Boards of Directors are more diverse, but the Hispanic and Latino community are underrepresented.

Boards of Directors are more diverse, but the Hispanic and Latino community are underrepresented

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Over the past decade, encouragingly, boards of directors have gotten much more diverse in background. In 2021, a notable infusion occurred of racial and ethnic minorities and women, comprising 41% of seats filled on Fortune 500 companies’ boards last year, double the 20% of 2011, according to Heidrick’s 2022 Board Monitor US, an annual and longstanding study of U.S. board composition trends.

However, the percentage of women directors in the Hispanic and Latino community is still miniscule – at just 4% of seats filled by women in 2021 – even though a record 45% of new appointments last year were women. And just 30% of seats going to Hispanic and Latino directors over the last six years went to women, the lowest proportion of any ethnicity group.

These figures highlight how uneven progress has been. Hispanic and Latino board representation is also especially low in several industry sectors, such as healthcare and life sciences companies, where only 7% of seats filled last year went to Hispanic/Latino directors.

CEOs, boards of directors, CHROs, we executive recruiters, and Hispanic and Latino executives themselves must increasingly ensure that more high-level Hispanic/Latino executives are identified for board consideration and developed to succeed in the role.

Why? Diversity matters. A great deal of research indicates that gender and ethnic diversity clearly correlate with profitability. In a 2019 analysis, for example, McKinsey & Company found that companies in the top quartile for their executive teams’ ethnic diversity were 36% more likely to register above-average profits than those in the lowest quartile.

And why the low representation? One key factor is that while the Hispanic and Latino community comprise 17% of the U.S. labor force, they occupy only 4.3% of executive positions. It’s the widest disparity of any group. The inequality is especially acute in New York City. It has the largest Hispanic and Latino population in the U.S., comprising nearly 23% of the city’s workforce, but only 4.5% of its executives are Hispanic and Latino.

Even at the largest companies, the numbers are insufficient. A Heidrick analysis of executive teams at Fortune 100 companies found that as of June (2022) there were only 52 Hispanic/Latino executives, or 3.5%, out of 1,468 leaders on these teams. In other words, we cannot wait for the pipeline of Hispanic and Latino executives to solve the issue.

What can be done? The Latino Corporate Directors Association (LCDA), which Heidrick partners with, is taking several initiatives to help their members gain more board roles. Besides actively advocating for more Hispanic or Latino representation on boards, the Washington, D.C., association prepares and positions aspiring and new directors for boardroom success, and it generates original research.

Several strategies and initiatives can also help begin to correct the inequity. The progress in appointing more women and Black directors offers a roadmap of sorts for how to expand Hispanic and Latino representation. That progress also offers hope that similar intentionality centered on additional groups must happen over time, and we bet it will.

While we recognize that boards don’t have enough seats to add all the kinds of diversity they should, we advise them to:

1.???Consider comprehensive strategies for refreshing their boards and improving their effectiveness. Specifically, this includes continuing to take intentional and purposeful actions to increase and retain diverse directors. This may involve casting a wider net to identify potential board members outside of existing networks.

2.???Continue to expand the criteria for board selection: Look beyond the traditional CEOs and chief financial officers to consider diverse executives in senior operational and functional roles, from the military, or from academia, who can add invaluable perspectives.

3.???Make DE&I strategic by defining those terms and what they mean to the organization strategically, and linking priorities directly to core business strategies.

4.???Look for a flywheel effect – used by organizations to ensure that small changes over time produce bigger ones – to emerge that will boost Hispanic/Latino board representation. We’ve seen that effect with the rise in the overall number of women on boards – to 29% in 2021 from 19% in 2015, according to Board Monitor. But the extent of the flywheel effect early on may be limited since, as we’ve pointed out, the pipeline of Hispanic/Latino executives is small.

·????????Cities, universities, nonprofit boards, and community groups, among others, can boost Hispanic or Latino entrepreneurship and business participation through educational opportunities and by supporting Latino business development groups and business incubator programs – all with the goal of feeding more Latino employees into the highest company executive levels.

But such initiatives take time to show real progress. We must use them all—and innovative new ideas—to move as quickly as possible to address the problematic issue of scant representation of Hispanics and Latinos in the boardroom – and break this particular glass ceiling. ??

Read our Board Monitor US 2022 report for more trends in nonexecutive director appointments to the boards of the Fortune 500. ?