6 Business Benefits of Young Leaders on Boards
Improving diversity on boards isn’t just an empty slogan; it makes good business sense.
If the business benefits of diversity on boards is widely known, why is it that the average age of Australian board members is 62.2 years old? As our rising population poses one of the greatest socio-economic concerns facing boards in the aged care and community sector over the next 30 years, improving age diversity is becoming a growing topic of conversation in the big diversity debate. Attracting young talent and investing in their development is vital in planning for the future of the sector, but how exactly does recruiting young directors translate into real business benefits for boards?
About the project
Provided there is little data to support how leadership is impacted by age diverse Australian boards, the Emerging Leaders in Governance Program (ELGP) facilitated a research project to reveal how boards responded to the placement of young leaders on boards from the ELGP program. Six interviews were carried out between 45-60 minutes in length, allowing for free ranging and open responses while focusing on the key themes that can be identified in our literature review.
Key findings of the study revealed a number of benefits that arise from having age diversity on boards, including:
1. Enthusiasm and energy
All interviewees agreed that the presence of young board members in board meetings brought an injection of enthusiasm and excitement, resulting in new insights shaped by an open mindset and willingness to explore new ways to approach boardroom discussions.
“The young ones … have a lot of energy and vitality and can bring great insights to the Board.”
2. Educational and experiential background
Younger board members often possess diverse educational and experiential backgrounds which assist in shaping their contributions during boardroom discussions and enhances the collective decision making of the board. All interviewees supported these findings, in addition to fifty percent of interviewees commenting that ELGP members brought a more questioning and challenging approach during board meetings.
“Both their backgrounds and more up-to-date knowledge in their areas brought different questioning that challenged our traditional ways of thinking.”
3. Unique perspectives
The perspectives of younger board members benefit boardrooms through thinking differently, providing new insights when it comes to addressing business challenges. The interviewees agreed that the perspectives of younger board members assisted in shaping their decision making and thought processes, making a positive impact during board meetings.
“The young ELGP members are a product of today’s world. They are connected to what’s going on around us not just from an IT perspective but on everything.”
4. Different insights into strategic areas
The study found that when the attributes of younger board members when integrated into the composition of boards, the business benefits included different insights into strategic areas. All interviewed considered that ELGP graduates contributed to the execution and development of strategies through their inquiring approach, enhancing the collective decision making of boards.
“They understand the role of governance and staying strategic – not becoming operational.”
5. New dynamic to the board
ELGP board member’s connection to today’s world and unique perspective allow to bring a different dynamic to the board and assist in providing new insights to boardroom discussions. While older board members contributed to the board through their experience, the study found that younger board members contributions were shaped through their connection with today’s world in terms of technology and unique tastes.
“It’s a win for both of us. Whilst the ELGP members benefit from getting board experience, they also bring with them their learnings from the program.”
6. Future development as the future custodians of the community
While younger board members provide immediate business benefits to boards, recruiting young directors should also be viewed as an investment in the future of board leadership. As succession planning should be an element of any board strategy, the findings of the study concluded that the board composition should be no exception.
“Boards should be succession planning 1-2 years out. Identifying skillset early… and have diversity in the future board members.”
As revealed through our study, the placement of young leaders on boards provides a number of business benefits. Encouraging boards to adopt inclusion and diversity policies and consider a range of perspectives assists in preparing boards to overcome the challenges facing the sector’s future. In light of the business benefits, improving the diversity of boards and should be seen as a positive step towards securing a bright future for the sector and a vital aspect of effective governance.
To find out more about the business benefits of young directors on boards, access the full project here.
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