Delayed Arrival at the C-Suite
Why Hispanic representation in the upper levels of Corprorate America is declining and what we can do about it
In early May, executive recruiter Victor Arias was talking to a few dozen Hispanic Fortune 500 board members at the fourth annual Corporate Directors Summit, held in Washington, D.C. Arias was updating them on other Hispanic directors at top companies across the nation. His take-home message, “We’re not making progress. If anything, things are in decline.”
The event was part of the Hispanic Association on Corporate Responsibility’s annual symposium. That same week, in North Carolina, Guilford College professor Richie Zweigenhaft received a copy of the cover for his latest book, The New CEOs: Women, African American, Latino, and Asian American Leaders of Fortune 500 Companies. Asked to sum up the state of affairs for Hispanic chief executive officers at Fortune 500 companies, he tells PODER, “There’s not much progress.”
So it is with two of the most important positions of corporate leadership at the nation’s top companies. Despite being 15 percent of the population, there has been little-to-no growth in Hispanic representation at the CEO or director level in the last year, or even in the last several years.
New Jersey Sen. Robert Menendez found similar results in a survey filled out last year by 219 of the Fortune 500 companies. The study found 3.2 percent of all directors and only 2.9 percent of executive team members were Hispanic.
Arias, a senior partner at Korn/Ferry International in Dallas, notes that even if the focus is widened to include the top 1,000 companies and the nearly 10,500 directors who serve on their boards, U.S.-born Hispanics only make up about 1.5 percent of the total. Put another way, about 130 of those companies have at least one Hispanic board member, or 13 percent. That’s down from 19 percent in 2007. So called C (as in corporate) suite diversity numbers are much smaller. Zweigenhaft, whose book was written with University of California, Santa Cruz research professor G. William Domhoff, says there have been only 15 Hispanic CEOs at Fortune 500 companies since 1981 – the year Roberto Goizueta rose to the top of Coca-Cola. Currently, there are six, the same as a decade ago.
Among the companies that replied to the PODER 2010-2011 Diversity Survey, the insurance companies State Farm and New York Life, as well as Wal-Mart Stores Inc., Prudential Financial; and McDonald’s Corp., each had one Hispanic board member. McGraw-Hill Corp. listed two.
Zweigenhaft says 11 Hispanics led top corporations in 2008, but what looked like the start of an upward trend stalled before it could take off. Several analysts consulted by PODER said the economy is playing a role in the current stasis. The next 36 months should create more favorable conditions as the economy strengthens and corporations look to revamp their boards. “The question is, if Latinos will fill more of those seats,” says Arias, himself a director at AFC Enterprises, the parent company of Popeye’s restaurants. The ongoing release of 2010 Census and other data should also help companies understand what he calls “the importance of having Latino representation in order to reach domestic markets.”
HOW MORE HISPANICS CAN RISE
Anita Perez Ferguson, a researcher at Fielding Graduate University, is working on a book about Hispanics in corporate boardrooms. She has divided Hispanic board members into three groups based on the routes they took to obtain a seat at the table. One, the most traditional, she calls the ‘insider,’ a CEO, CFO or counsel. Then there is the ‘joiner,’ or someone with corporate experience who also belongs to an affinity group, professional association or community group. This type of board member is linked to someone in the company through what Perez Ferguson calls ‘social capital,’ the glue that holds corporate networks together. Finally, there’s the ‘SOB,’ supporters of the ballet, symphony, opera or other cultural institutions.
Perez Ferguson says it can take from three-to-five years for a board member to get settled and begin recommending other directors, including other qualified Hispanics. Not knowing the right people is one of the obstacles Hispanics must overcome to enter top boards, she says. Ongoing networking at all levels will be vital to increasing representation, she adds.
As for the C-suite, Zweigenhaft uses a similar term in his taxonomy: insiders and outsiders. Ten of the 15 Hispanic CEOs to date have moved up within the same company over time – the insiders. Most have been foreign-born, well-educated members of the elite in their home countries. Zweigenhaft saw in his research that more top companies are hiring Hispanics in middle management, “but there’s winnowing down as you get toward the CEO’s office.”
Senator Menendez’s study noted that companies with diversity plans tend to increase Hispanic representation, some by a factor of two. The study recommended that more companies use search firms like Korn/Ferry International, and that searches for young Hispanic talent go beyond Ivy League walls.
Sol Trujillo was also in Washington in May. In 1995, Trujillo became the first native-born Hispanic to serve as CEO of a Fortune 200 company when he rose to the top of U.S. West. He held that position for five years. For the last 16 years, he has served on the board of Target Corp.
“The results are dramatically disappointing,” Trujillo says about the number of Hispanics in C-suites and boardrooms. “But I want to use the term, ‘inclusion,’ not ‘representation,’ because it’s about inclusion for the purpose of adding value...it’s not political.”
The veteran businessman says many companies have, for a long time, supposed that there was a shortage of Hispanics qualified for leadership. “This is no longer the case,” he insists. Additionally, the domestic Hispanic market is now worth $1 trillion, or the equivalent of one of the top 10 richest countries in the world.
Tapping into that market is made easier by including Hispanics in corporate leadership, he says. He urged his fellow leaders at the HACR conference to talk about this more in non-Hispanic circles, where they can influence others. “We’re at a moment where this needs to accelerate,” he says. “We need to step up and do something about it now.”
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Cristobal I. Conde, SunGuard Data Systems, CEO Born in Chile, Conde has been at SunGuard since 1987. He has degrees in astronomy and physics.
Manuel Medina-Mora, Citi Consumer Banking for the Americas, CEO
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Ralph de la Vega, AT & T Mobility & Consumer Markets
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Paul J, Diaz, Kindred Healthcare, CEO
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Alberto Verme, Europe, Middle East and Africa, Citigroup, CEO
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