How Shadow Boards Bridge Generational Divides

A shadow board is a group of young, nonexecutive employees tapped to work with the executive board on strategic initiatives. It’s designed to introduce a company’s (typically middle-aged) leadership team to new perspectives and insights, thereby helping to drive strategy. The shadow board might contribute to initiatives as significant as developing a new marketing plan, redesigning a business model, or updating key processes in the organization’s value chain. It can also shift corporate culture in two ways: Board members can gain access to new perspectives and younger employees can experience the inner workings of a board and share what they learn with their peers. As we welcome Gen Z into the workplace, such initiatives are more important than ever. While the Silent Generation, Baby Boomers, and Millennials are still learning how to work together, the addition of Gen Z has brought different challenges to light. Research reveals that this newest generation of employees has suffered the most from Covid-19 isolation, and many workers have been remotely onboarded to teams they still haven’t met in person. Gen Z also cares a lot about diversity and inclusion, having entered the workforce during Black Lives Matter, #MeToo, and gender diversity movements. Forming a shadow board with representatives from a younger generation or two is an effective way to navigate this shift among employees — and prepare for new customer segments and market dynamics. What Shadow Boards Contribute We spent five years studying the shadow boards of more than two dozen organizations across Europe, Asia, Africa, and the United States. These organizations ranged in size from very small (25 employees or fewer) to very large (more than 200,000 employees) and included professional service firms, energy giants, regional banks, and nonprofit organizations. All had formally announced the creation of a shadow board within the previous three to five years. Through our research, we found that the organizations gained two primary benefits. First, they were better able to test and pilot initiatives that were important to younger employees and customers. Second, they more effectively bridged gaps between workers of different generations, which enhanced respect and understanding across the hierarchy. Testing ideas. Shadow boards can serve as safe spaces for the sharing and testing of new initiatives before implementing them at scale. For example, at Mövenpick Hotels & Resorts, the senior executive team had been discussing the need to create a booking app for more than a year. All of the company’s competitors had such apps, so it seemed like a no-brainer to develop and roll one out. The IT department conducted extensive feasibility studies, but just as the company was preparing to look for vendors, management ran the idea by the shadow board — and members balked. “Why would you guys waste your time and money making an app?” they said, explaining that no one wanted to download another app or remember another password. The senior management, IT, and commercial teams considered this view and worked with the shadow board to develop a direct web interface instead. “It was a very cool moment,” recalls Craig Cochrane, senior vice president of talent and culture. “I don’t know how much time or money we would have spent going down the app route for no particular gain, had it not been for the shadow board giving us that feedback so bluntly.” We spoke to several executives in other companies who agreed that testing ideas with their shadow boards allowed them to stay connected to the changing expectations of younger demographics and empowered them to pursue bolder strategies. Bridging gaps. Shadow boards give both senior executives and rising young talent regular opportunities to communicate with one another, fostering understanding at both levels. The younger, less-experienced employees learn the complexities of the business, see how leaders make decisions, and get advice on their goals. The senior executives get new information and insights from different parts of the company and form personal relationships with up-and-comers in the pipeline. The exploration division at TotalEnergies launched its shadow board, a group of employees under the age of 35, in the second quarter of 2021. One member describes the experience as a win-win that builds empathy between generations. “Sitting next to the executives and seeing how complicated it is to make decisions for large groups of stakeholders makes us more aware of the realities of leadership,” he explains. “And it’s beneficial for management since we introduce topics that they might not be aware of yet.” The executive sponsor for the board, Gautier Baudot, echoes those sentiments. “At a critical time in our industry, the shadow board provides insights about how the next generation sees the future of the profession, and we get to know the rising talent,” he said. In addition, “we’re able to provide learning opportunities to the members of the shadow board. [They] receive mentoring and unparalleled visibility across the organization.” Forming a Shadow Board If you think your company could benefit from a shadow board, here are four steps you can take to form one. Step 1: Define your generational target. Which generation or generations do you want advice from? If your goal is to understand the views of your youngest consumers and employees, look to Gen Z. But if it’s to redesign business models or rethink the organizational structure, you might want to look to Millennials. Step 2: Recruit a diverse group. Once you define your target generation, bring in people who represent different genders, races, functions, cultures, and other types of backgrounds. Some companies choose candidates from their formal leadership development pools. Others have an open application process for all employees in the selected generations. We recommend the latter approach since it creates more enthusiasm around the shadow board, typically generates a more diverse pool of applicants, helps to uncover hidden talent, and makes employees feel better represented even if they aren’t selected. Some organizations combine both strategies, asking designated high potentials to apply and bringing them together with employees nominated by managers or by themselves. One executive team we know even found that the shadow board members selected through the open application received better executive assessments than those picked from the high-potential pool. As far as size, the number of people