In terms of corporate governance, experience trumps all, with the average age of board members at fashion and luxury companies hovering around 60 for nearly a decade.
But that’s slowly changing, for family-controlled firms grooming the next generation of leaders, and for brands keen to inject knowledge about the Millennial mind-set, new business models and the Chinese consumer, according to Ethics & Boards, a Paris-based firm that compiles data on corporate governance.
Younger directors are “digital native, they belong to brands’ target audience, and in terms of experience, most bring either knowledge of a pure player, or of a region,” said Floriane de Saint Pierre, cofounder of Ethics & Boards and the owner of an eponymous executive search and consulting business in Paris.
According to her latest tallies for the Ethics & Boards Luxury Index, which comprises the 40 most important listed companies in the sector, only seven have board members under 40.
What’s more, a quarter of companies on the index have no board members under age 50. “This will certainly become a point of attention for investors,” she predicted.
Among directors under age 40, the majority are still family members, “with an increasing trend of recruiting young talents since 2017, in particular with a digital or Asia Pacific profile,” de Saint Pierre said, highlighting a better balance between family and independent directors today than a few years ago. Thirty percent of directors under 40 are independent today, versus 16.7 percent in 2013, according to Ethics & Boards data.
L’Oréal and Brunello Cucinelli each have two family members under 40 on their boards: Jean-Victor Meyers, 35, and Nicolas Meyers, 33; and Carolina Cuccinelli, 30, and Camilla Cucinelli, 38.
Among prominent independent directors under 40 appointed since 2017 are “Harry Potter” actress and activist Emma Watson at Kering; Chinese economist Keyu Jin at Richemont; Rent the Runway chief executive officer Jennifer Hyman at The Estée Lauder Cos.; Stephanie Phair, Farfetch’s chief customer officer at Moncler, and Instagram executive Eva Chen at Net-a-porter Group.
In fact, the percentage of directors under age 40 has actually shrunk from 3.4 percent in 2013 to 2.2 percent this year, partly because some have already moved into the 40 to 50 age bracket since being appointed, de Saint Pierre noted.
Ethics & Boards tracks data worldwide, but because it is based in France, it is against the law to track data on race or ethnicity.
“Usually, age is not the first priority in terms of diversity efforts, and it comes after gender, race or ethnicity,” said Frédéric Godart, associate professor of organizational behavior at French business school INSEAD. “The first and foremost reason is that although age is widely recognized as being an important diversity factor, it has not received as much media attention and social movement mobilization as other factors, and as such it is not as prominent on the sociopolitical agenda.”
According to Randall Peterson, a professor at the London Business School and academic director of its Leadership Institute, diversity on boards varies across industries.
“The data we have is really clear that retail boards are where you have more women, you have more non-white representation, and where you have some younger people,” he said. “It much more reflects the customer base.”
Peterson said various studies in the U.K. have shown that boards in retail look more like the general population in terms of gender and race compared with any other business sector.
“What those data tell us broadly is that women are better represented across the board generally compared to 20 years ago — the average is about 30 percent, particularly in retail where it is approaching 50/50,” he said. “And race/ethnicity diversity is significantly lower in retail compared to the population at large, but outside of retail, non-white representation is extremely low — i.e., in the low-single digits.”
Peterson’s research confirms that age figures low on the list of priorities for board diversity.
“We’ve asked this question repeatedly,” he said in an interview. “Not surprisingly, gender is at the top, followed by race being high, but not as high as gender. Functional diversity is the next one, typically. And then you get into things like age.” Criteria considered even lower in terms of importance is socioeconomic status, regional representation and LGBTQ, he noted.
An exception is the Canadian province of Québec, where age is a priority. De Saint Pierre noted that Québec passed a law in 2016 that state-owned companies must have at least one board member under 35 years old.
There’s a host of other “diversity shortfalls” on corporate boards, according to Godart.
