Diversity and inclusion: accelerate action

There is much Government lawmaking and pronouncement about bringing women into the workforce motivated perhaps by a requirement to meet Pakistan’s SDG goal obligations and the country targets set in Vision 2025.

In 2017 through changes in the Listed Companies (Code of Corporate Governance) Regulations and the Companies Act 2017, the Boards of listed companies were required to appoint one female director.

In 2021, the State Bank of Pakistan issued policies on Banking on Equality and for Persons with Disabilities which established quotas for employment as well as for customer accounts and financing.

This was followed by circulars issued by the Securities and Exchange Commission of Pakistan requiring companies to put in place gender friendly policies. More recently, in July 2024, further changes have been enacted in the Listed Companies (Code of Corporate Governance) Regulations 2019 requiring companies to have DEI policies (diversity, equity and inclusion); implement the law enacted for protection of women in the workplace in 2010 and, to make disclosures on the gender pay gap in the company’s Annual Report as well as its website.

Whilst the formal sector has made a start in terms of facilitating diversity, the figures show that the effort is tepid and lacks conviction. Businesses have increased numbers at the entry level; however, this does not translate into greater opportunity at the mid and senior management level.

A survey of 46 large companies conducted by the IFC and Pakistan Business Council revealed that 2 percent of companies had more than 35 percent women employees, 56 percent of companies had only 6-15 percent women employees, and around 16 percent of companies had 0-5 percent female staff. 63 percent of the companies surveyed had less than 5 percent women in senior management positions.

Women are held back through the interplay of different barriers which range from personal and societal issues to disparate organizational structures. Organisations often lack the will to provide women the internal support required to overcome these barriers.

Women face unconscious bias and gender stereotyping; there are male competence assumptions and it is harder for them to have their skills and expertise acknowledged. There are fewer role models for women which would impact on commitment and satisfaction by example.

Women generally have less access to mentorship thereby losing the strength of a powerful network which could provide access to promotion opportunities and greater job responsibility.

In Pakistan, businesses in the formal sector are currently faced with a dearth of trained manpower as the country faces higher rates of emigration. Despite greater pressure to recruit and retain good quality staff, businesses continue to cling on to traditional modes of thinking and ignore the on-ground realities.

The data shows that the composition of the student population in tertiary education is changing as, more women are graduating from universities and, that female students are opting for non-traditional subjects such as Business Administration, Management, IT, Engineering and Law, thereby providing a rich pool of graduates for recruitment.

The business case for diversity also remains strong as research shows that diversity positively impacts a company’s financial performance, organizational culture, business ethics, resilience and corporate governance.

A study conducted by McKinsey in 2021 during the Covid crisis found that women leaders were more successful in supporting their teams, prioritizing wellbeing and providing extra resources.

A study conducted by the Securities and Exchange Commission of Pakistan in November 2020, which examined listed company data showed a strong correlation between better financial performance and greater female representation in decision making.

For comparison purposes listed companies were segregated into those with and without women on their boards and the average Return on Assets (ROA) and Return on Equity (ROE), calculated. The financial performance of companies with female board representation was higher in 2017 and 2019.

Increasing diversity does not, by itself, increase effectiveness. What matters is how an organisation harnesses diversity, and whether it is willing to reshape its power structures.

‘Organisations limit their capacity for innovation and continuous improvement unless all employees are full participants in the enterprise: fully seen, heard, developed, engaged and, rewarded accordingly. Moreover, such treatment can unleash enormous reserves of leadership potential too long suppressed by systems that perpetuate inequality.’

Businesses need to move away from the traditional, not just in who they recruit but also in how employees are treated. The recruitment of women has to be coupled with supportive policies and attitudinal change which values the benefits of diversity.

The McKinsey study (2021) points out that overlooking critical work around employee well-being and DEI has serious implications. Employees who are burnt out or unhappy are more likely to consider leaving their jobs.

