CEO Succession: How One Board Drove Transformation

New Year’s predictions are tricky, but one thing we know with certainty about 2016 is that the pace of change in business—propelled by companies seeking new markets and new products and aided by
increasingly sophisticated technology—will not abate. Crucial in this environment are boards equipped to serve as strategic assets, providing long-term competitive advantage to the shareholders they serve.

A few results from the most recent Korn Ferry Market Cap100 (KFMC100)—a study of governance changes at the top 100 U.S. companies by market capitalization—offer a glimpse into how board composition is shifting and how boards view recruiting directors with the skills they need. While 17 percent of new directors are 65 and older, 16 percent are 49 or younger. That’s a stark contrast to boards as a whole, including both new and incumbent directors, where 51 percent of directors are 65 and older, and a scant 4 percent are 49 or younger. This underscores efforts by the largest companies in America to add next generation directors who bring the fresh ideas, insights, and skills that are essential in a rapidly changing business environment.

Rather than merely add directors on a one-off basis when there is a vacancy, boards should continuously align their skills and competencies to the challenges of the future—not of the past—in a manner that is highly respectful of the value of the current directors but also keenly aware of the need to refresh the board. 

The case study of Harman International Industries highlights this process.