Two things we know: there is a dearth of Hispanic board members, and a compelling business case for recruiting more. The numbers are dismayingly familiar. According to the Hispanic Association on Corporate Responsibility (HACR), despite all of the progress on diversity and inclusion over the past three decades, the percentage of Hispanic directors on Fortune 500 boards remains stuck at about 3 percent, and 850 of the Fortune 1000 boards have no Hispanic members at all. Meanwhile, the business case will only grow stronger. Hispanics represent the fastest growing ethnic group in the U.S., have $1 trillion in purchasing power, and represent a highly desired consumer and employee base.
What is less well known is that finding qualified Hispanic candidates doesn't have to be as challenging as it is sometimes made out to be — if you know where and how to look. There are a variety of options available to find qualified candidates within the Hispanic executive community: engaging a search firm, networking with Hispanic members of your management team, or reaching out to organizations that focus on the Hispanic professional community.
Leadership talent pools for Hispanic candidates
In fact, qualified Hispanic board candidates can be found in a variety of places, as companies that have led the way in appointing Hispanic directors know. Our analysis of Hispanic membership on boards indicates that they have generally been drawn from five distinct pools of talent:
• CEOs and CFOs of large, publicly-traded companies: This is, of course, the talent pool to which most boards look first when seeking any new director. The competition for these candidates is fierce; they are in short supply and often reside on multiple boards, resulting in the need to look elsewhere.
• Other C-suite executives of Fortune 500 companies: This group could include general managers, division presidents, and other functional leaders who report directly to the CEO and have enterprise-wide responsibility.
• Hispanic entrepreneurs: This category encompasses Hispanic executives who have built enterprises of scale. At a time when companies need to be more nimble than ever to engage their competition, such entrepreneurs can bring fresh perspectives on growth, new market entry, strategy, and business model innovation. As with any board, fit is always critical, but the sophistication and experience with complex business environments that many Hispanic entrepreneurs bring can be powerful.
• Professional services: This includes fields like consulting, accounting, law, or investment management, all of which provide a window into the workings of large, complex enterprises and require practitioners who not only thoroughly understand such enterprises but who act as trusted advisors to the leaders of those businesses.
• Government/NGOs: Former members of Congress, former senior members of the executive branch of the federal government, retired military officers, and executives/board members of NGOs potentially offer highly desirable skills and experiences: a global outlook, an understanding of risk, strategic orientation, political sensitivity, and familiarity with government — one of the greatest sources of uncertainty for many companies. Currently, less than a handful of Hispanic directors come from these categories.
There are several organizations that provide important connections to the Hispanic community (see box).
The next step: Assessing readiness
What is the best way to assess candidate fit — especially since many of these executives may be new to board service or come from a non-CEO or CFO background?
Nominating committees are sometimes concerned about how to select a candidate who is new to board service or has not served in a CEO/CFO role for a large company. Whatever risk there may be, real or perceived, can be mitigated by carefully assessing the readiness of candidates (which should be done in any case!). In our experience, there are a few key areas to explore that will help the nominating committee discern viability and readiness for their particular board.]
As you consider a new to the board or non-CEO/CFO candidate, you may ask the following questions:
• Where are they in their careers and where are they headed? Consider the course of their careers to date: the job rotations, experiences, and roles they have had and whether they remained in those roles long enough to acquire real depth. Consider, also, their potential — whether they are likely to rise to the top or have already leveled off. CEO potential isn't critical — the board may need someone with great functional depth. However, functional depth should be combined with a breadth of perspective. Does this individual have the broad business exposure to add value across a variety of issues? In any case, assessing a career trajectory requires careful referencing well beyond colleagues in the candidate's current organization.
• How do they fit into their current organization? Look at the structure of the candidate's organization — whether a commercial enterprise or otherwise — and examine the real nature of the candidate's job within it. Ideally, the candidate's responsibility requires a broad view across the organization, the opportunity to learn and grow, and frequent exposure to the top. In some cases — entrepreneurs, university presidents, heads of nonprofits — all serve as ‘CEOs' and interact with demanding boards of their own. Other candidates — retired military officers, former politicians, professional services “stars” — may have broad exposure to strategy and policy or the ability to work successfully with diverse constituencies. They also frequently are comfortable and experienced presenting to and interacting with boards. High potential executives in commercial enterprises may also interact frequently with the board, learning how directors think and act and experiencing the rarefied atmosphere of the boardroom.
• How does a candidate's organization compare to yours? In the case of a candidate from the commercial world, for example, both companies may face analogous competitive challenges, operate in heavily regulated environments, or serve highly specialized markets. Or perhaps the candidate's company has successfully made a crucial business transition, such as decommoditization of its products and services, which your company needs to make. Even if the candidate comes from outside industry, there may be relevant similarities between organizational size/scale and challenges. The military and a large multinational, for example, often share common challenges. Beware, however, of making superficial comparisons of size. Though a $300 million enterprise may be small compared to a Fortune 500 giant, the entrepreneur or other executives who lead it may manage a great deal of complexity — in markets, channels, cross-border operations, and the like — making them more ready for service on some boards than people who have managed large but less complex operations.
• Is their role strategic or operational? Though in some cases a particular company or board may need a director who is steeped in operations, the ability to contribute to strategic discussions is a highly desirable attribute for board members. For example, successful Hispanic entrepreneurs clearly know quite a bit about strategy, especially growth strategy, and candidates from outside industry (e.g., in the not for profit, academic, or other sectors) often confront strategic challenges of their own and bring great skills and experience.
Assessing contribution and culture fit
Once the question of readiness is answered in the affirmative, the nominating committee can proceed to more familiar ground: what business contributions the candidate can make to the board and how well he or she will fit within its culture.
Given the growing Hispanic population and buying power, boards may have specific reasons for seeking the perspective of a Hispanic director. For example, boards that need greater understanding of the market might look to Hispanic CMOs of consumer-facing companies for potential directors. Boards that oversee companies with a large Hispanic work force might look to CHROs of companies with similar work forces. Boards should beware, however of underestimating the value of such candidates. Although a Hispanic candidate may have been initially sought to fill a particular need, it should not be assumed that he or she can contribute only in one area. In many cases, the board may be seeking the outlook of a generalist, like an entrepreneur or general manager, while also desiring the benefits of diversity of thought that directors from different backgrounds can provide.
As with any leadership role within a company, culture fit is equally critical for board selection. Board culture in general requires members who are collegial and collaborative, whose experiences have given them the wisdom to address complex issues, and who have the courage and candor to speak up without being confrontational. Assessment of these qualities should include extensive and wide referencing as well as in-depth interviews with candidates. Specific board cultures may need members who skew toward one end or the other of these attributes. For example, a fractious board may need a member who is highly diplomatic, collaborative, and able to bring people together. A passive board might need a more assertive member. And many boards, no matter how well they have performed in the past, may need the injection of new perspectives that diversity brings.
Finding great Hispanic candidates for your board today will likely require a willingness to look in new places for terrific board talent. Then, as with any candidate new to board service or with a nontraditional background, the readiness to take on a board must be assessed. And, of course, you will always want to carefully consider fit with your board's culture as you would with any candidate. But none of those steps are particularly difficult. They require only the will to undertake them and due diligence in carrying them out. In the long run, the extra effort will deliver far more value to the board and the company. â–
The authors can be contacted at ccata@heidrick.com and bgwin@heidrick.com.