Company boards are expected to be diverse in the 21st century — certainly by gender and ethnicity. But what about age?
The average age of non-executive directors in Britain’s top 150 public companies is over 60, says the headhunter Spencer Stuart. For executives, the figure is 53. In America, the figure for all directors of larger public companies is 62. In both countries, there are more directors over 70 than under 40. It is hard to argue that these organisations show age diversity — at least at the top.
Despite the unprecedented pace of change in so many industries, mainly thanks to technology, the average age of directors of big corporations has been steadily rising in recent years. It is now illegal to discriminate on the basis of age, and many able-bodied executives prefer not to retire at what used to be the default age of 65. Who can blame bosses for clinging on to the status, power and money that accompany high office?
Traditionally, experience has been seen as the most important factor when selecting leaders, but perhaps there is now an argument in favour of candidates with alternative attributes.
The truth is that most people tend to become more conservative as they get older, and less willing to embrace change and take risks. With many sectors undergoing significant disruption because of issues such as digitisation, automation, artificial intelligence and cyber-crime, those who grew up before the era of the internet are inevitably less well equipped to cope than digital natives. Meanwhile, the business culture is shifting: attitudes among workforces towards matters such as climate change, work/life balance, purpose and values are very different to those held by my generation.
It is all too easy for groupthink to envelop a board. Consensus on threats, markets, innovation and business models will usually revert towards safe decisions, not the hard ones. Directors with a common background, age and mindset are less like to challenge priorities. Preservation rather than transformation becomes the ambition.
The comfy solution is to appoint one, or possibly two, youngsters alongside the grey-haired board members. I’m not convinced this necessarily alters the dynamic. Often, the youthful recruits are intimidated by the apparent wisdom of their older colleagues. They are worried about looking foolish or cocky. The veterans around the table will be well-versed in the politics, protocols and personalities of the organisation — and hence able to outmanoeuvre someone they might perceive as an upstart.
At the other extreme, I don’t believe companies should appoint 16-year-old Greta Thunberg-style gurus and blindly follow their every utterance. Somehow, companies should try to forge a balance across the generations.
The quickest way for twenty or thirtysomethings to rise to positions of true responsibility in business is to start their own companies. Entrepreneurs don’t have to follow the rules of hierarchy that always dominate established institutions. You can become a company director at 16 in Britain, and in many ways the younger you are, the better. You may make lots of mistakes, but learning by doing is usually the best recipe in business. It helps that at a young age, everyone thinks they will live for ever — but they are also impatient, and possess a fierce sense of urgency.
It cannot be a coincidence that so many companies causing upheaval across so many fields — from Tesla to Airbnb, from Alphabet/Google to Stripe, from Uber to Tencent — had founders who were in their twenties or thirties. This is typically the age when entrepreneurs are at their most creative and their boldest, willing to try radical new ideas and cast aside conventions.
Of course, few incumbent firms ever deliberately compete with their own market shares by selling customers a cheaper, quicker or just better replacement. I suspect the founders of the companies mentioned above would never have succeeded in launching their offerings if they had tried to do it from within big companies — even if they had been sitting in the boardroom.
I’m not sure if this message will even reach any of the younger leaders of tomorrow. No doubt they look at blogs, listen to podcasts, watch videos on YouTube and don’t read newspapers much — a small example of how different habits are across the generations.
Generation Z — those born between 1995 and 2009 — will shortly become the largest segment of consumers and employees.
Do executives of my age understand them? Does generation Z respect the business leaders of today? Somehow, we must try to bridge the divide if we want to foster the companies of tomorrow.