If you look at the big and mid-size companies’ advertisement, you can get the impression, that slowly youth is becoming more fashionable. However, if you look at the products, little is changing. One of the issues is that a single generation is holding the reigns and thus questions of understanding mentalities are left to market research alone. What is the actual state of boards and why change it.
The current state of the boards
According to Harvard, the average age of the board member is 62.4 years. This age is nearly 25 years older than the median American, which, according to the census is 37.4.
Moreover, most of the board member is midsize and large companies are in their 50s and 60s. Only 2% of the S&P 500 board members are under 55 and just a total of 18%, including the 2%, are under the age of 60.
Why seek the next generation
Our world today is facing a host of issues. From inequality of opportunity to climate change. From population and pollution growth to a rise in AI and Robotics. These will all have a profound impact on the economy in the future. If you look at the companies, that are responsible for the majority of our day to day consumption, it seems, that we still have not discovered that our planet and society are changing.
Adding new expertise to the board can help hold the management accountable, to just for this year’s income growth but the survival of the company in the future. Generation Y and Z have the perspective that they need to survive 70 plus years on this planet, while many of the older generations start to think about retirement and estate plans.
Thus a slow change of guard is advisable if management and shareholders want to preserve the value of their investments. Otherwise, today’s market leaders could go the same way as Blockbuster and Blackberry. In a few short years from the top of their class to the bottom of the pile and into history.
Experience, expectation, entitlement
While there are definite advantages of rejuvenating the board room, it should not be an entitlement. You can say a lot about my generation, and our sense of entitlement is one of the strongest points against it. After all, the title “Generation Me” did not come out of thin air. After all, no one is accusing the Baby Boomers of being defined by the events of their youth.
However, the positions should not be an entitlement. Younger people should work for these positions, engage with head hunters and do the work needed to succeed. The plain “you are too young” or “you have no experience on Boards” should however not be an argument. After all, experience comes from actually doing the job, and you cannot complain about people lacking expertise if you never offer anyone the option to gain any.
Start now
If you are working in a nomination committee or seeking a position, it might be a good time to start ignoring decades of experience requirements and start looking for actual visions. After all, experience has helped neither the boards of Enron, PG&E, nor GM. Only by building a board that incorporates visions of the future, can you make sure, that management does more than preserve the status quo.