Why India Inc's boardrooms need to look younger

It does make the case for stepping up the inclusion of young people on company boards since millennials tend to be more idealistic and ethical-minded

India Inc’s boardrooms continue to be filled with grizzly old men. According to a Mint analysis of the data from Nifty 500 firms, 80 percent of the directors on the boards of companies in India are above the age of 45 with 50 percent into the 60+ bracket. Only a tiny 3.8 percent are below 35 years in age.

Not only is this skewed in terms of diversity, it also flies against the realities of the market that these companies are trying to address.

For one, it defies the demographics of the country with almost 60 percent of the population below the age of 34 - a full 50 percent is below 25 - and just 15 percent above 55. While the survey data relates to all directors, it mentions that the board composition remains heavily skewed towards non-executive directors. The role of these directors is to provide independent oversight and bring in expertise. The bias towards older directors means that those supervising decisions for the bulk of a company’s customers belong to the wrong age group.

As per a recent Bain report, How Indian Shops Online 2022, India’s online shopper base is estimated to increase to 400–450 million by 2027 with most of the new additions belonging to the younger age group. In 2021 for instance, of the 40 and 50 million new shoppers that were added to the Indian e-retail market, one in three belonged to Gen Z (younger than age 25), a group which, writes Bain, “will become a critical cohort in the future.” The report highlights how these shoppers frequently use wishlists to shortlist products before adding items to the shopping cart. It will be interesting to see how many of the sexagenarians that grace Indian boardrooms even understand that concept, leave alone guide their companies to anticipate such needs. With India’s e-retail market estimated to increase to $150–$170 billion by 2027 a native understanding of the digital universe isn’t just desirable, it’s a necessity.

A look at the most successful digital startups of the 21st century also shows how that underpins successful businesses. Thus, Jeff Bezos was 30 when he founded Amazon while Steve Jobs was just 21 when he founded Apple and Mark Zuckerberg not yet 20 when he started Facebook. Ditto for Indian startups with Binny and Sachin Bansal of Flipkart, Bhavish Aggarwal of Ola and Deepinder Goyal of Zomato, all in their 20s when they kicked off their ventures.

Even if we ignore them as outliers, aggregated data still supports the hypothesis. In his book, Super Founders: What Data Reveals About Billion-Dollar Startups, author Ali Tamaseb writes that the median age at which founders have started their billion-dollar businesses is 34. HBR researchers in a 2018 study found that the average age of entrepreneurs at the time of their company's founding is 42. The sweet spot then seems to be somewhere between the mid 30s and mid 40s when people seem to be able to combine the creativity and passion needed to build a large business from the ground up. Since most surveys say that’s what established companies struggle with most, you would assume that some degree of youth would be welcomed in boardrooms.

In the Indian context, where there is increasing disillusionment about the role independent directors have played to arrest corporate misgovernance, there is also a dire need to see if that is in any way related to age. In the absence of conclusive evidence it may be libelous to say that older men tend to be more willing to go along when promoters and executives bend the rules. But it does make the case for stepping up the inclusion of young people on company boards since millennials tend to be more idealistic and ethical-minded. They have greater awareness and concern for the climate and view issues like sustainability and social responsibility as mission critical and not merely as compliance issues.

With more than 800 independent directors set to mandatorily retire in 2024 and 65 percent of the companies in India (according to a survey by KPMG) planning to appoint new independent directors in the next 12 months, there’s a great opportunity to bring down the average age in boardrooms.