Four of a kind: The generations holding a hand at the table

Effective multi-generational boards will become the norm and we need to construct our succession thinking in these terms, says Craig Hattle CMInstD.

“The reality is that people are living healthy longer lives, and so succession is more about embracing two, three or even four generations at the table contributing value, each in their own way.”

Hattle, a professional director with a background in the primary sector, says there will be many people who will be looking to work well into their 70s, even 80s, and will be competent to do so.

“We will need to find ways of arranging our governance structures so we leverage this source of talent and expertise for longer, while at the same time including younger people with fresh ideas.”

In one organisation he chairs, Hattle says they make use of board committees and encourage younger practitioners to join these committees, and to chair them where possible. The expectation is they will become shareholders in the practice one day and will be ready to join the main board.

To prepare for the future, Hattle says the most important thing is to have a succession strategy in the first place and to understand the purpose of any transition – whether it’s for director rotation, independence joining a board, or a new chair.

“These successions are best done with a purpose that suits the interests of the business at the time – and for what the business is anticipated to need in the future.

“If you consider that the success of a board is largely determined by the quality of its decision-making, any succession strategy should be based around asking the question, ‘What mix of skills and experience is needed to make the best decisions for this business going forward, right now’.

Values, diversity and equality are important in different ways, he says, and it’s hard to be an effective board if values are not aligned across all members – a person’s ‘style’ should not be mistaken for their ‘lack of values’.

“Without diversity of thought you are likely to be a less effective board, however what diversity would be best for your board should be informed by the company purpose. In a rapidly changing world, diversity of thought might be what saves the company from wandering on into irrelevance,” he says, citing the downfall of Blackberry and Blockbuster video rentals, which failed to adapt to changing technologies and market trends.

“All board members are there to contribute equally, usually all on the same remuneration unless a chair or committee chair.”

Director transitions are part of embracing some ongoing disruption, he says, even if it is only to challenge the board’s potential tendency to group think and not notice certain confirmation biases in decision-making, a tendency we all have to some degree.

“Renewal in this way is better than wholescale change when shareholders and other stakeholders are so dissatisfied in some way that they want to force rapid change.”

Hattle agrees, on the one hand, that the loss of knowledge and skills of the baby boomers is likely to cause some issues for businesses, and the economy generally. But, on the other hand, much of the learned experience of these boomers was gained arguably in a social context that is quite different for what will be needed in the future.

“Competency is the ability to apply knowledge in a context – just having knowledge may not make a person a good director for the future,” he says. “The answer must lie in effective strategies to transfer experience and knowledge, and this could mean building a mentoring culture.

“This may be challenging for short-term productivity, if two highly paid resources are working on a project that arguably could be done by one person. But this two-way mentoring is vital for longer term success: the boomer is mentored in context and relevance, and the younger person gets the benefit of insights from lived experience.”

He says he does not support the notion that directors are people who have reached the end of their executive career and therefore moving towards retirement. “I believe that governance in general would benefit from more professionals who are still also involved in their executive careers, taking up governance positions.

“Becoming a director should be viewed as a professional career pathway in its own right, albeit sometimes alongside an executive career.”