The Importance of Age Diversity in the Boardroom – Research in AIM and FTSE 100 Listed Companies

February 25, 2021

Following last month’s article about gender diversity, this month, MM&K will dive into a different area of diversity: age.

Diversity is an increasingly important matter for companies of all kinds- but it is not just limited to race and gender.  In fact, age diversity may play a significant role with regard to managing key social issues and challenges in today’s business climate. As reported by PwC’s Annual Corporate Directors Survey, only 21% of directors consider age diversity as very important—a considerable contrast to the 46% who say the same about gender.

To see the repercussions in boardroom composition, MM&K analysed the age of executive and non-executive directors in AIM companies listed after December 2018 in the Oil and Gas, Financial Services and Technology sectors. This data was then compared to FTSE 100 companies in the same sectors, in order to gain a better overview.

As you can see from the graph below, the average age of directors is very similar for both AIM and FTSE 100 companies.

In order to dig deeper, the graphs below show a breakdown of executives and non-executives’ age in different markets and sectors.

This shows evidence that, broadly speaking, executive directors are younger than non-executives, and the smallest difference in average age as between NEDs and executives is found in the Financial Services Sector among both AIM and FTSE 100 companies.

In the Technology sector, diverse age ranges mean more experience with digital transformation and analytics tools. Typically, younger people bring new technological innovations to businesses. This could also be the reason why the directors’ average age in the Technology industry for FTSE 100 is lower than in either of the other industry sectors.

Millennials now represent more than 35% of the workforce, therefore it is increasingly important to ensure they are properly represented.

Younger directors are also more likely to be actively connected with the day-to-day business world and hence, with Millennials and Gen-X consumers. This may help the business to better align its strategy with those target generations.

To conclude, it is important that companies of all sizes and sectors consider age as a factor when recruiting directors. Many businesses still face the challenge of incorporating age diversity, driven by the age-old notion that younger people have less experience to offer than older candidates. Age is as important to diversity as gender and race, evidenced by recent innovations in the technology sector. Older directors can bring more experience and expertise to the board, but younger directors can bring new and fresh ideas to the business landscape.  Getting the balance right is a key to success.

For further information please contact Elisa Cobetto .

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