While there still are very few Hispanics on large corporate boards, there are signs of improvement, according to Korn Ferry’s report, “Latino Board Representation: Improving or Not?”
The percentage of Hispanics on Fortune 500 boards has remained stagnant since 2015, with 2.6 percent of board members being Hispanic as of summer 2017, and 2.5 percent at the end of 2015, according to the report. Three-quarters of Fortune 500 companies have no Hispanic board members.
The numbers are even lower when analyzing the Fortune 1000, with the number of Hispanic board members remaining at 2.1 percent since 2015. More than 82 percent of Fortune 1000 companies still have no Hispanic board members.
“There’s been very little improvement in the overall percentage numbers, but there are signs of hope,” said Victor Arias, Korn Ferry’s senior client partner, CEO/board services.
“companies are now looking beyond THOSE WITH PRIOR BOARD EXPERIENCE and are bringing new Hispanic individuals to the table, making a bet that they will be good board members.”
The percentage of Hispanic women board members at Fortune 500 companies has increased 19 percent since 2015, from 29 to 35 women. The Fortune 1000 has seen a 15 percent increase, from 52 Hispanic women board members to 60.
Moreover, in 2016 and the first half of 2017, there were 27 Latinos elected to new seats; 67 percent of whom were first-time directors. Similarly, in the Fortune 1000, there were 39 Hispanics elected to new seats, with 62 percent being first-time directors.
“There are significant numbers of Hispanics who are first-time directors, those who have never served on a board before,” Arias said recently. “In my mind that’s really good, because typically, companies say they can’t find qualified Hispanics or weren’t sure where to find them. They also really want someone with prior board experience, but this tells me that companies are now looking beyond that and are bringing new Hispanic individuals to the table, making a bet that they will be good board members.”
Where to find potential Hispanic board members? For one, more and more private equity firms that control companies are doing public offerings, and they need independent board members, he said, adding that this demand should be an opportunity to get Hispanic individuals on those boards.
“That was my path to a public board – I was on the Stanford University Board of Trustees and a large PE firm was looking to sell their position and needed independent board members,” Arias said. “There are a lot of universities looking to find strong Hispanic executives to serve on boards of trustees, boards of regents or boards of visitors and in my mind, that is a really important platform to find potential board members.”
Another good source for board members: entrepreneurs who have scaled up their businesses, he said. Latino entrepreneurs accounted for 86 percent of new business formations in the U.S. during the last half of the decade, according to the Stanford Latino Entrepreneurship Initiative.
“There are many Hispanic entrepreneurs with sizable businesses that can be strong contributors to a board’s governance needs,” Arias said. “They also can be functional experts in marketing, cybersecurity, general counsel and general business.”
Hispanic government officials and former leaders also can make good board directors, particularly for companies in highly regulated businesses, he added.
“The importance of companies having Hispanic board members [is unquestionable], as the number of Hispanics and Hispanic consumers in the U.S. continue to grow,” Arias said.
Latinos are expected to make up 52 percent of new homebuyers between 2010 and 2030, fueled in large part by the nation’s 14.6 million Latino millennials and growth in the increasingly diverse suburbs, according to Hispanic Wealth Project’s 2016 report. And some 73 percent of Toyota’s U.S. sales growth in 2015 came from Hispanics, according to the carmaker’s Hispanic Business Strategy Group.
“Companies have to pay attention to this for their future economic growth – it behooves corporate America to start thinking how to reflect that demographic in their boardrooms,” Arias said.