Board Focus: Generational Diversity
- March 29, 2016
Today, corporate boards have a dual mandate: to advise and to offer oversight. To do both effectively, the board must have the collective knowledge, skills and experience to offer appropriate guidance. The NACD’s Blue Ribbon Commission on the Diverse Board wrote, “boards must strive for diverse composition as a means of strengthening their own ability to make wise and informed decisions. In particular, this requires gender, racial, age, and experience diversity to broaden the viewpoints, skills, and backgrounds of the individual board members.”
There is quite a bit of research supporting the notion that the best boards are diverse boards. Whether looking at diversity in age, gender, race, or perspectives and thought processes, however, it’s difficult to quantify. Regardless, the Association of Fundraising Professionals noted that “boards that are gender exclusive or limited in age range often lose valuable differing perspectives.” Many boards today don’t accurately reflect real-world demographics—or the individuals they are supposed to understand, sell to, or represent.
There is a plethora of evidence telling us that there is little to no diversity in the boardroom. If you look at an age comparison over time, you’ll likely find that the average age of board directors has been trending upwards. Recent reports from Institutional Shareholder Services (ISS), Deloitte LLP’s Center for Corporate Governance, and Forbes reported that even the “younger” directors tend to be over 50, and those in their sixties occupy the highest proportion of board seats.
Over the past five to ten years, there has been a major shift in corporate governance to add boardroom expertise in three key areas: finance, technology, and more specifically cybersecurity, and particular industries. Enlight Research’s analysis of the Russell 3000 identified more than 85 public company directors ranging from 29 -35 years old. Of these, unsurprisingly, 43% are in the finance, consumer discretionary and IT industries, which are perhaps even more valuable as we succumb to a consumer-centric and technology-driven era.
I know that including a 30-something director on your board seems illogical, or even irresponsible; and, with the limited number of board seats available, how could a millennial possibly contribute the same value as an esteemed, experienced professional? The truth is, they probably can’t—but they can probably offer valuable technology guidance, introduce new business models or communication styles, and they represent the largest growing consumer segment in the country. As a director, consider how increasing diversity, and including millennials in the screening process, could benefit your company.
In our next post, I’ll highlight some of the areas in which millennials could offer substantial value to your board.