Researchers have also pointed to the new phenomenon of ‘quiet quitting’ in which employees remain on the payroll but are disengaged. Focusing on diversity as well as decent work conditions for all staff brings benefits not just in terms of higher employee engagement and motivation but will create access to valuable customers as well.

According to a Deloitte survey, 64 percent of Gen Z prefer a career with positive impact on society rather than a traditional corporate role. The survey says that these young adults will work for companies that reflect their values.

For 86 percent of Gen Zs and 89 percent millennials surveyed, having a sense of purpose was important to their overall job satisfaction and well-being. These young adults responded that they were willing to reject assignments or employers which did not align with their values.

75 percent of the Gen Z and millennial respondents said that an organisation’s community engagement and societal impact was an important factor for them when considering a potential employer.

How can one achieve this objective of hiring right and harnessing the benefits of diversity.

My list is not exhaustive but let me put forward some thoughts:

1. Follow the Law. Pakistan already has in place a comprehensive framework of laws and policies which provide for the rights of men, women, transgender and disabled persons. Businesses should implement these.

The laws require equality of pay and equal opportunity in the work place; these prohibit sexual harassment and sexist discrimination; require provision of day care and creche facilities and implementation of social protection mechanisms like social security and EOBI; gratuity, provident fund and maternity benefit.

It is mandatory to pay minimum wage to all workers whether directly employed or outsourced. Companies must ensure that the service contractor follows the law. Management must remember that the Act of 2010 as amended in 2020 applies to gig workers, piece rate workers and those working from home as well. The scope has been expanded to include media as well as online businesses and call centres. Conditions for safe work are mandated through enactments like the factories act.

2. Follow your own policies. The company culture and behaviour has to conform to company values and must be modelled by the senior leadership team. These core values alongside, the Code of Business Conduct, the whistle-blowing policy, the anti- harassment policy and, disciplinary action policies must be widely known within the company and, staff should have the confidence to forward complaints for investigation and action.

The CEO of Uber was forced to resign in 2017 as the Company faced accusations of sexual harassment and questions over its stop at nothing approach to expansion. The Company image was affected by the ‘bro scandal’ at a time when the Company was getting ready for an IPO.

Not enough work is being done in Pakistan around embedding core values and improving culture. Complaints surface of intimidation, bullying and harassment as this is considered acceptable behaviour in certain industries and sectors. This does not conform with the definition of decent work conditions enshrined in SDG 8.

Recently, the provincial and federal ombudspersons have also issued a number of judgements under the Act of 2010, which denotes greater awareness and action around the issue of sexual harassment and sexist discrimination. A toxic work environment results in demotivated and fearful staff.

Furthermore, companies in which such behaviour is condoned would be the ones which do not foster initiative, creativity or innovation; where leadership would be prescriptive and in which individual merit would not be prioritised. As the Uber example clearly shows ultimately these factors also impact on shareholder value and the share price.

Since the Act of 2010 provides all employees including those working in the private sector access to the ombudsperson to file complaints, issues left unaddressed by the company could create a reputation risk.

3. Focus on impact and be aware of indirect disadvantage or biased attitude. Indirect discrimination can arise from practices, policies, or rules that may appear neutral on the surface but disadvantage specific individuals or groups. Women do not get sales jobs but then promotions are linked to having sales experience.

Women cannot be supervisors as they will not be accepted on the factory floor. Transport is not provided for late sitting. There is only one female toilet in the whole building. Such policies and practices can now be challenged under the Act of 2010.

The insertion of a definition of sexist harassment through the 2020 Amendment to the Act of 2010 has created a requirement for companies to look at their policies and practices to ensure that these are not ‘rooted’ in gender stereotypes and generalisations which may result in discriminatory behaviour.

In a recent judgement given by the Federal Ombudsman in a case filed against a private bank, the Ombudsman said ‘gender based discrimination often goes unseen due to collective ignorance.’ This can be exacerbated by social class.

