While the average age of CEOs and boards directors has come down over the years, representation of the younger people is still low considering Kenya’s demographic balance.
One of the main stumbling blocks for young people seeking executive and board positions is the lack of adequate experience that companies demand for these positions.
Talk of company board members in Kenya, and the image that comes to mind is of grey-haired individuals, most likely male.
While the average age of CEOs and boards directors has come down over the years, representation of the younger people is still low considering Kenya’s demographic balance.
A board diversity report published by Nairobi Securities Exchange (NSE) #ticker:NSE , Kenya Institute of Management (KIM) and Kenya Private Sector Alliance (Kepsa), and New Faces New Voices ties this to among others a lack of talent within the younger people and age bias.
The report, titled ‘KIM Board Diversity & Inclusion Report 2021’, reveals that the average age of boards in Kenya was 47.6 years as of March this year, an improvement from 55.8 years in 2017.
The report shows young executives aged below 35 account for only four percent of boardroom seats against their older counterparts aged between 46-55, who at 57 percent are the majority.
Executives aged 55 on average constituted 13 percent of all appointees while those aged between 36-45 constitute 26 percent.
The survey of age diversity was carried out on 345 public listed and private companies.
One of the main stumbling blocks for young people seeking executive and board positions is the lack of adequate experience that companies demand for these positions.
“Although there is plenty of progress in gender diversity and inclusion, unfortunately, it has remained challenging to break down roadblocks of age bias and prejudice in board recruitment,” the KIM report stated.
Most firms have an older average age of directors who are deemed to contribute to better financial performance, bring experience, institutional memory and build stronger relationships with stakeholders.
A few years ago, there was a mini evolution that saw several listed forms tap young professionals aged below 40 to corner offices, but that trend has markedly slowed down.
For instance, Centum chief executive James Mworia made it to the corner office at 36 in 2014 while KCB Group chief executive Joshua Oigara had been appointed at 37 in 2012.
Age limit
Despite the progression that has been made, this profile is seen dwindling due to a corporate policy that allows chief executives and board directors of NSE-listed firms to serve until 70 years — age limit set by the Capital Markets Authority.
Corporate heads acknowledge that companies could be missing out on new markets by ignoring younger people on boards because they hold different perspectives that are shaped by technological innovations compared to their older counterparts.
Former BOC Kenya managing director Marion Gathoga–Mwangi says the younger people, however, need training programmes to be “board ready’’ because of the high expectations to bring top-level and diverse perspectives in strategic planning.
The drag in inclusion, she says, has also been attributed to the rule for boards that lets directors serve for a term of three years and be eligible for re-appointment for one further term of three years.
“Young people are needed in the board due to their different consumption habits, constituting a huge part of growth, which would give a different perspective in making of decisions and strategising,” says Ms Mwangi.
“It will be just a matter of time before we start to see opportunities arise for younger executives to break through the artificial barrier. Businesses are starting to know that they can add value.”
According to NSE senior manager, corporate affairs and sustainability Waithera Mwai-Ireri, there has been progress in lowering the average age in the boardroom, albeit a slow one.
“We need to appreciate we have come far. The initiative to drive change is slow and takes time,” she said.
“We are trying to show the need to have the younger generation within listed companies to drive representation and get more young people on boards to bring a different perspective.”
A global trend shows the average age of CEO was 56 last year. The youngest CEO can be found in Germany at age of 30, and the oldest in the US at age of 89.
In the US, CEOs, are more likely to be aged between 50-60, with the technology industry most likely to promote young talent.
Gender diversity has also been a problem for boards, but there has been encouraging improvement in the last four years, which shows that parity is not a mirage.
Female representation in boards stands at 36 percent this year, a significant jump from the 17 percent representation level that was seen in 2017 — indicating that efforts to address the imbalance are working.
Another report by Women on Boards Network says the problem has been largely due to gender bias, where younger women are disadvantaged when accessing these positions. The lobby says there are only about 15 women under 40 years serving on boards.
From the KIM report, it was found that at the chairperson level, women accounted for 21 percent of the positions, an improvement from 7.7 percent in 2017.
In the C-suites, the percentage of women stands at 37 percent, up from 26 percent in 2017 and well ahead of the global average of 21 percent.
The marked increase, experts say, is an affirmation that there is enough talent among women to take up more executive and board roles, and an incentive to hasten the drive for equal representation.
“The changes in age diversity have been a similar narrative as gender diversity. The increment is slow and hence we need to hasten it,” says Ms Ireri.
On the bright side, companies are taking concrete steps to address the gender imbalance in boardrooms, which will likely improve Kenya’s leading position in Africa in gender inclusivity.
According to the report’s findings, 97 percent of the polled companies were encouraging employees of diverse backgrounds to apply for board positions, while 85 percent had a diversity and inclusion policy statement.
A similar number — 85 percent — were providing training programmes aimed at promoting diversity and inclusion to the rest of the organisation.
