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Why You Should Create a “Shadow Board” of Younger EmployeesWhy You Should Create a “Shadow Board” of Younger Employees

A lot of companies struggle with two apparently unrelated problems: disengaged younger workers and a weak response to changing market conditions. A few companies have tackled both problems at the same time by creating a “shadow board” — a group of non-executive employees that works with senior executives on strategic initiatives. The purpose? To leverage the younger groups’ insights and to diversify the perspectives that executives are exposed to.

They seem to work. Consider Prada and Gucci, two fashion companies with a good track record of keeping up with — or shaping — consumer tastes. Until recently, Prada enjoyed high margins, a legendary creative director, and good growth opportunities. But since 2014, it has witnessed declining sales. In 2017, the company finally admitted that it had been “slow in realizing the importance of digital channels and the blogging online ‘influencers’ which are disrupting the industry.” Co-CEO Patrizio Bertelli said, “We made a mistake.”

Over the same period, under the direction of CEO Mario Bizzarri, Gucci underwent a comprehensive transformation that made the company more relevant to today’s marketplace. Gucci created a shadow board composed of Millennials who, since 2015, have met regularly with the senior team. According to Bizzarri, the shadow board includes people drawn from different functions; they’re “the most talented people in the organization — many of them very young.” They talk through the issues that the executive committee is focused on and their insights have “served as a wakeup call for the executives.” Gucci’s sales have since grown 136% — from 3,497 million Euro (FY2014) to 8,285 million Euro (FY2018) — a growth driven largely by the success of both its internet and digital strategies. In the same period, Prada’s sales have dropped by 11.5%, from 3,551 million Euro (FY2014) to 3,142 million Euro (FY2018).

We researched companies that use shadow boards, trying to understand what they really contribute to the organization and what best practices look like. We focus here on three companies’ experiences.

Business model reinvention. Facing increasing pressure from Airbnb, French AccorHotels needed a new business model. Top management asked marketing to develop a brand for Millennials. However, after two years marketing came up empty. Arantxa Balson, chief talent and culture officer, decided to turn the project over to a shadow board. In 2018, the Jo&Joe brand was born. Considered “an urban shelter for Millennials,” the brand communicates creativity, flexibility, and a strong sense of community. According to Balson, the shadow board succeeded in part because they focused on their vision and developed their point of view “regardless of all internal and cost constraints.” The shadow board then gave birth to another innovation, the Accor Pass, a hotel subscription that provided people under 25 with a place to stay while they hunted for a permanent residence.

Process redesign. Stora Enso, a Finnish paper and packaging company, used their shadow board (which they call Pathfinders and Pathbuilders) to revise how the executive committee assigned work. Until this shift, work was assigned to groups that the executives considered experts and therefore best suited to the assignment. The shadow board convinced them to assign certain tasks to non-experts, arguing that an unbiased view would increase the chance of breakthroughs. One project, aimed at reducing supply-chain lead time, had stumped a supposedly expert team. The new team came up with a workable plan within six months. No team members came from the business unit in question, nor had they any prior supply chain experience.

Organizational transformation. CVL Srinivas, the CEO of GroupM India, needed to implement a three-year digital and cultural transformation. With that end in mind, he created the YCO (Youth Committee). Since its inception in 2013, the YCO has led GroupM’s Vision 3.0, making digital the centerpiece for driving future growth. Working across departments, the shadow board also led a scoping initiative focused on the digitalization of contracts. It strengthened GroupM’s ecosystem by increasing the number and improving the nature of partnerships with media owners, data providers, consultants, auditors, and start-ups. Additionally, the group noticed that there wasn’t much cross-agency interaction. To promote meaningful conversations, the YCO developed a social media platform (Yammer) that facilitated conversations between management and lower-level employees across agencies.

Increased visibility for Millennials. Research suggests that Millennials crave more visibility and access, which shadow boards deliver. This visibility often results in significant career progression for shadow board members. At Stora Enso, a female shadow board member was a group-level financial controller when she began the program. As a result of her impressive work on a project involving one of their legacy businesses (paper), she was promoted to be the sales director of the largest paper segment a few months after the program’s end. As HR director Lars Haggstrom stated, “This [promotion] would never have happened had it not been for the shadow board program.”

What are the best practices for implementing a shadow board?

Look beyond the “high-potential” group. Many companies staff shadow boards exclusively through executive-committee nominations or with already identified high potentials. Millennial participants tend to prefer a more open process. Stora Enso’s Haggstrom pushed for an open-application process — allowing anyone who fit certain criteria to apply. Doing so not only created a more diverse cohort; it also allowed the company to discover some hidden gems who would not otherwise have been on the radar. Interestingly, they tested the performance of the company’s top forty high potentials (who were clear shoo-ins for the program) against the employees chosen via open enrollment. On abilities such as data analytic skills, sense-making, and teamwork, the open-enrollment members outperformed the high-potentials.

