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Senator Menendez Sparks Controversy with Fortune 500 Diversity Survey

April 2, 2010

Rob Kuznia -- HispanicBusiness.com

Senator Menendez, diversity survey, Fortune 500, boards of directors, Robert Menendez, Hispanic  

While it's true many Fortune 500 companies go out of their way to promote workplace diversity, they tend to give their own corporate boardrooms a pass.

Extensive data on the matter is lacking, but conventional wisdom holds that the boards of directors of Fortune 500 companies are not only overwhelmingly white, but, by some accounts, becoming more and more so -- even while the rest of the nation grows more diverse.

Robert Menendez, the nation's lone Hispanic U.S. Senator, is trying to pin down the numbers. The Democrat from New Jersey is risking a clash with some of the corporate titans by asking all 500 of them to fill out a diversity survey.

Speaking to HispanicBusiness.com by phone, Menendez said the survey will gauge not only the presence of minorities and women on corporate boards and management teams, but also the companies' use of minority and women-owned businesses in the contracting and procurement arena.

"Corporate board rooms have become almost an insular universe, and breaking into those insular universes isn't easy," Menendez told HispanicBusiness.com. "We're going to work with companies to try to move them in a better direction, which will probably produce positive results for the companies."

Some don't think the survey sounds very positive, however.

Burton Fishman, a counsel with the Washington D.C. employment law firm Fortney Scott, told HispanicBusiness.com that he found the survey to be a thinly veiled threat that anybody would find off-putting. Plus, he said, the survey might be out of compliance with the law.

"It seemed like a kind of implied coercion about information," he said. "It just cuts against the grain of Title 7 (of the Civil Rights Act of 1964), where you want to have the color-blind approach."

And the U.S. Chamber of Commerce has referred to it as a "fishing expedition," according to Politico.com. (The Chamber declined HispanicBusiness.com's request for a comment.)

Menendez, who chairs the Senate Democratic Hispanic Task Force, said his aim is not to shame. The results of the survey will be aired publicly, but only as an aggregate, he said. Companies with abysmal boardroom diversity numbers will not be outed, but rather worked with to make improvements.

However, Menendez -- who hopes to have the surveys returned to him by May 1 -- does promise to come out with the names of the companies that refuse to participate. To date, he said, about 100 companies have indicated they will fill out the survey, and just one has said it will not participate. (Menendez declined to name names this early on.)

Fortune 500 companies tend to keep pretty quiet about the racial makeup of their boardrooms , but it is possible to glean reasonable estimates based on the surnames of board members.

By this magazine's own annual estimate in January, Hispanics, who constitute roughly 15 percent of the U.S. population, account for less than 2 percent of all Fortune 500 directors. Blacks, who make up nearly 13 percent of the U.S. population, do a little better, accounting for 7.4 percent, according to Target Market News, a black consumer market publication. But that 2008 figure represented a step in the wrong direction; four years prior, it was higher, at 8.1 percent.

Fortney Scott -- which happens to be a woman-owned firm -- posted a memo about the Menendez survey on its Web site, presumably for the benefit of its Fortune 500 clients.

"Please contact the FortneyScott attorney with whom you work to discuss how you may want to respond, particularly because the survey requests information that otherwise typically would not be in the public domain and need not be disclosed to the government under existing reporting procedures," it said.

Fishman of Fortney Scott added that the survey doesn't just ask about race.

"Some of that stuff he's asking made my eyebrows raise," he told HispanicBusiness.com. "They want to know about disabilities?"

The U.S. Hispanic Chamber of Commerce, on the other hand, is strongly supportive.

"When you diversify the talent at the board level, you get better thinking," Javier Palomarez, president and CEO of the U.S. Hispanic Chamber, told HispanicBusiness.com. "Frankly, you are able to get a perspective on the consumers you would not otherwise have if all you have is middle-aged white guys."

Palomarez added that some Fortune 500 companies "get it," and cited as an example Comerica Bank, whose board two years ago added Nina Vaca, founder, president and CEO of Pinnacle, an information technology services provider to the Fortune 500.

(Comerica also ranked No. 1 this year on Hispanic Business magazines annual supplier diversity index.)

Menendez's survey to Fortune 500 companies comes at a time when diversity advocates have much to cheer about in the public sector.

President Barack Obama has appointed a record number of Hispanics to key administration positions. Of his first 300 nominations, 11 percent were Hispanic -- doubling the previous record, set by President George W. Bush.

In a letter attached to the survey to Fortune 500 companies, Menendez said the upper echelons of the corporate world have not matched the progress in government.

"As a United States Senator, I have cast numerous votes this year to confirm a highly diverse group of nominees to federal posts in the current administration," he wrote. "However, for many years, I have been concerned with the poor level of Hispanic representation on corporate boards and among senior executives across major corporations and financial institutions in this country."

Menendez told HispanicBusiness.com that the ultimate goal is to help both the qualified Hispanic executives who often get overlooked, as well as the companies that often overlook them.

"We're not in need of their philanthropy," Menendez told HispanicBusiness.com. "I want their respect and investment. Our community is one with a trillion-dollar market. It's younger by a decade than the rest of the country (in terms of average age), and it's more brand-loyal."

He added, "If you have people on your corporate board who understand the (Hispanic) community -- the combination of language, customs, and the essence of doing business in the community -- you're going to improve the bottom line for the company."

Source: HispanicBusiness.com (c) 2010. All rights reserved

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