Shadow boards can unlock innovation, bridge generational divides and boost profits. Stephen Conmy explains why
Many businesses struggle with two seemingly unrelated issues: disengaged younger employees and a lack of response among senior executives to shifting market trends.
Some companies have tackled these problems by creating a “shadow board” – a group of non-executive employees who work with senior executives on strategic initiatives so the organisation can gain insights from the younger generation while broadening the view of senior executives.
The specific roles, responsibilities and authority of a shadow board can vary widely depending on the organisation and its goals, however. So what exactly is a shadow board?
Generational perspective
A shadow board is typically sponsored by the CEO and consists of nine to thirteen younger people (either millennials or Gen Z) from a cross-section of the business whose primary purpose is to provide insight, feedback and ideas to senior decision-makers in the company, representing their generation’s perspective.
Members of the shadow board learn about the company’s strategy and decisions so that they can share with their peers and network.
The shadow board at work
Harvard Business Review (HBR) reported that when Gucci created a shadow board of younger employees, its profits soared. By contrast, when Prada didn’t pay attention to the creative input of its younger employees and failed to recognise the growing power of digital influencers, its profits fell.
The tale of these two fashion giants is a valuable lesson for all companies regarding the potential creative energy of a shadow board.
As reported by HBR, in the past, Prada had high margins, a legendarily creative director and good growth prospects. Since 2014, however, sales have declined.
In 2017, the company admitted that it had “been slow in realising the importance of digital channels and online influencers disrupting the industry”.
Meanwhile, during the same period, Gucci created a shadow board.
Gucci’s shadow board is made up of millennials, and in 2015, met regularly with senior management.
The shadow board’s insights have “served as a wake-up call for the executives”, and Gucci’s sales grew by 136 percent. This growth was primarily driven by the success of both its internet and digital strategies.
In the same period, Prada’s sales dropped by 11.5 percent.
Types of shadow boards
There are three different types of shadow boards:
Developmental shadow board
Shadow boards are used by certain businesses to prepare and promote younger or less-experienced staff for future leadership positions.
A shadow board, in this context, is made up of people who do not have formal authority inside the organisation but participate in board-like conversations to provide new perspectives, develop novel ideas or gain experience in board-level decision-making.
It’s a learning experience for these people, as well as a method for the organisation to gain diverse perspectives.
Checks and balances shadow board
In other situations, a shadow board might act as a separate, unofficial group that reviews and critiques the decisions of the official board of directors. It can offer alternative perspectives or point out potential flaws in the board’s decisions.
This structure is less common and can sometimes arise in activist or oversight situations.
Perspective shadow board
Especially in larger or more complex organisations, a shadow board can be formed to offer viewpoints from different parts of the company or from different stakeholder groups.
For instance, a non-profit might have a shadow board made up of the people it serves rather than employees.
Mutually beneficial arrangement
Shadow boards provide younger workers with the visibility and access they desire, which can often lead to significant career advancement.
Notably, the impact and insights of the shadow board can drive valuable offshoots more senior executives might otherwise miss.
Not only is a shadow board beneficial to both the members and its organisation, it can also contribute significantly to effective governance, innovation and leadership succession planning.
Stephen Conmy is Head of Content at the Corporate Governance Institute
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