Companies are Increasingly Seeking Directors with Tech Expertise As Boards Shifting Toward Hiring Young Blood.
Companies are Increasingly Seeking Directors with Tech Expertise As Boards Shifting Toward Hiring Young Blood.
Synopsis:
Primeinfobase data reveals that the number of first-time independent directors appointed in the calendar year 2023 increased to around 830, compared to 776 in the previous year and 518 in the year 2019 before the pandemic. In 2023, the average age of these first-time independent directors has decreased to 53 years from 59 years five years before.
More and more companies are appointing young independent directors who possess knowledge and expertise in cutting-edge technologies like digital, artificial intelligence, and cybersecurity, as well as in the fields of environmental, social, and governance, which have become essential components of their business strategy and roadmap.
According to prominent board members and leadership advisory firms, there has been a rise in the number of younger first-time independent directors in the past year. These directors were selected for their expertise in modern skills.
Primeinfobase data reveals that the number of first-time independent directors appointed in the calendar year 2023 increased to around 830, compared to 776 in the previous year and 518 in the year before the pandemic in 2019. The mean age of these novice independent directors has decreased to 53 years in 2023 from 59 years five years prior.
“Digital, Al, data mining, and other technological skill sets have become crucial prerequisites for board membership,” stated Arun Duggal, the head of ratings firm ICRA and an independent director at many firms.
“We manage searches for the replacement of an independent director whose tenure on the board is nearing its conclusion. However, we are observing that companies are now seeking board members with distinct skills and experiences when they replace them,” stated Jvoti Bowen Nath, the managing partner at executive search firm Claricent Partners.
She mentioned that there is currently a notable increase in the appointment of novice board directors who are chosen specifically for their expertise in artificial intelligence (AI) or environmental, social, and governance (ESG) matters.
Nath stated that in a recent search for a diverse Indian industrial company, the requirement was to find someone who is very knowledgeable in artificial intelligence and technology, with a modern perspective that is much different from past requirements.
According to data from Primeinfobase, more than 1,400 independent directors of National Stock Exchange-listed companies would be required to retire by March 2024. The mean age of the directors for 2,257 businesses listed on the NSE is 58.6.
There is a scarcity of directors who possess the necessary technological expertise and other contemporary abilities. Recently, boards of companies in unrelated industries have appointed numerous senior executives who hold leading positions in their respective organizations.
Monica Agrawal, the managing director of financial services for the Asia Pacific and India region and the lead for Board Services at Korn Ferry, stated that individuals currently holding full-time executive positions are seeking special approval to join non-compete boards. As the skill sets required for these positions, such as data security, consumer tech, and ESG, are predominantly modern, the average age of first-time directors is naturally decreasing as these positions are filled by working professionals.
The primary function of the board is to actively participate in shaping the organization’s strategy and managing any risks. Consequently, directors are expected to possess a strong understanding of technology rather than extensive technical proficiency. “The primary responsibility of the board is to ensure effective governance, and there is a growing need for directors who possess a deep understanding of technology,” stated Pankaj Arora, Managing Director of Russell Reynolds Associates India, a leadership advice business.
Several companies are also seeking directors who can establish a connection with both the employee and consumer base. “If the mean age of the company’s employees (and customers) falls within the range of 25-30 years and if there is no individual on the board who can empathize with such a demographic, the board’s capacity to comprehend the challenges faced by the company will be restricted,” stated Arora.
About The Author:
Yogesh Naager is a content marketer who specializes in the cybersecurity and B2B space. Besides writing for the News4Hackers blog, he’s also written for brands including CollegeDunia, Utsav Fashion, and NASSCOM. Naager entered the field of content in an unusual way. He began his career as an insurance sales executive, where he developed an interest in simplifying difficult concepts. He also combines this interest with a love of narrative, which makes him a good writer in the cybersecurity field. In the bottom line, he frequently writes for Craw Security.
About Author
English