Latino families will account for more than $1 out of every $10 spent in the U.S. by 2015. But despite their growing consumer purchasing power, less than 5 percent –1 out of 23 board members– of Fortune 500 companies are Hispanic, according to a new survey.
A total of 196 Fortune 500 and 66 Fortune 100 companies responded to a Corporate Diversity survey, which was sent out by Sen. Robert Menendez (D-NJ). The results show little improvement in the way of Hispanic representation on the boards of the U.S.’s most influential companies.
Only 12 companies of the 196 companies that responded have two or more Hispanics on their board, and 118 companies, or about 60 percent, have none, according to the report.
The survey, Menendez said, was meant “to hold corporate America’s feet to the fire.” And yet more than half of the Fortune 500 companies chose not to respond to the senator’s survey, despite promises of anonymity, he said.
“That shows me we still have a long way to go,” Menendez said in a letter included in the report.
Hispanic purchasing power is set to reach 1.5 trillion dollars by 2015, according to the Selig Center for Economic Growth, representing 11 percent of the nation’s total purchasing power. But in 2011, just 4.32 percent of board members in Fortune 500 companies were Hispanic, that’s less than half a percent per board. While low, the number is actually higher than it was a year earlier, when 3.28 percent of board directors were Latinos.
In comparison, white men accounted for 64.39 percent of all board room positions, down from 67.51 in 2010. Women accounted for 19.18 percent, up from 18.04 percent the year before, and African Americans accounted for 9.33 percent of board rooms positions, up from 8.77 percent in 2010.
“I think it’s disgraceful,” said Charles P. Garcia, CEO of Garcia-Trujillo, a company that helps Fortune 500 and multi-national management teams significantly grow their market share in the Hispanic market. “They want to sell to Hispanics, but they don’t make an effort to get qualified Hispanics on their boards. They can choose from thousands and they don’t because they don’t really care.”
Fortune 500 companies are recognizing that Latinos are a growing market, but the problem is the effort hasn’t trickled to the top. Diversity panels and programs can only do so much, said Garcia, who makes a living teaching Fortune 500 companies how to target the Hispanic market.
He said the main problem is the dearth of Hispanics among top decision makers.
A CEO, he said, is dependent on the seven to 10 senior vice presidents he surrounds himself with –and if there is no Hispanic voice, “that’s a problem,” he added.
Landing a board member position is difficult – and lucrative. The plum (they meet only a handful of times a year), well-paying board members are usually appointed based on who they know in the company. According to the National Association of Corporate Directors, about 74 percent of respondents said personal networking or word of mouth was the way they were selected as board members for Fortune 1000 companies.
Whether companies are doing enough to recruit Hispanics is up for interpretation. But Garcia, a former board member for Winn-Dixie, said the bigger problem is that Hispanics are not doing a good enough job to bring about change. National organizations can only go so far in calling out Fortune 500 companies – especially then they are accepting loads of cash from companies not hiring Latinos.
“No one is calling out specific companies, or taking out a full page add in The Wall Street Journal,” Garcia said.
Pablo Schneider, president of Corporate Creations, the largest minority-owned registered agent provider, said boards need to cast a wider net than simply recruiting former CEOs to their boards.
“If the predominant criterion for board candidates is that they are sitting or retired CEOs,” Schneider said, “the lack of board diversity will continue – as there are only approximately 40 Fortune 500 CEOs who are women and minorities.”