but soon the women  began to assert themselves and things are changing for the better,

The experiment of having women directors on every board would also be similarly fruitful, especially because of more women taking to employment,  if the government sincerely takes it to heart and not make it another Nilokheri.

This can be brought about not by rules alone but by enlightened self-interest.

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