“Grow or die” has been a corporate mantra for the last 50 years. Shareholders expect growth and CEOs consistently name growth as a top priority year after year. However, corporate boards of directors that oversee company strategies often lack members with experience increasing revenue and market share—marketers. Our study published in the Journal of Marketing demonstrates that companies with boards containing members with marketing experience do indeed generate better revenue growth.
Surprisingly, boards are not concerned by the lack of experienced marketers among their ranks. A 2011 National Association of Corporate Directors survey found that less than 5% of directors felt that marketing experience was important for a board member. We questioned this view and predicted instead that companies that lack board members with marketing experience would perform more poorly than those companies that did.
Our research team examined 64,086 biographies of board members for every company listed in the S&P 1500 from 2007 to 2012 as reported in proxy statements required by the U.S. Securities and Exchange Commission. The analysis found that 2.6% of all board members had past or current executive-level marketing experience and that 16% of boards have a member with some type of background in marketing. We then compared board makeup with the percentage change in annual revenues.
The study demonstrates that boards with members with deep marketing experience are better positioned to make growth a firm-wide priority and to increase the effectiveness of revenue growth strategies. Comparing board makeup, we found that revenues increased by 5.8 percentage points annually when a marketer is on the board. At the same time, our research demonstrated that this relationship is much stronger when other board members are open to marketing ideas (i.e., there are fewer CFOs on the board), when the board has a strong connection to top management decision making (through a CEO who is also the Chairman of the Board), and when prior industry growth and company market share growth are weak (setting up the opportunity for marketing-experienced board members to have a meaningful impact on the path forward).
While conducting the study, we also realized that adding marketers to boards may increase diversity. Board members with marketing backgrounds are typically female and younger than their peers. Thus, beyond the growth benefit, hiring board members with marketing experience may increase board diversity in makeup and ideas, enabling the board to gain fresh perspectives and insights into how to woo, win, and retain customers and grow market share in the highly competitive digital marketplace.
Companies seeking to build a board of directors with wide-ranging expertise and the ability to grow company sales should read this study.
From: Kimberly A. Whitler, Ryan Krause, and Donald R. Lehmann (2018), “When and How Board Members with Marketing Experience Facilitate Firm Growth,” Journal of Marketing, 82 (September).
Go to the Journal of Marketing