Closing the diversity gap on Fortune 1000 boards means understanding the job description for a board position and developing the needed skills.
By Jonathan Higuera
HISPANIC BUSINESS® magazine
Armando Codina has a reputation as a pioneer when it comes to serving on corporate boards. The CEO of the Codina Group, a commercial real estate development firm in Miami, has served on six boards of Fortune 1000 companies since 1985. Together with Colorado Rockies owner Linda Alvarado, former U.S. Treasurer Katherine Ortega, and entrepreneur Enrique Hernandez, Mr. Codina stands as one of the few Hispanics to serve on four boards simultaneously (see article, “Growing Representation?”). According to this year’s HISPANIC BUSINESS Boardroom Elite directory [PDF], 82 Hispanics currently hold 114 board seats among the Fortune 1000. That represents 52 percent increase from last year, but with nearly 10,600 total board slots at Fortune 1000 corporations, it’s far short of parity with the Hispanic population. How can the diversity gap be narrowed? First, Mr. Codina says, a clear understanding of the job description implied by board membership is required. “I consider my constituency my shareholders,” he explains, summing up his approach to board service. “You happen to be Hispanic and that gives you a good perspective on some things, but your fiduciary responsibility is to the shareholders. It’s not about wearing a Hispanic hat but adding value to the company.” “The Latino community doesn’t elect you to these boards – shareholders do,” says Pastora San Juan Cafferty, a professor at the University of Chicago who serves on three Fortune 1000 boards. “I don’t think anyone represents an ethnic constituency with a board seat, the way a member of Congress represents a district. It’s not a political appointment. This involves a different voice and a different legitimacy.” Like many women and minorities of her generation, Ms. Cafferty came to the corporate boardroom through service on civic boards. In contrast, today’s boardroom recruiters look for corporate managerial experience, and Ms. Cafferty believes diversity in the corporate work force eventually will yield more diversity on the board. In the meantime, insistence that board members have a major corporate job title – specifically, CEO at a public company – leads to a dilemma, according to Mr. Codina. Because CEOs need to spend their time running the company, boards often limit the number of outside boards on which their CEO can serve, even while they try to recruit CEOs at other companies to join their board. In fact, a simple re-evaluation of the prerequisites for board service would go a long way to opening up opportunities for talented Hispanics, says David Gomez, owner of David Gomez & Associates, a Chicago-based executive search firm. “It will take a lot of time and concerted efforts from executive search organizations to reach out from their normal way of searching for board members,” he says. He cites a panel he organized in New York earlier this year made up of representatives from some of the country’s top executive search firms. “I basically heard them say they can’t find anybody and that Hispanics have to hang out more with other board members,” he recalls. When boardroom recruiters start to look at successful CEOs of private mid-sized companies, they’ll have more success in finding diverse candidates, Mr. Gomez predicts. “People who have started their own business, worked their hearts out, and fought against all odds to become very successful could be better board members” than corporate managers, he maintains. Despite the shift toward managerial expertise, Ms. Cafferty asserts, “there is still a need to understand the public sector, particularly [on the boards of] highly regulated industries.” From 1996 to 2001, consolidation in those industries – banking, utilities, and telecommunications – contributed to stagnant growth of the HISPANIC BUSINESS Boardroom Elite directory. Modesto “Mitch” Maidique, president of Florida International University and a board member at National Semiconductor Corp., predicts that consolidation will prove a temporary restraint on boardroom diversity, thanks to the demographic surge of the Hispanic market. “The best shot for Hispanics to make rapid advancement on boards will be with companies that sell consumer products, particularly in states like California, Texas, New York, and Florida,” Mr. Maidique says. Case in point: Raul Yzaguirre, president of the National Council of La Raza, who joined the board of Sears, Roebuck early last year. “Given our purchasing and political power and greater visibility, there’s more pressure to add [Hispanics] to corporate boards. In the long run, it’s inevitable you’ll see more on boards,” says Mr. Yzaguirre. According to HispanTelligence projections, U.S. Hispanics now number 36.3 million, or 12.5 percent of the nation’s population, with total purchasing power of $499.7 billion. Since joining the board, Mr. Yzaguirre has received many calls from consumers and Sears workers – evidence that board membership carries a powerful symbolic message throughout an organization. “It’s an empowering process when you know there is Latino representation at the top,” he declares. “Those of us from a civil rights background tend to look at customers in a different way. We look at employment issues. We see society differently and bring a public policy perspective. It’s good for the community, and I think it’s been good for Sears.” On the individual level, HISPANIC BUSINESS Boardroom Elite members advise Hispanic professionals who would like to serve on boards to build their skill set on a strong base of interpersonal communication and negotiation. “You need to bring in people who will work well with all the board members,” observes Mr. Maidique, noting that “if someone doesn’t get along, it reduces the likelihood they will be reappointed” to the board. Adds Mr. Codina: “Chemistry on a board is very important. … You need to express your opinion in such a way that people can buy into it, that is constructive. You have to be able to disagree with the CEO in a way that brings him around in a productive manner.” Ms. Cafferty lists three key skills for board service: strategic thinking, financial expertise, and specific industry knowledge. The need for strategic thinkers explains why CEOs and retired CEOs are so valuable to boards, and the financial emphasis and industry knowledge requirement favor corporate managers. However, for young up-and-coming managers hoping to serve on their first board – a necessary step on the development ladder – one stumbling block is the time commitment required for board service. Just as with CEOs, “the tension is between excelling in their paid corporate job and devoting time to an ‘outside’ board position,” she says. In addition to possessing business skills, Mr. Codina believes, board members should be motivated by having an interest in the company they serve. In his case, he defers all fees to company stock. “It’s not a dollars issue. No company can pay me for my time,” he states. “You have to make a commitment.” Mr. Codina says the process of selecting board members has become much more formal and sophisticated since he was named to his first board in 1985, after one of the original owners of Winn-Dixie recommended him for a seat on that company’s board. But even as the process has grown cumbersome, the pool of qualified Hispanic corporate talent has grown tremendously. The HISPANIC BUSINESS 2002 Corporate Elite Directory lists 928 executives at the vice-presidential level or higher at Fortune 1000 companies. Of that number, only four are corporate-wide CEOs, although another 15 bear the title at subsidiary operations. “I don’t think a company has to go through a lot of pain to find Hispanics who can serve on the board,” Mr. Codina opines. “There are a number of qualified Hispanics. The company just has to make the effort.” Today, catching the attention of search committees and headhunters remains as a lingering barrier to Hispanic access and diversity in the boardroom. “Someone has to open the door to someone who isn’t on a board now. You’re not always going to find them playing on the golf course,” says Anna Escobedo Cabral, president of the Hispanic Association on Corporate Responsibility in Washington, D.C. Or, as Mr. Yzaguirre puts it, “we’ve got bushels of talent but we don’t always have the opportunity to be known by the decision makers.” Finding a Seat Tips for future board members •Develop People Skills Negotiation and consensus-building makes for effective board service.•Think Strategically Successful corporations understand their place in the market.•Learn Business Math Financial expertise applies to every organization.•Know Your Industry Develop a specialty as well as general business skills.•Make the Commitment Boards require time for study, networking, and meeting attendance.
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