Make it a CEO-sponsored program. In order for the program to have maximum impact, support needs to come from the top of the organization (though most are coordinated on a procedural level by HR). For example, AccorHotels’ shadow board program succeeds because CEO Sebastian Bazin plays an active role by interviewing potential members and regularly interacting with existing members. At Stora Enso, members reported directly to the CEO on issues related to the Pathfinders and Pathbuilders work.

Keep evaluating and iterating. All of the companies we profiled adjusted the programs as they learned what worked (and what didn’t). For example, Stora Enso’s leaders reviewed the program annually and as a result added resources to better capitalize on diversity within the shadow board and interactions between the shadow board and executive committee. And while GroupM’s YCO program originated as a 12-month program, the organization extended it by one year in order for the YCO to maximize potential contributions.


Jennifer Jordan, Ph.D., is a social psychologist and Professor of Leadership and Organizational Behavior at IMD. Her research focuses on power, ethics, leadership, and the intersection of these topics.


Michael Sorell is a research associate at IMD.

 

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What PwC Learned from Its Policy of Flexible Work for Everyone

Every Tuesday at 7:30 a.m. Pacific Time, I join a video conference call with leadership colleagues from across the country. I’m on the West Coast, so these meetings are always early for me. When I started joining them more than 10 years ago, I was up early to ensure that I looked polished and ready to conquer the day before I got on the video conference. These days, I find myself forgoing dressing up or putting on makeup before dialing in. I no longer think twice about being on video from the comfort of my living room and in my morning sweatshirt. And, as I say good morning to my colleagues, it’s apparent that I’m not the only one.

It hasn’t always been this way. Our company has come a long way over the past decade by truly instilling a culture of flexibility across the firm. We now have the ability to work in a way that fits our personal lives and, if that means taking an early morning video call at home in our sweatpants, then so be it.

When others ask me how we did it, I’m honest. This did not happen overnight. It wasn’t easy, there were growing pains along the way, and we’re still learning. Here’s some of what we learned along the way that we hope other companies can benefit from:

You need to toss out the rule book. To build a culture of flexibility, you must first reimagine what flexibility means today. Remember, to create behavior change, you need to allow for variance and creativity and agility. In other words, be “flexible” when creating a flexibility culture. A policy guide or a formal program can work against you. It seems counterintuitive, but having rules in place actually hinders the development of a truly authentic culture. At PwC, we loosely call it “everyday flexibility.” It isn’t something we mandate that all teams adopt; it’s a mentality and a way of life that should be individualized for each person.

Flexibility for a caregiver might mean being able to leave work early to take an elderly parent to a doctor’s appointment. For a parent, it might mean taking a midday run, so evenings can be spent with their children. And for others, it could simply be taking an hour in the afternoon to go to a yoga class and recharge. When we look at flexibility this way, it’s easy to see why formal rules actually hinder adoption and progress. It’s impossible to have a one-size-fits-all approach for flexibility. We let our teams figure out what works best for them, as long as they deliver excellent work, on time. The rest is all fair game.

Everyone deserves the same degree of flexibility. Flexibility is not related to a generational need. Every employee, at any age, benefits from and is looking for its availability. A culture of flexibility will not be created, adopted, or embraced unless the origination stems from an understanding and belief that every single person in the organization deserves the same consideration and flex work policies. This isn’t about one segment of the workforce, so if you’re sending out any kind of internal communications materials about flexibility, make sure it speaks to all employees. After all, we are a diverse workforce made up of diverse people, from working moms and dads to thousands of others without children who also want flexibility. One person’s reasons for needing flexibility are not any more important or any less important than any another person’s.

When it comes to flexibility, trust is not earned. It is not uncommon for managers to tell me that they believe in allowing employees to work flexibly, if and only when they’ve been with the firm a certain amount of time and earned that trust. This is when I remind people that we place our trust in employees from the moment they start working for us, so why wouldn’t that same theory apply when it comes to flexibility? If you trust an individual enough that you hired them to join your organization, you also should trust them to get the work done when and where they prefer, as long as they meet deadlines. I challenge all managers to take this approach.

Flexibility is a two-way street. A strong culture starts from the very top. For example, when our CEO started wearing jeans to work, it sent a message to all of our people that it’s okay to dress casually. That said, that is only where it starts. The action comes from the bottom up.

I often travel to speak to groups of our newly promoted senior associates. For most of these individuals, this is the first time they are stepping into a supervisory role. At the same time, they are still being supervised. They have a unique opportunity to empower direct reports, while putting pressure on managers to do the right thing for their teams. In these moments, I am reminded of the tremendous power our people hold in strengthening flexibility across the firm.

For us, flexibility is not about working less, but it is about encouraging people to work differently. It’s a two-way street. We give our people the flexibility they need when they need it, and sometimes, we need them to give more when business demands require it. When done right, flexibility results in a happier, healthier, and more productive workforce. And it helps attract the best employees, and makes them want to stick around

Anne Donovan is the U.S. People Experience Leader at PwC (PricewaterhouseCoopers), where she is a key senior leader responsible for strategy and innovation around culture change. She has a strong background in operational effectiveness and in engaging people to lead positive change.

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