“For example, what about social classes? Subcultures? Neurodiversity? There are many others,” he said. “It is, of course, a challenge for corporations to tackle all these diversity dimensions at once, but in the end it needs to be done for ethical reasons, and has all kinds of benefits backed up by research. This is even more important for fashion, luxury and beauty companies that rely on creativity for survival because creativity is one of the well-known outcomes of diversity.”
However, most companies don’t understand “intersectionality,” or the interconnected nature of social categorizations such as race, socioeconomic status, and gender, and therefore tend to compartmentalize criteria, said Peterson, who is nearing completion of a study of boards of the FTSE 350, commissioned by the Financial Reporting Council. That research suggests companies that recently appointed women to their boards were of high socioeconomic status, and typically replaced men of low socioeconomic status.
“Do we replace one group with another when we do this?” Peterson asked. “So we appoint a young person — great. But that young person is very much like the rest of the board.”
So whose responsibility is it to ensure board diversity across multiple criteria?
“It is the responsibility of key stakeholders to ensure board diversity: the main shareholders, the board, itself, key executives,” Godart said. “Even if they don’t have formal authority, they can influence to promote diversity.”
Historically, boards of directors have been stacked with people nearing or past retirement age.
“There’s a lot of talk about the importance of having age diversity, but almost no action on it. And the reason is because we think of board positions as a natural progression from senior management,” Peterson explained. “You have a bird’s-eye view as a very senior manager and therefore it makes sense to go on boards where you have purview over the whole thing, and you’ve got to make decisions that are relevant to that. In order to have that kind of experience, you will have had to work for a while, which means you’re of a certain age. So isn’t overt hostility to somebody young, it’s just that we want business experience, and that takes time.”
Some findings of the FTSE 350 study are coming into view.
“The why of diversity comes down to either different points of view that help us see problems in different ways, or diversity should reflect who we serve as a customer,” Peterson said. “Marketing through social media, as opposed to traditional advertising channels — it’s hard to wrap your head around if you’re of a certain age. Young people, of course, haven’t known it any other way.
On the downside, young people might not know the realities of a large organization, especially “how slow things can move, how embedded cultures can be,” Peterson said, also noting that the intricacies of “big finance” might take some time to grasp.
While joining boards has been considered more of a late-stage career move, de Saint Pierre argued there is no barrier in terms of qualifications “as most of these board members under 40 are already extremely successful in running a company, or in the C-suite, when they join a board. The most important criteria is just to make sure they have enough time in their busy executive life to dedicate to a board.”
Peterson said he recommends companies conduct a “skills audit” to determine board eligibility.
“The point of the skills audit is not about looking for skills that women or minorities might specifically have. But when you list the skill sets needed around the table you then look to recruit by focusing on skills, not experiences,” he said, noting that work experience-related evaluations tend to favor those in the majority and those in power. “If we recruit by skills then we need to explore with the candidates what they have done to build those skills. Here women and minorities in particular have had to improvise when organizations have not been willing to give them certain roles.”
According to INSEAD’s Godart, it isn’t enough for companies to rely on just young employees to stay relevant.
“After all, Millennial or Gen Z marketing managers could do the job of connecting with younger generations,” he said. “But remaining relevant requires making key strategic decisions that are made by the board only, and by no one else. So the generational shift needs to happen at the top as well as throughout the organization, for strategic reasons. Investors or external stakeholders may put pressure for more generational diversity.”
What’s more, Godart added, “Millennials offer a broad take on major cultural shifts that are happening globally, such as a focus on sustainability. All the above can help drive strategic changes at the level of the whole company.”
François-Henri Pinault, chairman and CEO of Kering, confirms that observation.
“Emma Watson’s contribution to the work of the board over the past year has been very significant, especially in the scope of the sustainability committee which she chairs,” Pinault told WWD. “She helped accelerate a number of concrete key initiatives around sustainable fashion and gender equality within the group, and her nomination, alongside that of Jean Liu and Tidjane Thiam, has been an important step toward achieving the ambitious goals we have set ourselves.”