by Sean Kearns, Editor-in-Chief, Longitude
When it comes to the boardroom, corporate longevity has long held sway. High-profile candidates with existing board or C-suite expertise are often sought after, while aspiring, younger directors struggle to break in.
But a strong ESG strategy needs business functions to work together towards common goals. A recent survey by OECG found that confidence in the maturity of ESG programmes among senior executives was limited. With many companies yet to embed their policies, close guidance from the board will be essential if short and long-term ambitions are to be met.
New research among Financial Times readers who currently sit on boards reveals that more than a third believe that younger members will join boards over the next two years. The survey, conducted by Longitude, a Financial Times company, also reveals that 40% say much greater diversity is needed among their board’s members – in terms of age, race, education, culture, experience and gender.
Such diversity of background has a direct impact on the board’s collective ability. Randall Peterson, professor of organisational behaviour and academic director of the Leadership Institute at London Business School, says: “We want boards to be much more active, more probing, to have a better understanding of how the business operates, to ask better questions in the boardroom.”
Those probing questions come when there is a mix of skills and specific technical or functional knowledge. According to PwC research, 96% of young directors (aged 50 or under) are active in their jobs or roles on a day-to-day basis. That means they can bring a level of operational insight that an older NED may not be able to offer.
But if the benefits of appointing younger board members are understood, the demographics remain lop-sided. Research from Spencer Stuart in 2020 suggests that the average age of a non-executive director in the FTSE150 is 60.3.
Progressive and proactive
Younger board members can help companies combat the problems that cause young workers to feel disengaged, while also giving valuable insights when it comes to changing market conditions and trends.
Younger execs are keen because they are passionate about ESG, diversity and governance, and believe they can have an influence. That interest in board positions wasn’t there when I first joined a board.Independent director of Starhub and non-executive director of Inchcape
John Elkington, who has served on more than 70 boards and advisory boards, agrees. “These individuals are sustainability natives in the sense that they see the challenges, this is very much their future, and they want to see them being addressed properly and effectively, and in a timely manner.”
Welcome wake-up call
The raft of benefits that comes from listening to younger voices has not escaped progressive companies, leading to the rise of ‘shadow boards’. These groups of employees work with senior executives to challenge current thinking and increase their exposure to different insights and perspectives.
Gucci, for example, created a shadow ‘committee’ of millennials in 2015, who regularly met with senior executives. CEO Marco Bizzarri admitting that the insights from younger employees across the business provided a wake-up call for the senior team.
Writing for the CMI, Rebecca Robins, global chief learning and culture officer at Interbrand, describes how the term ‘shadow’ didn’t feel right for what they call the company’s “Horizon Board,’ which is “future-facing, horizon-scanning and fresh.”
The Financial Times launched its Next Generation Board in 2020, with members drawn from all areas of the business. The selection process was blind, with the application process asking employees about the potential challenges they saw facing the FT – and what the solutions might be. Each member is paired with a member of the FT management team to provide reverse mentoring and to exchange feedback and ideas.
Boards are clearly seeking new ways to react to the changing social and business environment in which their companies operate. To improve their awareness of sustainability and social issues – and to better understand the ambitions and concerns of employees – they must be open to a new set of voices, whatever their vintage.