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One of my ‘go to’ quotes whenever I am teaching directors and boards about their roles and responsibilities is this one by Charles Exley, a previous chairman of the NCR Corporation, a company that has been around for over 130 years:
"I have been in this business for 36 years. I have learnt a lot - and most of it doesn’t apply anymore."
I then go on to ask what one of the most important words or phrases in this quote is.
Most people respond with "doesn’t apply anymore" which is obviously a massive challenge when one has learnt a lot – but I think the most important word in the quote is the word "most". I think this because, in working with boards over the past decade, I think the most important thing for boards to discern is what things have changed and what things have not changed.
It is in the light of this perspective that I would like to examine the question, ‘where are the millennial board members?’ This is a question that I have heard raised more and more frequently – and for some good reasons.
First, let us take a step back and clarify two things:
1. Who do we mean by ‘millennials’?
2. What is the current state of boards, and board composition, especially age profile?
Along with a clarifying third question
3. What are boards for?
Who are millennials?
Since the Second World War descriptions of people born at various times have emerged as ‘short-hand’ to identify specific characteristics of these different ‘generations’. Where these, fairly arbitrary, generational names are most useful is to position people on a timeline in terms of their ages and life experiences. The distinct generations tend to be between 15 and 20 years in length. Millennials are those people born between (about) 1980 and (about) 1994. That would make them (in 2019) between the ages of 23 and 38.
What is the current age range of directors?
Based on the Directors Sentiment Report carried out in 2018 by the South African Institute of Directors most directors in South Africa are over the age of 45 years (72%). Only 9% of directors are under the age of 35. Most of these board members also tend to be, in the commonly used phrase, ‘pale and male’.
What are boards for?
In a nutshell, directors and boards are required to act in the best interests of the company they direct and lead.
Perhaps then the question about board composition, and about millennials on boards, needs to be rephrased. We need to move away from an approach that simply seeks to ensure that every conceivable type of person, no-matter how we define or describe them, has a seat on the board and rather ask, "what team do we need to act in the best interests of the company?"
Don’t get me wrong, I am not against anyone of any particular profile or characteristics sitting on a board – what I am against is a mindless tick-the-box approach that dilutes or undermines the whole purpose of the board and its ability to lead and govern a company well. I do also firmly believe that many of the challenges, hurdles and, in some cases downright failures we have seen across a whole range of different companies stems from badly constructed and badly run boards.
Constructing an effective board consists of re-examining who sits on the board, recognising that each board seat is a scarce commodity, as well as re-examining everything the board does – it is not only the team itself but, perhaps more importantly, how the team works that counts. Successful companies tend to be directed by boards that remain relevant yet robust, engage at the right level and depth of insight and provide effective leadership to the company.
As Charles Exley implied, as things change around us, we too need to adapt and learn new things. Existing boards can certainly do this by broadening their thinking about who should be sitting across the boardroom table. They can do this by continuing to ask questions about, who should best be occupying the scarce seats in the boardroom, about who the right team would be to act in the best interests of their company. They can also do this by looking outside of the normal range of candidates for board positions – and maybe not stop at the Millennials but go even further to the next generation, currently labelled as Generation-Z.
Roger Hitchcock, Senior Partner at the Sirdar Group
