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Detroit Free Press
Study Shows Hispanics Lack Seats On Corporate Boards
By Brenda Rios
December 25, 2001
Hispanics make up at least 12.5 percent of the country's population, but they hold only 1.7 percent of the board seats at Fortune 1,000 companies, according to a study by a Washington group concerned with Hispanic representation on corporate boards.
Failing to have Hispanics in leadership could hurt companies trying to cash in on the $561 billion Latinos spend every year, said Anna Escobedo Cabral, president of the Hispanic Association on Corporate Responsibility, which authored the 2001 Governance Study.
Cabral said the makeup of a company's leadership is important because its top officials set its goals and direction. She said Michigan cereal giant Kellogg Inc. understands the value of diversity among its workers and leaders.
The association recognized the Battle Creek cereal maker as one of 23 of companies with significant Latino representation on their boards.
Three of Kellogg's 12 board members -- including CEO and Chairman Carlos Gutierrez -- are Hispanic.
"As a company with consumers of all backgrounds, having individuals on our board that reflect this diversity helps us maintain a competitive advantage," Gutierrez said in written comments about the study. "Diversity is not only a company's social responsibility, but sound business strategy."
According to the association's study, Latinos hold 181 of the 10,597 board seats at the Fortune 1,000 companies. That's up from 152 seats in 2000 and 84 seats in 1993, when the group began doing the study.
The Fortune 1,000 companies with the highest representation of Hispanics on their boards tend to be based in states with high populations of Hispanics, such as California, Texas and New York. Half of all U.S. Hispanics live in Texas or California, but states across the Midwest and South also experienced a surge in the Hispanic population over the last decade.
The study also found that 70 of the 1,000 companies have Hispanic executive officers.
Business experts say reaching out to Hispanic consumers and including Hispanics in key decision-making positions makes sense for companies wanting to tap into the growing market.
There has been a 58-percent growth in the number of Hispanics nationally in the past decade. The 2000 census found there are 35.3 million Hispanics, up from 22.4 million in 1990. The number of U.S. Hispanics is roughly equal to the number of African Americans.
"The Hispanic population is the fastest-growing segment in the minority population today," said Harvey Kahalas, dean of the Wayne State University School of Business Administration. "They have a large and ever-increasing amount of buying power, so it's certainly good business to be able to show an involvement and understanding of the Hispanic community."
Companies in the waste management, beverage, transportation and cosmetics industries have the highest Latino representation on their boards, according to the study.
None of Detroit's auto manufacturers has Hispanics on their corporate boards. But Cabral met with the heads of Ford Motor Co., General Motors Corp. and DaimlerChrysler last month to discuss ways to get more Hispanics on their boards and throughout the ranks of employees.
Automakers have been reaching out to Hispanic buyers. DaimlerChrysler is the latest manufacturer to focus on the growing Hispanic market by designing special TV commercials and print ads that debuted in November. Ford, Honda, Toyota and Chevrolet are veterans in the Hispanic-oriented ad market.
Meanwhile, Kmart Corp. of Troy successfully released a clothing line -- Estilo -- targeted at young Latina shoppers. The line for preteen girls was launched in Puerto Rico in 1999 and has expanded to 300 stores nationwide and soon will move into infants and ladies wear, said Kmart spokesman Stephen Pagnani.
Recognizing the importance of its changing customer base, Kmart appointed Rose Reza to senior vice president of multi-cultural merchandising in August, Pagnani said. Reza works with vendors and buyers to get products that appeal to various regional and ethnic groups, including Hispanics, he said.
Cabral, whose nonprofit group is a coalition of national Hispanic organizations, said companies like Kmart and the automakers need to develop Hispanic leaders if they want to claim sizable stakes in the Latino market.
"This is an enormous emerging market," Cabral said. "What companies are realizing is that in order to capture their share, they need to be more interactive with that market and they need that expertise."