The judgement acknowledges that men and women may be impacted differently by policies which prima facie do not look discriminatory and advises companies to be aware of such impact.

4. Prioritise inclusion: A McKinsey study of 2018 found that whilst some Companies had improved their statistics on diversity; women showed negative sentiment regarding inclusion. The study concluded that companies which did not prioritise inclusion would not fully harness the benefits of diversity. This attitude also does not accord with the definition of decent work in SDG 8, which refers to integration.

5. Understand the broken rung: According to the McKinsey study of 2018 ‘the broken rung’ is still holding women back in Corporate America. The study found that for every 100 men promoted to Manager, only 86 women were promoted.

As a result men out-numbered women significantly at the manager level, which meant that there were fewer women to promote to more senior levels. Almost universally, this omission is justified through female blaming.

Women are not ambitious. Women are not committed, etc.; this argument negates the internal barriers faced by women. These could be structural as well as attitudinal. In an article in the Harvard Business Review the authors mention ‘second generation bias’ which means that male managers may accept female subordinates but have difficulty in accepting women in positions of authority.

They are also more comfortable remaining within the ‘old boys’ club’ which means that women must work harder to establish credibility as leaders and to find managers who will sponsor their upward mobility in the close confines of the board room or the C suite meeting, when promotion opportunities and succession planning are discussed.

6. Be forward looking and adaptable: As the social imperatives change so do the requirements of employees. To remain employers of choice, companies will have to look at organisational design with reference to the physical work environment and collaborative structures to enhance integration and focus while offering maximum employee choice.

7. Embrace technology: Covid introduced businesses to concepts around remote working, hybrid work and flexible hours. Now businesses are faced with a major disruptor in terms of AI. It is estimated e.g. that the market for predictive analytics software is expected to grow to USD 42 billion by 2028.

This means that the types of jobs, the skill set and the method of doing these jobs will change drastically and will potentially lend themselves to remote or project based flexible work. These changes will create opportunities for women as they continue to balance family and work responsibilities.

8. Be data driven and use a bottom up approach to framing and implementing policies: Managers need to exercise ‘social listening’ and understand the building blocks for employee satisfaction. Many of the asks are not new and include opportunity, fairness, leadership training, sponsorship, high profile assignments, promotions etc.; the newer asks e.g. flexible working, elderly care leave, paternity leave, etc., are a response to changing social needs.

9. Fix measurable targets and make managers accountable: In today’s highly competitive world having access to the best talent, leveraging diversity and providing ‘decent’ work conditions are not optional. There are sufficient examples available to show that HR failures impact on shareholder value and business success.

Many international retailers like Zara, H&M, Berksha have faced consumer boycotts for labour abuses in supply chain and subjecting workers to degrading conditions. In 2012, 255 workers were killed and 100 injured in a fire in a garment factory in which investigations found an absence of fire safety measures, over-crowding and forced labour practices.

Whether it is hiring and retention targets, safety standards or prioritising employee well-being, managers must be held accountable for implementing Company targets. Also targets must be meaningful and must move away from tokenism. Having one female engineer in the factory is not enough.

Diversity creates economic value as well. Pakistani economists estimate that if women’s participation was at par with men’s, Pakistan’s GDP could increase by 60% by 2025. This statistic becomes crucial at a time when Pakistan’s poverty rate is projected to reach 40%. Driving progress through economic and business support becomes an imperative and women are an essential part of the equation as they constitute an untapped economic resource.

Whilst this article addresses itself to the initiatives which could be taken to support diversity and accelerate action within the formal business sector, other broader initiatives are also needed to support female participation in the labour force.

Measures are required around promoting female entrepreneurship, protecting the rights of home based workers and, creating economic empowerment through greater digital access for women.

Women have to be supported to integrate into the economy as, in the words of the Quaid-e-Azam, “no nation can ever be worthy of its existence that cannot take its women along with the men. No struggle can ever succeed without women participating side by side with men.”

Copyright Business Recorder, 2025