Age diversity means leaders of different ages in a company. A company has age diversity when its leaders are from various age groups.
SYNOPSIS
According to the web search results, age diversity in corporate governance means having leaders of different ages in a company1. It is important because it can improve the board’s monitoring performance2, decision-making, collaboration, and overall performance1. Age diversity can also help the board adapt to different views and challenges3.
Age diversity in corporate governance refers to the representation of individuals from different age groups in leadership and decision-making roles within a company. It is important because a diverse range of perspectives and experiences can lead to better decision-making, innovation, and adaptability within the organization.
Having a mix of younger and older individuals in leadership positions can bring a variety of benefits to a company. For example, younger individuals may be more in touch with new technologies and trends, and can bring fresh ideas and perspectives. Older individuals, on the other hand, may have more experience and wisdom, and can provide valuable guidance and mentorship.
Moreover, age diversity can also help companies better understand and meet the needs of a diverse customer base. This can improve customer satisfaction, loyalty, and ultimately, the company’s bottom line.
Indian companies are increasingly looking for younger independent directors in a bid to complement the experience of senior board members and to cater to demand for specific skills in technology, cybersecurity, material science and ESG (environmental, social and governance), said executives of leadership advisory firms.
Leadership consultants such as Russell Reynolds, Heidrick & Struggles and Native said they are seeing increasing mandates for age diversity on boards, with a certain set of companies looking for directors in their 40s and up to mid-50s.
“A lot of the target consumers are younger folks and there is an increasing recognition among many progressive companies that the board cannot be disconnected with the market,” said Pankaj Arora, managing director, Russell Reynolds Associates.
Also Read: Diversity Within Boards Of Directors: Exploring The Concept, Purpose, And Key Pillars – India CSR
The trend has gathered steam as many companies are looking to fill up vacant slots for directors after the maximum ten-year term for many non-executive directors.
“Demand for younger directors between 45-50 years is building up particularly in digital transformation and ESG,” said Varun Sidana, partner corporate functions hiring at executive search firm Native.
A”Capability conversation has accentuated, and age conversation is a natural outcome of that,” said Shailesh Haribhakti, chairman of audit and accounting firm Haribhakti & Co, who is also an independent director at several companies.
However, the demand depends on the business, he said.
The average age of board of directors in India is 60-65 years, according to data from Native. The number of independent directors who will compulsorily need to retire by March 2024 is more than 800, showed data of more than 700 listed companies above market cap of Rs 5,000 crore each.
Many companies are looking for directors who can relate to the employee base. “If the average age of the company’s employees is 25-30 years and if there is no one on board who can relate to such a crowd, the board’s ability to understand the issues on the ground will be limited,” said Arora.
Nonetheless, top board members are of the view that mere age cannot be a determinant for a board seat. “The lens should be skills and competency and the willingness to devote adequate time to board responsibilities – and not age,” said Vinita Bali, former managing director of Britannia and an independent director on boards of several Indian and overseas firms. “If it is only about AI (artificial intelligence) and digital competency then younger members are perhaps more aware, as these are newer disciplines, but the driving factor in board selection cannot be just that.
She said companies must have a clear idea of the skills, knowledge, competencies and experience trajectory that are needed on the board and assess potential new board members in that context.
“Every board where I sit, we want to see that different skill sets and capabilities are represented,” said Haribhakti. “A better way to define that is by how the members are oriented in terms of expertise rather than defining skills as a factor of age.
Suresh Raina, partner at Heidrick & Struggles, said, “The acceptance of younger directors is much higher now, being driven by the market dynamics. Five years ago, conversations with companies about hiring directors in the 40s age bracket would be few and far in between, but we see that changing.”