on your shadow board should match, as closely as possible, the number who sit on the executive board. Having a fairly proportional representation allows for an equal balance of voices on both sides, as well as the opportunity for the shadow board to understand what it “feels” like to be on a board the size of the executive committee. Avoid creating a group that is significantly larger, as complexity of decision-making grows exponentially with the addition of people in a team. Step 3: Define the time commitment. Across the organizations we studied, members of shadow boards were expected to add the role to their regular responsibilities without extra compensation. By maintaining those dual roles, they were able to keep tabs on what was happening on the ground, report back to and hear from senior leaders and fellow board members, and take the insights and ideas discussed into their day jobs. But candidates should understand up front that being on the shadow board is a big commitment. Organizations must be clear on how much time someone is expected to contribute and ensure that the tasks assigned don’t cause anyone to exceed that amount. We recommend recruiting people with the self-discipline to balance both roles and a true desire to participate. That’s why we endorse the standard policy of not paying people for shadow board work: While the evidence is mixed, financial remuneration could create a perverse incentive, overshadowing young employees’ intrinsic motivations to contribute to the strategic direction of the organization. In addition, we think it’s important that shadow boards not create a financial burden for companies, which is why the decision of whether to start one should be purely about the value the group could bring, rather than about budgetary concerns. Step 4: Embed the board into organizational decision-making. For a shadow board to have impact, it needs concerted, focused, and deliberate coordination by its sponsors. One of the biggest mistakes we came across in our research was failing to onboard members and guide their interactions with the executive board in a structured way. The two groups comprise less- and more-experienced people, respectively, from two different levels and generations, so it will take some work to ensure that they can communicate effectively and cooperate. We recommend a formal onboarding period for both boards. For example, Shakespeare Martineau, a UK-based law firm, set aside several days for an offsite where shadow and executive board members got to know one another and devised their governance guidelines. The CEO, Sarah Walker-Smith, explained that her team did preparatory work ahead of time, giving assignments to participants to demonstrate that everyone’s voices would carry equal weight at the onboarding sessions. She noted that some executive board members were initially apprehensive, feeling their authority could be undermined. But ultimately, “the prework created common ground and established informal rules of engagement between the shadow and main board, which enabled the retreat to be a resounding success,” she said. After the induction period, the two boards should meet separately and then together to further discuss how they will interact. Important questions to consider include: Will the shadow board be present at every executive board meeting, or a subset of them? Will a representative of the shadow board be elected to attend executive team meetings and share the shadow board’s viewpoints, then report back to their own board? Will the representative role rotate across the shadow board, or be held by one person throughout the board’s tenure? Best practices are to hold several joint board meetings and to have a shadow board representative at some executive meetings. This method allows the shadow board to stay abreast of management decisions while still giving the executive board the autonomy it needs. Potential Pitfalls While shadow boards can make lasting contributions to organizations, they can also present challenges. When forming and running a shadow board, be on the lookout for two key pitfalls. Lack of CEO or executive committee sponsorship. When a shadow board fails to have impact, this is often the reason. In one company we studied, the shadow board was the brainchild of the CHRO. While she made a convincing argument for why it would benefit the organization, the CEO saw it as a distraction and even a threat. The board lasted one year, and none of its recommendations were taken. In another case, a shadow board supported by the CEO was formed and just as quickly disassembled because other members of the executive team, who were worried about the company’s survival, didn’t buy in. To avoid this pitfall, you need to establish a clear business case for the shadow board that resonates with all stakeholders. The key sponsor must also show their commitment to the board and its success. “I take it seriously, so they take it seriously,” Mgcinisihlalo Jordan, the deputy CEO of Deloitte Africa, told us. Publicly celebrating some early wins, like finalizing a deliverable or making a strategic choice, can help to support the business case. And manage expectations about the value the shadow board is expected to bring and the timeline it should happen on. No clarity or purpose. A second major pitfall is a lack of clearly defined output or deliverables. Without such deliverables, shadow boards can be perceived as just another top-management initiative meant for show rather than for substantial strategic or cultural contribution. Specifically, these can include projects or specific assignments and mandates. For example, at TotalEnergies the shadow board is tasked with learning what the next generation thinks about careers in energy exploration. A regional bank assigned its shadow board to find methods for attracting and retaining the young customers who were flocking to fintechs. It’s not enough to merely ask for opinions from your shadow board. You need to know what the organization will do with them. . . . During one of the most tumultuous times in recent business history, shadow boards are an effective way to break down generational barriers, build trust, and bring diverse groups together to solve problems and respond to fast-evolving market dynamics. When done correctly, with the right planning and goals from the top, shadow boards can put management’s finger on the pulse of the organization while also keeping its eyes on the future.

How Shadow Boards Bridge Generational Divides

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