When we think about boardroom diversity, typically we focus on gender or ethnicity. There is, however, an ever increasing need to include generational diversity in this equation. In the space of only ten years, the average age of a directors within UK plc’s has risen from 58.2 to 60.4.
This is against the backdrop of rapid advancements in technology and fundamental shifts in the way we, and in particular younger generations, are communicating and transacting with one another. To stay in touch with the needs and interests of all stakeholders; from shareholders and employees to clients and the broader community, boards must have a complete grasp on these generational differences which are more pronounced now than ever before.
Millennials (those born between 1980 and 2000) will, in less than 10 years’ time, make up 75 percent of the workforce. As the Baby Boomers (those born between 1946 and 1964) continue to retire in droves and Generation X (those in between) are simply too light in numbers to naturally fill the gaps, a profound impact is emerging within executive ranks. The need to develop staff rapidly has has never been as necessary as senior managers become younger and younger.
It is critical that boards reflect this trend and do not simply absorb the Baby Boomer generation, continuing to believe that qualification only comes from years of executive experience but take action to secure better representation from younger generations. They may not have the years under their belts but do know what makes these stakeholders tick.
While improving the numbers of female and ethnic-minorities represented in the boardroom is important, more needs to be done to close the generational gap. While most directors believe diversity adds value in the boardroom; 82 percent believe it improves board and company performance, the huge over-representation of white, middle-class, middle-aged males remains, and is becoming, an ever more serious issue.
We are certainly not advocating diversity as a bureaucratic box-ticking exercise; diversity in the boardroom offers a plethora of benefits, such as better utilisation of the talent pool, more effective decision making, a better understanding of client needs and the ability to deal with risk (identification and mitigation) in a more rigorous and balanced way. Like never before, it is essential for investors to place their board composition under the microscope and continually challenge convention in exactly the same way younger generations do in every aspect of life.
We believe it is vital that investors actively engage with younger candidates when considering boardroom diversity and we bring this approach and challenge to all of our non-executive search work. If they do, they will reap the rewards and be one step ahead of the competition when it comes to engaging effectively with stakeholders setting themselves up for sustainable and long-term success.