A market on the big growth path

BOARD DIVERSITY tablished, there will be less resistance to diversity efforts. If the concept of "inclusiveness" rather than "diversity" is emphasized, the anxiety is further lessened. This involves more than just having a mixture of different ethnic groups, racial groups, and genders. What is most important is to have people who have a strong link to, and knowledge of, the communi- ties that represent the growth for the company and its future workforce. Can consultants and advisers fill that role? In many ways the challenges of diversity in the mar- ketplace and workforce can be analyzed by advisers. But their view of the future will lack black-and- white clarity. Therefore, judgment calls are required. A board's decision-making process should stand up to scrutiny. Most people believe that to the extent a company's future growth depends on its adapta- tion to new, diverse customers and employees, the decision makers themselves, rather than consul- tants, should be able to speak with some authority on the subject. Having diversity in the boardroom does not mean that every ethnic group represented among the firm's customers, business partners, and employees need be represented. Rather, the board should include directors who understand the im- pact of diversity on the firm's products and work- force, and how the company's future growth might depend on such understanding. If a board does not have gender, ethnic, or racial diversity, then the question should be asked, "Why not?" There may be a good answer. But it will become difficult for a "homogeneous" board to judge a company's strategy in a more global and diverse marketplace. that might not sit well. That can make people ner- vous in dealing with diversity. PuzzliBg discomfort Finally, few companies can escape what goes on in Washington, D.C. Legislation, whether it involves taxes or regulations or trade agreements, affects all boardrooms. More legislators at the state level and slowly at the federal level are reflecting the growing minority communities in our country. Just as it has been important for boards to have strong relation- ships among the powers that affect business, when a shift in the power base occurs, we must have people in our boardroom who understand the changes and have relationships in communities that help protect our business and shareholder value. Ironically, most boards would have no qualms discussing "diversification" of products, assets, etc. But when it comes to diversification of the people in the boardroom, there is discomfort. It is hard to have an open and honest discussion of what diversity can bring to the boardroom that is in the company's best interest. But if we just apply the lessons we learned when we were youngsters — that everyone is dif- ferent, everyone is special, and everyone has a place — then we should not get uncomfortable when that difference is also required in the boardroom. • The author can be contacted at gmunoz@munozgroup. net Boards responding Many Fortune 500 companies are react- ing to the shifting marketplace. One area of new focus is the Hispanic community (see sidebar). According to the Hispanic Association on Corporate Responsibil- ity (HACR), last year 145 of the Fortune 500 companies had Hispanic represen- tation on their board of directors. That was a dramatic increase from just 10 years before. Making distinctions among groups for marketing, training, or employment purposes is a delicate matter that goes beyond the legal concerns of permis- sible "discriminating" treatment. "Dis- tinguishing" your customer groups, supplier groups, or employee groups, if done wrong, can turn a well-intended motive into a "discriminatory" action A market on the big growth path The Hispanic community is now the larg- est minority group in the United States, with approximately 45 million people. It consti- tutes 15 percent of the U.S. population; more important, Hispanic consumers and employ- ees are gaining clout in the marketplace. According to Hispanic Business magazine, the purchasing power of this group is $900 billion in 2007 and is expected to surpass $1 trillion in 2010. There are more Hispanics in the United States than there are Canadians in Canada (33 million). In fact, there are more Hispanics in the United States than there are people in Spain (40 million). For many companies it may be easier to capture a new entrant into the market than to take away a customer from a competitor. Therefore,the Hispanic community, because it is growing via births and immigration, is a natural focal point. The Hispanic community is an example of a population that was previously satisfied with mass-produced, generic products but is now demanding more customization. It used to be that English commercials were merely translated and put on the airwaves in Spanish to attract Hispanic customers. That no longer works. We have seen a dramatic shift in Hispanic advertising and broadcasting. According to Univision, the Spanish television broadcaster, its weekday morning show "Despierta America" ("Wake Up America") has a higher Hispanic viewing than ABC's "Good Morning America," NBC's "Today Show," and CBS's "The Early Show," combined. I prefer watching the news on Spanish networks because their coverage is generally more global. More recruitment of Hispanics to boards is likely because their population will con- tinue to grow in the foreseeable future. — George Munoz FOURTH QUARTER 2007 3S

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