Host: Meghan Day, Senior Director of Board Member Experience, Diligent
In this episode:
- Why is it more important now for boards to prioritize ethnic diversity? Increasing regulation, shareholder pressure, and digital transformation are just a few reasons.
- How can groups like LCDA help drive change? Aguilera talks about activities related to data, awareness, and connections.
- What role can nominations & governance committee chairs play? Expanding their networks is a good place to start.
Summary:
The roughly 60 million Latinos in the United States are a large and growing part of the nation’s workforce and customer base. Yet less than 3% of the board seats of Fortune 1000 companies are held by Latinos, according to Esther Aguilera, president & CEO of the Latino Corporate Directors Association (LCDA).
LCDA is changing this picture for the better. The organization is identifying board candidates, coaching and positioning Latino professionals for board service, and increasing awareness of the need for more Latinos on boards.
In this episode, Meghan Day, Senior Director of Board Member Experience, Diligent, talks to Aguilera about efforts toward greater diversity to date—and how far boards have to go.
Now more than ever, why is it important for boards to prioritize diversity?
PwC’s 2019 Annual Corporate Directors Survey reported that director support for board diversity has dwindled from 34% in 2018 to 26% in 2019. But in a world of increased scrutiny, conversation, and regulation around board diversity, companies ignore this issue at their peril.
Aguilera cites a bipartisan bill for self-disclosure of board gender, race, and ethnicity. Concurrently, as innovation and transformation bring more risk factors, investors want to know who’s around the table, who’s making decisions for shareholder and long-term value, she says. “There has never in our history been this kind of microscope on the boardroom.”
“Having more diversity around the table is good for business and for shareholders overall.”
– Esther Aguilera, president & CEO of the Latino Corporate Directors Association
How can groups like LCDA help drive change?
LCDA works with private equity search firms, companies, investors, “anyone who influences board placement,” to connect boards to “exceptionally qualified” LCDA members, Aguilera says. And requests have increased in the last two years.
“The more people find out about us, the more they see LCDA as an ‘aha’—there is the place to go,” she says. “We aim to be a resource and part of the solution.”
LCDA also has been collecting data about Latino board representation. Aguilera sees self-disclosure—for instance, by the corporate secretary—as a sensible approach for making this information more widely available. “The secretary’s role is to help provide investors with the information they need to make informed decisions.”
“Transparency is a first line of finding out where everything stands.”
– Esther Aguilera, president & CEO of the Latino Corporate Directors Association
What role can nominations & governance committee chairs play?
Nominations and governance committees have always had an important role, Aguilera says, and increasing diversity is an opportunity to expand it even more. She’s seeing more boards look at succession planning. “They want to have a pool of people … rather than scrambling when the time comes to fill seats.”
Creation of this pool involves nominations and governance committee chairs expanding their own networks, Aguilera says. “[Recruitment] is no longer a stagnant role that you can push off to a search firm.”
“[Nominations & governance] is one of the most important committees right now.”
– Esther Aguilera, president & CEO of the Latino Corporate Directors Association
Also in this episode…
Aguilera and Day talk about overboarding. Because current demands on board members—like mergers and acquisitions—are huge, Aguilera predicts, “The days of people being on five or six corporate boards will be a thing of the past.”
Listen to Episode 22 on Apple Podcasts
Episode resources:
