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The Danger of Homogeneity For Supervisory Boards

December 2020
Michael Schaumann
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For true effectiveness, board members should be younger and more diverse

Homogeneity makes life simple. Surrounding yourself with people from similar social backgrounds, with a similar education, and of a similar age keeps the likelihood of conflict low and makes it easy to be together. And that’s all well and good in a private circle of friends. In the governance bodies of large corporations, however, cozy unanimity can become a problem. If the members of the management and/or supervisory boards are all cut from the same cloth, they share the same opinions and management styles and deliver similar solutions. For companies that find themselves under constant pressure to innovate due to digitalization, new technologies, and globalization, this can prove to be a problem in the long term and sometimes also even in the short term.

Similarity (be it unintentional or intentional) unfortunately often seems to be a bonus feature in selection procedures. This applies both for gender and age. The latter is still given far too little consideration when it comes to the appointment of senior executives and supervisory board members. Young people can bring a whole new perspective, especially in the all-important matter of innovation: People who have grown up with the Internet as a matter of course will, for instance, clearly have a different view of the requirements of the digital market than those with a purely analogue education and career background.

The clear need for action in current supervisory boards is confirmed by the University of Linz’s Corporate Governance Monitor, which reveals that supervisory board members in Germany and Austria are on average 57 years of age. The average age of supervisory board chairpersons is higher, at 64 years. Supervisory board chairpersons at DAX 30 companies are even older still, with an average age of 68. New appointments to supervisory boards are on average 54 years of age. Only 3% of all supervisory board members are younger than 40, while 35% are over the age of 60.

It is argued that young people are right in the middle of their working lives and too intensively focused on their careers to take on a supervisory board role, but this has a positive slant: Being in the middle of life is an asset that governance bodies urgently require. If these young people can then also contribute expertise that stems from beyond the usual professions of law, controlling, or economics, this can only be of huge benefit to a company.

Indeed, our own industry of executive search should show a bit more courage and perhaps even put the disruptive before the convenient. Why not recommend a female founder of a successful startup for a position on a supervisory board? This wouldn’t be an end in itself but done in the knowledge that she would be a huge win and the best possible choice for the company.

About the Author:

Michael Schaumann is a Managing Partner at the Vienna office of Stanton Chase.

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