Board members are often described as “pale, male, and stale,” but that may finally be changing. Wynn Resorts has named three women to its board, including VEA favorite Betsy Atkins, following sexual abuse allegations against co-founder and CEO Steve Wynn. And today PWC is releasing its new “census” of board members who are 50 and younger, calling on boards to consider the value of “age diversity” in responding to markets increasingly driven by millennials.
PWC points out that:
Directors tell us that diversity of age is important to achieving diversity of thought.
In fact, they rated age diversity as more important than any other element of diversity, including gender and race.2 Yet the average age of independent directors in S&P 500 companies is rising—from 61 in 2007 to 63 in 2017.3 In S&P 500 boardrooms, there are more directors 75 or older than there are aged 50 or under.
Experienced directors are certainly valuable. Their long careers give them the benefit of having seen several business cycles. They can use their experience to share perspectives and provide expertise to help management address certain challenges more effectively.
But the environment is also evolving. Directors who are younger may be particularly well positioned to add value as companies address the new challenges that change brings:
• The digital revolution and technologies like robotics and arti cial intelligence are reshaping corporate opportunities—and the workforce.
• Millennials are about to become the most powerful consumer group in the United States, with spending habits and priorities that are different from any generation before. And as they mature in the labor market, their expectations are changing workplaces.
• A corporate scandal—real or alleged—can erupt over social media in the course of mere hours.
• The lines separating industriesare blurring as traditional companies face pressure to keep up.
The authors warn that “Directors aged 50 or under (whom we call “Younger Directors”) make up only 6% of the seats on S&P 500 boards. That is despite the fact that post-Boomer generations make up 67% of the US population.”
The data are instructive, though mostly confirming what one might assume — younger CEOs are more likely to bring on younger directors, and there is more gender diversity among younger directors. But the report is a powerful reminder that companies that want to hire and sell to younger people had better bring some of them on board.