Power dynamics shift as Oliver Blume faces pressure from elder male colleagues!
In the automotive industry, where technological disruptions are the norm, the composition of a company's governing body can significantly impact its adaptability and competitiveness. A recent discussion has been centered around the age and tenure of supervisory board members at Volkswagen (VW), one of Germany's largest car manufacturers.
Oliver Blume, the CEO of VW, is supervised by a body consisting of members who are partly very long-serving and elderly. The average age of all DAX supervisory boards is 60 years, making the VW supervisory board above average. Moreover, the average age of the four most powerful supervisory board members of VW is 74 years.
These board members include Hans Dieter Pötsch, Wolfgang Porsche, Hans Michel Piech, and Ferdinand Oliver Porsche, who hold multiple mandates at Porsche, Volkswagen, and VW subsidiary Traton. Their extensive experience rooted in traditional automotive and manufacturing roles supports a thorough understanding of the company's historical operations and workforce considerations. However, this demographic profile can also result in risk aversion and slower responsiveness to technological disruptions.
Marc Tüngler, CEO of the German Shareholders' Association, criticizes the lack of transformation in the supervisory boards of German stock corporations, specifically highlighting a "disturbed control system" in the Porsche Group and VW. He calls for more changes in VW's supervisory board, stating that the lack of control and influence from outside could lead to poorer results.
Michael Wolff, an economics professor, shares similar concerns, criticizing the long tenure and advanced age of many supervisory board members, including those at VW. He believes there are too many supervisory board members who have been in office for longer than 12 years and are older than 70 or 80 years.
A spokesperson for the VW supervisory board, however, asserts that they were not aware of the study and emphasize that the nomination committee and the supervisory board plenum intensively dealt with proposals for the election of the supervisory board regarding rejuvenation. They also claim that the supervisory board has an appropriate age mix that covers a wide range of age groups.
The high average age and long tenure of supervisory board members could reinforce VW's organizational stability and employee alignment, but may also constrain strategic agility and innovation, possibly impacting the company’s competitive edge in the future automotive landscape. Balancing experience with diversity of age and external expertise can be essential for boards to effectively navigate the ongoing transformation in the industry.
Interestingly, the Skoda subsidiary of VW has a younger supervisory board compared to VW, suggesting that a more diverse board composition could potentially bring fresh perspectives and foster agility in strategic decision-making.
As the automotive industry continues to evolve at an unprecedented pace, the need for fresh leadership at the top becomes increasingly apparent. The long tenure of VW's supervisory board members, with an average of 21.5 years, well above the average term of office of 5.6 years, raises questions about the company's ability to adapt quickly to new challenges.
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- The high average age and prolonged tenure of supervisory board members at Volkswagen, despite their wealth of experience, may impede the company's ability to adapt swiftly to technological advancements in the evolving automotive industry.
- Balancing experienced board members with a diverse mix of ages and external expertise could aid boards, such as Volkswagen's, in navigating the ongoing transformation within the industry more effectively, thereby ensuring strategic agility and innovation.
