Age diversity is just as important as gender diversity when considering the composition of a board of directors. A 2018 PwC survey states that while 90% of corporate directors agree that diversity is important, nearly all American corporate directors are over the age of 50. In Canada, the most recent statistics available for 2017 from the Canadian Board Diversity Council (CBDC) show that while age diversity still remains low, 39.9% of corporate directors believe that they have made progress in appointing younger directors. However, two-thirds of Canadian board directors are over the age of 60.
Average Age of Corporate Directors is Now 63
- Average age of corporate directors is 63, up from 61 in 2007
- In the US, 21% of directors are over 75, 10% are over 80
- In Canada, 5.4% of corporate directors are under the age of 50
- Only 6% of American corporate directors are under 50, and of those many are company CEOs
Why Age Diversity on Boards is Important
In a word, technology. Social media expertise is important in order to understand the potential damage in reputation to a story going viral about the company and understanding the latest technology that can help grow the firm is also vital. A younger board member who has been raised with social media and technology may have more acumen in this area. This may explain why companies in the Information Technology (IT) sector have the most age-diverse boards in America.
There is also a correlation between age diversity on a board and profitability of a firm. This Swedish study showed that small -cap companies with a market cap below €150 million saw a significant uptick on overall firm performance when they added younger members to their boards, while larger companies didn’t see as much of a boost. The recommendation from the report is that age diversity should be given equal weight when considering board composition.
Richard Leblanc, a governance expert at Toronto’s York University, states that “You want 40s, 50s, early 60s, people at the peak of their careers,” since governance is constantly changing, and it is easy for skills to become outdated in today’s corporate environment.
Can Age and Term Limits Help Improve Board Diversity?
Age limits can obviously help to improve board diversity in terms of age, and there is sufficient evidence that they would also help with gender diversity. Age or term limits have both been proposed as effective ways of opening up board seats to other potential board members. However, they may not work fast enough for a board to get enough younger members on it to keep the organization agile in the digital age. 62% of boards that added younger members did so by increasing the size of the board.
Canadian boards are changing their diversity policies. Barrick Gold, for example, has a policy for its board to be inclusive of all diversity considerations including age, gender, ethnicity, disability, and where a board candidate is from geographically.
How can Board Management Software Help?
If you plan on increasing the size of your board, managing it can be more difficult. Putting everything together for board members on a spreadsheet and a number of disparate files sent through email or shared through standard cloud file hosting services is not efficient or secure. Board management software such as DiliTrust Exec allows for swift and secure access to information your directors will need for board and executive committee meetings, and makes it accessible from anywhere in the world. Polls, surveys and instant alerts are all DiliTrust Exec features that your board can use quickly and efficiently for simple, effective board governance. Contact DiliTrust today for a demonstration of what DiliTrust Exec can do for your board.