Celebrating Generational Diversity on Your Board of Directors with Millennials on the Board
Millennials make up the largest generation coming of age, becoming lucrative consumers, making their way into the workforce, and scaling the corporate ladder. Time famously labeled millennials the “me-me-me generation” and are often blamed for ruining restaurant chains, the housing market, banks, department stores, and even football. As the first digitally native generation, there’s no doubt that on-demand technology and instant access to information has changed the way millennials interact, gain, and share knowledge. Millennials are also responsible for changing lifestyle trends and impacting the way companies operate especially in regards to product development, marketing, environmental and sustainable markets, and the Fintech industry. The drastic impact of this generation has made it apparent that millennials in the boardroom are a necessary addition to boards of directors and increasingly earning their places at the boardroom table.
Diversity is a trending subject in the corporate governance realm these days and often restricted to gender and race. Fortunately, diversity encompasses a vast range of talents, skills, ethnicities, socioeconomic statuses, philosophies, life experiences, and age. In 2013, the median board age of S&P 500 companies was 63 years. The youngest members on boards are usually in their 50s which shows the close correlation of the “experience is gained with age” notion. However, the PwC Annual Corporate Directors Survey offered an interesting viewpoint last year of almost 900 corporate directors. This past year, a new question was added to the survey asking directors if age diversity was important in corporate governance. 90% of directors reported that age diversity was either “very” or “somewhat” important in achieving diversity of thought, “which was on par with both gender and tenure.”
Deborah DeHaas discusses generational diversity in her article for The Wall Street Journal, “There is another type of diversity that I see lacking and one that will likely become increasingly important in the years ahead: generational diversity.” Millennials in the boardroom are a necessity for the growth and development of companies due to the sheer size of the population. Millennials will make up 77% of the consumer population in the future. However, diversity cannot exist just to meet a requirement. Avery Blank in her article for Forbes states, “But for millennials to get on boards for public or private companies or non-profits, the argument cannot hinge on diversity. The issue must be looked at through a strategic planning lens.” Millennials in the boardroom are essential for many reasons including helping companies make the digital transformation, targeting a new generation of consumers, and ultimately changing corporate culture.
Make the Digital Transformation with Millennials in the Boardroom
Companies began making the digital transformation several years ago with creating apps, adding e-commerce, and expanding their digital presence on social media. However, digital transformations are taking on a whole new meeting in the corporate sphere. The need to have more technical literate millennials in the boardroom and executives are becoming apparent as more and more millennials are becoming educated consumers. “They need to undergo an end-to-end transformation,” reports Harvard Business Review. “The success of which demands dramatic operational, structural, and cultural shifts.” Millennials in the boardroom offer the expertise needed to make this shift happen in companies and in corporate governance as a whole. Research shows that the board of directors has a vital and essential role in transforming a company digitally. Boards of directors need to usher millennials into the boardroom because of their aptitude and digital mindset.
According to a 2013 study, 96% of American millennials are digital natives. Successful companies looking to grow and change with their consumers will find it hard not to work with millennials in the boardroom who have grown up in a world where they are accustomed to using technology on a daily basis. Digital fluency should be at the forefront of corporate governance best practices for all successful companies. The experience and ease at which millennials use and integrate technology into their personal and business lives is something essentially inherent to this generation. People often assume that business experience can only be gained with age and years as a c-suite executive. This just isn’t the case with technology. “Millennials in their thirties can have a more natural grasp of technology and technological possibilities than someone who has been in the workforce for 40 years,” reports Craig Guillot of Chief Executive. In order to make this digital transformation, boards of directors need to actively search out candidates who are digitally native millennials if they are going to succeed in the future.
A New Kind of Consumer
Millennials make up the largest generation in American history. Recent data suggests that millennials are set to surpass the Baby Boomer generation in 2019 as their numbers increase to 73 million and Boomers decline to 72 million. Millennials are also expected to make up over 75% of the workforce in less than a decade. This revolutionary generation is making big changes to the consumer market and the workplace. If companies want to succeed, they will need to progressively target millennial consumers, which should begin at the top of the corporate ladder with more millennials in the boardroom. Starbucks is among one of the first boards to welcome millennial, Clara Shih to their board of directors followed by Caroline Tsay at Rosetta Stone.
Marco Bizzarri, Gucci’s chief executive attributes the fashion company’s recent turnaround and growth to a shadow committee made up exclusively of millennials. The shadow committee offers Bizzarri a different perspective than that of his top executives. “It is a committee that is structured with people below the age of 30,” said Bizzari. “The task is either discussing the same topics that we discuss in the normal meeting with executives or giving me ideas on different processes.” The group also lets Bizzari know what’s not working like the way they cut their leather bags. The millennial committee found a way to cut down on unnecessary waste. Bizzari also takes time to do lunches with his millennial employees and asks them how to improve the Gucci brand. This change in company culture is directly related to the increase in millennial guidance and input.
Changing Corporate Culture
The way that millennials do business and the choices they are making are not only changing the workplace culture but innovating corporate governance. 90% of millennials say money does not drive them when making career decisions because they would rather feel fulfilled in their careers. This is completely different from previous generations. As the most educated generation, millennials in the boardroom want to use their knowledge to create long-term value for stakeholders and consumers. Business isn’t just about the bottom line, but taking accountability for our actions and ultimately making the world we live in a better place. During a recent forum with millennial corporate leaders, Mariana Zobel-Aboitiz, general manager of Ayala Malls The 30th says, “Value creation goes beyond profit realization to how we contribute to society; not just for altruism but also to grow our markets.” Environmental concerns are also at the forefront of millennials’ minds as they make their way into the boardroom. “They will push for a cleaner environment because their futures will literally depend on it,” says Dr. Benito Teehankee. Millennial Hans “Chico” Sy, Jr., vice-president of SM Engineering, Design and Development explains, “For millennials, we don’t have to be told, ‘Hey, look at the environment. Look at your social impact.’ This is something that a lot of millennials take to heart, They want to believe in the company they work for and the cause that they do. It’s a question of ‘how has the business generally improved everyone?” This voice and opinion deserve a seat at the boardroom table and necessary for the growth and culture of many companies.
Millennial perspective, philosophy, and life experience are the generational diversity boards of directors need to grow and thrive in regards to digital transformation, targeting their fellow consumers, and shining the light on environmental accountability. “Boards need the experience and knowledge of millennials to understand the needs of customers, innovate to satisfy the desires of users, and contribute to a vision that will inspire employees and others to join and stay with the organization,” says Avery Blank. Millennials in the boardroom are also engaging fellow directors in a different way by engaging them with unfamiliar subject matter and bridging the knowledge gap. “Many bring knowledge in fields such as cybersecurity, AI (artificial intelligence), machine learning and industry 4.0 technologies; others have firsthand experience of digital transformation, organizational design, customer insight or social communication,” reports SpencerStuart. These directors are unquestionably from a younger generation. SpencerStuart concludes, “As companies address new challenges, and a younger generation of executives with very different background become independent directors, boards will need to find the right balance between experience and relevance.” This balancing act is true for most boardrooms today but becoming more evident looking towards the future. Millennials in the boardroom are truly a force to be reckoned with.
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