The Missing Pieces: Latinos in the Boardroom
Written by: Victor Arias, Jr.
Corporate boardrooms have seen a lot of changes in recent years. There’s been a strong focus on boards taking responsibility for the larger corporate enterprise, including issues that may seem out of the board’s control, such as the increasingly high-profile issue of social purpose.
It really shouldn’t come as much of a surprise. This is in line with a focus on gender equity (heightened by the #MeToo movement), including more corporate board seats and more equitable compensation for female executives. There’s also pressure from proxy advisors and institutional investors for more clarity on the diversity of boards, including very specific disclosures on ethnic makeup, continued board effectiveness/refreshment, and increasingly common discussions regarding ESG (environmental, social, governance) issues.
But for Latinos, the more things change, the more they… don’t.
Despite a bevy of new statistics that highlight the important contributions Latinos make to both the U.S. economy and society, there has been little to no improvement of notable representation by Latinos on America’s corporate boards. A recent survey by Diversified Search (featuring com-parisons from 2017 to mid-year 2019) of Fortune 500 and Fortune 1000 companies shows that the number of total seats in the Fortune 500 held by Latinos has remained largely flat, at 2.8%. (“Latinos” are defined as those that are U.S.-born, or self-identify as Latino if born in another country of origin.) The good news? The total number of board seats occupied by Latinx people has increased by 14% during that period. The bad news is that the figure has not kept pace with the commensurate increase in overall Fortune 500 seats. One bright spot: the number of Fortune 500 companies without any Latino directors has declined from 73% to 69%. But that’s still a surprisingly large, and frankly distressing, number.
The Fortune 1000 representation numbers show some improvement in the overall increase of 32 net seats, or 2.7%, slightly lower than the Fortune 500 rate of 2.8%. The number of Fortune 1000 companies without a single Latino director has similarly dropped, from 799 to 769 companies.While Latina directors increased from 79 to 86 in the Fortune 1000, the numbers still lag the impact of the overall growth rate of female directors on such boards. Women now represent about 24% of Fortune 1000 seats, a noticeable improvement in just a few years. Latinas represent less than 1% of corporate directors.
Some overall trends for all corporate directors are notable. First-time directors (those who have not previously served on a corporate board) continue to be a positive trend for all corporate directors. Of the 22 net Fortune 500 new director seats for Latinos, 15, or 68%, were first-time directors. This is evidence that corporate boards continue to show openness to board refreshment and non-CEO candidates. Additionally, the ever-present need for cybersecurity experts trends favorably for Latinx CIOs and CTOs who have recently been elected to corporate boards; that bodes well for future elections. Finally, there is a strong and pragmatic reason for an increasing focus on getting more Latinx representation on corporate boards: the Latino consumer is the fastest-growing segment of the business-to-consumer economy. You can’t understand your growing customer base if no one from that base is in the room during top-level decision-making.
While Latino representation on boards remains very much a work in progress, it may be helped by current governance trends. In addition to the openness to first-time directors and non-CEO candidates, the growing importance of ESG may bolster the inclusion of more Latino candidates into the board pool. And continued demand for gender representation may hopefully lead to more Latino elections. Why? There seems to be a correlation for companies that the more women they elect to their boards, the more likely they are to add minority directors, including Latinx people, as well.
Representation of Latino directors has not kept pace with increases in net board seats and the growing representation of women on boards. Continued demand for diversity, especially Latinos and Latinas, will hopefully lead to more proportionate representation on corporate boards. In the interim, the Latino Corporate Directors Association (LCDA) and publications like Latino Leaders will continue to be critical in advocating and making the business case for more Latinx representation on corporate boards to nominating/governance committees, and to influencers such as search firms. At Diversified Search, we remain committed to continuing to place diverse individuals--including more women and Latinos—to allow America’s boards to reflect America itself. +
