As boards look to recruit younger, active and digital directors, mandatory age requirements across the S&P 500 continue to rise. Why is that?
In this episode, Julie Hembrock Daum, Leader of Spencer Stuart’s North American Board Practice, returns to Inside America’s Boardrooms to review trends in board recruitment and age limits, but more importantly, to tie these trends together.
“Every industry is being disrupted,” said Daum. “Technology affects everybody. Global markets are affecting everyone… So boards recognize that they need new skills in the boardroom.”
The challenge, she says, is that only 8 percent of S&P 500 board seats turns over in a given year, which limits the rate of refreshment for many of today’s boards. On top of that, emerging areas of board oversight (e.g., cyber risk, ecommerce) present boards with a different challenge: Do we bring on a director who’s highly specialized in one area or recruit someone with a wider range of operational experience?
You do need directors who are multifaceted—who are [knowledgeable] beyond one topic. Cyber is one of those issues that people have grappled with. Most board have come out saying, ‘You know what, instead we’re going to hire a CISO (or somebody like that) rather than having a director whose specialty is that.’
— Julie Daum, Leader, Spencer Stuart’s North American Board Practice
Both Daum and Kerstetter have also challenged the automatic assumption that younger or digital directors can’t possibly have sufficient operational experience—or the ability to learn quickly. Several ‘exceptions to the rule’ comprise the newly formed Next Gen Board Leaders community, an initiative created jointly by Spencer Stuart and Boardroom Resources.
Daum also discusses several factors that are raising the mandatory retirement age across S&P 500 boards, and she explains why “boards must begin thinking about turnover in a different way.”