Only 2.5 percent of board directors at Fortune 500 firms were Hispanic in 2015. By 2017, that percentage rose 0.1 percent, according to a recent Korn Ferry study that was released at the Latino Corporate Directors Association (LCDA) Convening in November 2017.
“Latino board representation has really not improved, but I think that there are some silver linings about where we’re headed for the first time,” says Victor Arias, who recently joined RSR Partners as managing director after nearly eleven years at Korn Ferry.
The study, which Arias led, also showed an increase in overall first-time directors—many of whom are Hispanic. In the Fortune 500, twenty-seven Latinos were elected to new seats, and eighteen of those were first-time directors.
“For the first time, we are seeing the majority of the elections from the past year, those new seats, went to first-time directors,” Arias says. “That’s a really good sign, rather than just recycling former board members.”
Arias, himself, has served on multiple boards, corporate and nonprofit: the Stanford Board of Trustees, PepsiCo’s Advisory Board, and Popeye’s Louisiana Kitchen. Today, he serves as a cofounder and board member of the Latino Corporate Directors Association (LCDA). “It is an organization that helps move the needle,” Arias explains. “My work is really symbiotic: one as a corporate director and the other as an executive search consultant that specializes in corporate governance.”
Arias is Hispanic Executive’s featured guest editor for the annual Best of the Boardroom feature section. He spoke with Hispanic Executive about his passion for increasing the number of Latino corporate directors and how others can move the needle forward.
What sparked your interest in board membership?
Arias: When navigating the corporate ladder early on, I learned about the significance of corporate governance and the role of corporate board members. I aspired to either work with or be a part of corporate or nonprofit boards.
Boards are opportunities to serve. That’s a really important thing to remember because if someone’s motivation is not to be of service, then that’s that wrong reason to be aspire to be on a board. A board member is seated to govern and serve the interests of shareholders or stakeholders and also the mission of the organization.
When did you become focused on helping other Latinos join boards, whether corporate or nonprofit?
Arias: From day one of my executive recruitment career, I began trying to clearly understand why there few Latinos on boards. The biggest eye-opener for me was serving on the Stanford Board of Trustees. It’s a big board, a prestigious board, a nonprofit board, and a great example of proper governance. There were few Latinos on that board, but even so, the importance of social capital and social networks was apparent. The need to plug in Latinos and Latinas into those social networks is critical.
Looking back on the boards that you have served on, what types of disruption have you seen?
Arias: The disruption has really been around economic cycles. You’re there to serve the shareholders in a corporate environment. If financial results are not positive, then there’s a high potential for some needed change.
When I got on my first board in 2001, the fast-paced world of the dot-com industry created tremendous upheaval—including the so-called bust. Many shareholders were asking how to have a better say as to what should be happening and how to protect themselves. There was a huge disruption about the process of electing boards, the number of boards that CEOs sit on, the liability that the directors have to bear, and emphasis on the duty of care. Sarbanes-Oxley was born, and that legislation has had a profound impact on corporate governance today.
I think the second one I had to deal with was the downturn of the economy in 2009. That was more of economic survival. For example, there were some older directors that had reached the mandatory retirement age, but many boards extended early retirement age so that they could keep that kind of expertise on their boards rather than have to go out and recruit new directors in a time of great uncertainty. Meetings were long, and scrutiny on financial performance was high.
Another one has been the advent and the rise of the millennials. I think that’s going to tremendously impact corporations because most millennials are not traditional in the way that they consume products. They’re much more attuned to the environmental issues, attuned to the packaging, and attuned to a lot of the social issues that I think companies have to really come to grips with. Additionally, they represent the future workforce and value different aspects of their work environment.
What can the Latino board directors now do to help balance out boards?
Arias: I believe we share a responsibility to change the narrative in the boardroom and remind our colleagues about the changing demographics and the new American mainstream, by which I mean US Latinos. However, it’s a balancing act for sitting directors because, first and foremost, the responsibility is to shareholders and advocating for Latinos can be viewed as risky. However, if not we do not advocate for Latinos, then who will?
Another area for opportunity is increasing the pool of candidates. Most companies have to be more mindful of ensuring that they have Latinos who manage P&Ls and touch the revenue stream. That’s a natural pool for board election. I think that most corporations have would also be open to others for some key functional areas that will be in demand in the future.
I know that you recently stepped down from the Popeye’s board in back in 2016. Are you looking to join another corporate board?
Arias: I would definitely consider joining another corporate board if asked. I’m still young enough that I can add a lot of value, especially in the area of executive compensation, which is a hot topic today. I will continue my passionate work around changing the face of the corporate boardroom. Adelante!