30 Years of Governance - How to use the power of generation divide?

Difference and diversity gain in importance due to a higher rate of change, volatility and uncertainty that companies are confronted with on a daily basis. On the one hand, technologies transform business models and operations. This change necessitates different sets of profiles at boards. On the other hand, external world with tougher global competition, individualisation of consumption, increasing uncertainty and pressing long-term concerns also calls for wider mindsets of directors. 

At the same time, young people treat digital technology as an integral part of their daily environment, they are used to a rapid pace of technological and societal change. Such agility of attitude, readiness to novelty together with higher attention to long-term issues, as climate change for example, shape a different type of contribution younger people could bring to boards. 

Does that mean that boards should have a certain number of people of a certain age? And what age? Despite a frequent reference to a “younger generation”, its definition remains rather vague. “Generation” on itself is an abstract construction comprising some general features that might be spread across different individuals. When a board is looking for other voices, should it focus on age per se or on a wider set of criteria? In the latter case, what competences, experience or status differentiate “the old” and “the new” generations? 

One of the approaches to make a certain perspective captured and explicitly formulated is setting up a special framework, meant to facilitate exchange and focused on shaping such contribution. That could be an advisory board, a panel, or a working group. Synergies from having such an additional body result in specific targeted recommendations for board of directors. Active search for external inputs allows reaching out and liaising with a wider pool of stakeholders. 

Indeed, when it comes to board dynamics, having people with different perspectives in a room does not necessarily result in having their perspective embraced. A board room could be an intimidating environment for younger members, especially when the emphasis is on established rules and routines. Possible questions board members could ask themselves include: Should there be an explicit call for a fresh perspective? How does a board open up for alternative voices? How can a board capture the different perspectives and transform it into an agenda?

Apart from structural solutions, should there be more soft tools to empower young directors and to promote wider culture of inclusion in general? In other words, is diversity as a source of alternative perspectives and new strengths well integrated into a board’s routines? Diversity of gender, skills, experience, and nationality on boards adds value when it is complemented by an inclusive culture of board discussions. Here support programmes could add value: trainings, coaching, mentorship and alike. 

A good balance between a fresh view and an experienced interpretation is not always easy to find, although it needs special attention from of the board for a number of reasons: 

1. To facilitate transition. Generation shift is a natural step in every family-owned business and requires effective transition. As flowers turn into fruits, people who are young today will lead tomorrow. How can we find a balance between what exists already and what we want to have in the future?  As family enterprises dominate Belgian business scene, generation change becomes especially challenging in family companies. How can we recognise a future leader in a young family member? And which features are indeed key to ensure continuity of family values on the one hand, and relevance of a business model to the rapidly changing environment on the other hand? Companies keep actively experimenting with effective transition schemes, and every case remains unique. 

2. To ensure agility. Boards need to be better prepared to deal with uncertainty and abrupt changes. More diverse skills and experience in boards address this need. 

3. To establish and advance dialogue. As the startup scene keeps evolving, the difference of perspectives between founders and investors could either drive the company’s growth or hinder its overall existence. Besides the objective difference in roles that shapes positions of each party, there are also generation specificities that could be traced in experience, in setting priorities and in approaching external environment. They matter too and have to be pro-actively approached. 

As the economy becomes more dynamic, boards have to dynamise too. In other words, business reality is pushing for new skills and more diverse expertise on boards. This opening-up does not happen overnight. Just having younger people on board does not necessarily mean that their voice will be heard. During the Festival of Governance on November 27, a special session will focus on how to address generation differences and how to nurture future talent.