This is why boards of directors need younger members
The following text is taken in its entirety from World Economic Forum’s site:
By 2020, half of the global workforce will be millennials. Millennials are born between 1981 and 2000, a large majority are digital natives and they are purpose-driven. They want to be part of businesses that consider ethical, environmental and social goals.
Despite millennials representing one of the largest generations ever, currently few serve on the boards of companies and organizations.
A board is responsible for driving the business forward, while keeping it under prudent control. The board needs to find the right balance between the various competing challenges and act responsibly towards its employees, business partners and society as a whole. Diverse perspectives are needed in the boardroom to pursue its key purpose – creating value.
How to bring a balance of perspectives around the table
Boards historically have assumed that valuable experience is only gained with age. This assumption no longer holds. Digitalization is transforming many aspects of our every day lives, and how we organize our economy and society, and how the two function.
Social issues are becoming a part of strategic discussions in organizations. The world around us continues to change rapidly, and often in ways that are difficult to predict. Digital transformation and increased complexity require new skills and change the nature of decision-making, transforming the way companies operate. Recent research shows that board composition, diversity and quality of the boardroom are key focus areas
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. In the 2018 US Spencer Stuart Board Index – an annual analysis of boardrooms – 74% of the Nominating and Governance Committee members said a diverse board is crucial in a global market.
Only 35% of the new S&P 500 directors are active or retired CEOs, chairs, vice chairs, or presidents, down from nearly half (47%) 10 years ago. Seventeen percent of the incoming members on boards are 50 or younger. This increasingly “young” representation is based on the need for more tech savvy board members to manage market disruption.
Companies are starting to recognize the need for younger board members, who can relate to their peers. Emerging and developing countries are home to a massive 89.6% of the global population under the age of 30. This is a market for some of the world’s fast-growing companies, suppliers and a large group of customers.
Executives increasingly accept the business case for diversity on boards. Companies are becoming more active in promoting gender balance, but age diversity has not been addressed to the same degree, even though we know that more than half of the world’s population is aged 30 or under.
To improve diversity on boards, it is crucial to make sure that the selection pool is diverse. Maybe it is time for the Nominations and Elections Committees to move beyond the standard practice of looking for members with board experience as a prerequisite. Different channels for talent need to be explored.
I was privileged enough to be elected as a board member of the Norwegian Refugee Council (NRC) at the age of 30. NRC is one of the world’s leading humanitarian organizations for people who are forced to flee their homes. I am a part of an extremely dedicated board where I probably have more to learn than give, but I do have insights to share
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. I am a millennial, like a large number of today’s refugees; I am a lawyer; and I am Norwegian-Pakistani. I bring a different perspective to the conversation.
As with anything else, the journey as a board member is a process of continuous improvement. For every new board position, I will be slightly better prepared for the responsibilities to come, and one day will be eligible for the position as chair
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Serving on a board is one of the most influential roles millennials can take in order to have impact. It is a role that evolves strategic thinking and develops leadership skills. It is also crucial to remember that a board operates as a collective for decision-making purposes. Young people should not wait to accumulate a range of experiences but should start to pursue board roles early on.
The question is, which organizations will take the lead and look in new places for young board members with curious mindsets, and bring them on board in new ways?
It is not sufficient to believe we will get there eventually, without setting any goals. Companies need to make a sincere effort to get to know potential candidates. The engagement is there; we now require some concrete opportunities.
There are some companies heading in the right direction. Clara Shih, chief executive of Hearsay Social, who is known for being an excellent technology leader, was elected to serve on the board of Starbucks at the age of 29, and is still on it today.
Non-profit organizations, such as Pathfinder International and Women Deliver, have also acknowledged the importance of millennial representation in the boardroom. But the list of companies that turn those commitments into meaningful progress needs to be much longer.
By Kiran Aziz