Shadow boards: how young executives are running corporates

You don’t have to have wrinkles and a Freedom Pass to be a member of a board of Britain’s biggest companies, but it helps. The average age of a chair on a FTSE 150 board is 66; the average non-executive has just celebrated his (if we’re going with the majority, they’re still very much blokes) 60th birthday, and the average director (NED or executive) is 59.2, according to research by headhunter Spencer Stuart.

But boards with an age range that’s about as diverse as that of CBeebies’ audience mean boardrooms generally lack the tech wizardry and millennial marketing skills most in demand to modernise corporates. The rapid rise of technology means age is no longer a proxy for experience, or success. The average founder of a unicorn start-up is aged 34.

Now firms are conjuring ways to bring together younger staff with the seniority of board-level decision making, without hauling more chairs into their boardrooms.

The answer is the NexCo, as Lloyd’s of London insurer Beazley dubs its younger executive committee, or the shadow board. It’s in place at companies stretching from Italian luxury goods giant Gucci to law firms and even SMEs, and sees a cohort of younger staff selected either to work on a particular corporate conundrum (driving demand amongst millennials, say), or, as is the case at Beazley, to go through the exact same board papers and agenda as the main board, then report back. Andrew Horton, Beazley’s chief executive, says the idea came about after he wanted staff to know more about the work carried out by the executive committee.

After abandoning the idea of televising board meetings, he decided to set up a younger, alternative executive committee. For the past two years, Beazley has had a NexCo of 14 people nominated by the exec from their main areas, including risk, finance, HR and marketing.

“The NexCo members receive the same set of board papers as the main executive, and are encouraged to share discussions with others in the firm,” he says. “It’s great for getting ideas from throughout the company — it increases transparency — and helps the exec to hear a different viewpoint from a more diverse group of people in terms of gender, age and race.”

The shadow board has 50% women, unlike Beazley’s main board, and the youngest NexCo member is in their “very-low twenties”.

The role is unpaid, but it’s engaging recognition-craving millennials: “it is something that more junior people in the organisation aspire to be on. It signals that the individuals are valued and that they likely have strong career opportunities at Beazley and it’s very popular,” says Horton.

Gucci even thanks its shadow board for helping its profitable turnaround since its new creative director and new chief executive, Marco Bizzarri, took over in 2015. Bizzarri has said he instigated a “bottom-up approach”, including setting up a “shadow committee” of some of Gucci’s under-30 employees. Either he or one of his senior executives attend their meetings, which either cover the same topics as Gucci’s execs cover, or fresh ideas for particular areas. Since 2014, digital growth has helped Gucci’s sales more than double to €8.3 billion (£6.9 billion).

When French hotels giant Accor launched a new shadow executive committee last year, it too gave

12 people aged 25 to 35 from seven different countries access to all board business. Part of the brief was to come up with ideas to fight back in a hospitality market reshaped by millennials’ love for Airbnb. Chief executive Sébastien Bazin says the idea came from “observations that the majority of recent successful companies (mainly start-ups and digital companies) have been created by under-35s”.

He says he wanted to “integrate younger generations into decision-making circles” because “we must embrace the revolution”. Accor’s shadow board inspired its millennial-focused hostels brand Jo&Joe, which launched last year and is set to expand into 50 sites including London by 2020.

It’s not just for the big guns. Sarah Walker-Smith, chief executive of City law firm Shakespeare Martineau, says she set up a 12-member shadow board in part for “succession planning”.