Diversity has become a big talking point in the fintech industry. Gen Z and millennials make up more than a third of the global workforce and a large proportion of the customer base. However, very few boards of directors hear from young people as the majority are in their mid to late 50s. WB Directors explains why it’s time for firms to close the generational gap in the boardroom.
Fiona Hathorn is the CEO of WB Directors, the Women on Boards network – helping women rise to the top of their businesses. Expanding diversity is a must and one way organisations can start to progress in this way is through ‘shadow boards’. This is where a cohort of young talent gets given access to the Boardroom. Explaining why this is so important, Hathorn said:
Youth at the table: the importance of younger voices in the boardroom
When it comes to the boardroom, extensive experience and a proven track record of success has long held sway. Despite attempts to diversify candidates the most sought-after people are still those with existing board or c-suite expertise, while aspiring, younger directors struggle to break in. In fact, according to the UK Spencer Stuart Board Index, the average age of non-executive directors has increased from 59.9 to 60.9 years despite Gen Z and millennials making up more than one-third of the global workforce.
While experience is an important factor and it is entirely appropriate that board and non-executive director roles are filled by people with corporate longevity, boards are starting to recognise the importance of having diverse perspectives represented in the boardroom. This includes the voices of younger generations.
WB Directors recently collaborated with KPMG on their Leaders 2050 initiative, which provides companies with a framework for how to include the ‘voice of young professionals’ in decision-making. Particularly when it comes to the climate and decarbonisation. KPMG found that 95 per cent of organisations believe they need to improve the integration of young voices in decision-making, yet only 28 per cent believe young professionals are heard at leadership levels.
There is a sound business case to incorporate generational diversity in the boardroom. Organisations must be agile and open to change to maintain their competitive edge. While many areas of the business have undergone transformations, the boardroom has moved at a slower pace.
For decades it seems that the duty of company boards was to protect financial wealth and maximise profit growth over and above everything else but societal shifts and changing expectations have meant that boards now have to respond to the expectations of a broader range of stakeholders, including employees, customers, and communities.
Benefits of youth
Young people can bring a different energy and enthusiasm to the boardroom, which can lead to more innovative and forward-thinking strategies, as well as a better understanding of the needs and desires of younger consumers. Younger generations can also offer valuable insights into the latest trends and developments in their industries, which can be helpful for long-term strategic planning.
They are more likely to be open to trying new technologies and digital tools, which can help boards stay up-to-date and competitive in today’s fast-paced business world. Companies are also finding that young board members also have a more optimistic and forward-thinking perspective, which can be a valuable asset to boards that are looking to drive change and innovation.
Furthermore, having younger people on boards can help companies understand the values of an increasingly purpose-driven and changing consumer landscape. From a commercial standpoint, this helps a company to position its brand with the consumer and from a culture perspective, embracing the views of younger employees can help re-engage workers as well as attract a younger talent pool.
The companies we work with are also seeing an unexpected benefit – giving younger employees direct access to the senior management team and the running of the business provides them with invaluable insight into the complexities and nuances of navigating some of today’s most pressing issues and in turn, greater appreciation for the obstacles and challenges involved in running a business.
This element is certainly one of the gains RenewableUK has reported since it set up its shadow board – a cohort of younger staff to work alongside their main board. Amongst other topics the shadow board has been developed to help companies scale up even faster on renewables and accelerate the UK’s transition to a net zero future.
Tapping into the drive, creativity and originality of this tech-savvy generation is proving invaluable to RenewableUK and its members. What helped to make the RenewableUK initiative a success is their partnership with WB Directors to ensure that shadow board members have the support and learning about how to engage effectively in a board environment as well as the skills to take back to their day jobs and help position themselves for the promotion opportunities they merit.
Highlighting the importance of diversity
It’s clear that business is reliant on diversity — of experience and of thought — and having input from different demographics has many positives. When we start to reimagine board-ready candidates through a lens of ‘talent’ versus ‘experience’ – the possibilities are rather exciting. Here’s how to ensure your shadow board makes a meaningful impact:
- Ensure a diverse mix of genders, ethnicities and professional disciplines and you will reap the benefits of a strategy that is richer, more innovative, more in touch with society.
- View the opportunity as a way to nurture your greatest talent and position them as future leaders by investing in the right skills training, particularly around what it means to operate in a non-executive capacity. Done well, your shadow board can be a form of succession planning.
- Coach, rather than manage – this will empower your younger staff and ensure you get the best from them.
- Actively listen and embrace the views of your shadow board. Whether about new technology or social responsibility, be humble, fully engaged and prepared to act on what you learn.