Addressing the “Glass Cliff” challenge within the current corporate governance framework

Mansi Dixit [2nd year, BBA LLB, Centre for Legal Studies GIBS affiliated with Guru Gobind Singh Indraprastha University]

Introduction

In our march to become an egalitarian society, we understand and are trying to overcome the challenges that haunt us. Various schemes and policies are being launched by governments around the world to empower women but even then it is not easy for women to survive in the old boys’ club of the corporates.


The term “glass ceiling” was coined by feminists in the 1960s and since has been widely used to describe the situation where women are not promoted to high profile jobs positions such as CEO and CFO, while their male counterparts are, even though both of them have similar qualifications. It is like women can see those roles through the “glass”, but do not seem to reach because of the “ceiling”. This concept was furthered by British professors Michelle K. Ryan and Alexander Haslam of the University of Exeter, United Kingdoms in the year 2004, when they coined the term “Glass Cliff”.


What is the “Glass Cliff” challenge?

Furthering the glass ceiling metaphor, the glass cliff challenge talks about what often happens when women are appointed to high profile positions such as CEO and CFO. Often companies that are struggling or are in crisis or dealing with a very high-risk project, tend to appoint a female leader (a scapegoat) so that when the company inevitably fails, they have someone to blame for it. Even though the company may fail in that one project or deal, they still come out as egalitarian, whereas the image of the female leader, even after burning the midnight oil, is tarnished in the market. And then the companies do the most typical thing. They appoint a man in the position and he is the knight in shining armour.


This challenge is faced by women mainly because of lesser connections among the top executives and not knowing what is going-on on the inside. Women are just glad to have broken the glass ceiling. While in the case of men, they tend to gather knowledge from old buddies who often give them a heads up about such projects.


Issues associated with the glass cliff received public attention recently with media coverage of Jane Fraser’s ascendancy as CEO of Citigroup. The New York Times’ DealBook feature referred to the Citigroup position as “a big repair job, a major turnaround effort” and speculated whether her hiring would contribute to the perception “that women are more likely than men to be given tough clean-up jobs when promoted to top roles, setting them up for failure." Ms Fraser firmly denied any glass cliff concerns, noting that while she may have a different style, it is not gender-related.[i]


Indian Scenario

Already ventured within the West, the Glass Cliff challenge is not widely known in India, it does not mean that it is not a problem. With women barely making it through the Glass Ceiling, the challenge of Glass Cliff stands ahead. What will come of it is yet to be seen.


Current provisions for Women in India

In March 2018, the various recommendations made by the Kotak Committee were agreed upon at a meeting by the Securities and Exchange Board of India (SEBI)'s board. One of which was regarding the appointment of 1 independent women direction. In pursuance with the Second proviso to Section 149(1) read Rule 3 of Companies (Appointment and Qualification of Directors) Act, 2014, all listed companies and all public companies with a paid-up capital of INR 100 crore or more or with a turnover of INR 300 crore or more must have at least one Women Director.


Additionally, for listed entities, the Board of Directors of the top 500 listed entities were to have at least one independent woman director by April 1, 2019, and the Board of Directors of the top 1000 listed entities were to have at least one independent women director by April 1, 2020. [ii]

(The top 500 and 1000 entities shall be determined on the market capitalization, as at the end of the immediate financial year.)


But the question is whether it is enough? With the world moving forward and governments pushing for equality not only in the offices but also in the office. The Canadian PM Justin Trudeau’s Cabinet is one such example, with an equal number of men and women.[iii] The bottom line is that there needs to be awareness so that we can actually continue our march to become an egalitarian society and not just keep moving in circles.

[i]https://www.forbes.com/sites/michaelperegrine/2021/02/28/the-glass-cliff-challenge-for-corporate-governance/?sh=7fae4df8240e [ii]https://www.icsi.edu/media/webmodules/CompanyLaw_BOOK.pdf [iii]https://www.pbs.org/video/-contrary-ttc-extra-justin/

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