Ford director Kimberly Casiano was the first Hispanic woman to serve on a Fortune 100 top five corporate board. A founding member of the Latino Corporate Directors Association, she also serves on the boards for Mead Johnson Nutrition and Mutual of America.

Her firm, Kimberly Casiano & Associates, provides advisory services to help businesses reach the U.S. Hispanic market, the Caribbean and Latin America. She recently spoke with CNBC about diversity in corporate America ahead of the Equity and Opportunity Forum on April 4. The following interview has been edited for length and clarity.

CNBC: You were the first Hispanic woman to serve on one of the top five Fortune 100 corporate boards, but as of 2022, corporate boards continue to remain majority white and male. What do you see as the biggest obstacle to diversifying corporate boards?

Casiano: The biggest obstacle to diversity is lack of true buy-in — as I call it, “true believers.” Believers are the decision makers in companies who are truly convinced of the proven business case that diversity in their workforce, in management, and on the board of directors leads to a diversity of perspectives and more innovation, which in turn leads to more profitability. These believers truly understand that a board table composed of homogeneous white males whose life experiences and social circles are largely the same is not optimal for generating innovative ideas.

Leaders cannot make the best decisions when they are in an echo chamber where they don’t get challenged with different perspectives and feedback. In addition, companies should reflect their customers. The United States is no longer overwhelmingly plain vanilla. These “true believers” believe that diversity makes good business sense.

Over that past 18 years that I have sat in Fortune 500 boardrooms, I have seen a multitude of polite nods whenever diversity and inclusion is discussed. Unfortunately, I believe that until diversity or inequality has touched someone personally, people do not become “true believers.”

Increasingly, more often in recent times, I have personally experienced white men at board dinners and business events telling me stories of how frustrated they feel because their daughters have experienced discrimination or have hit the glass ceiling. They also tell me stories of how their daughters or sons or nieces or nephews have married a Hispanic – so they proudly let me know that they have half Hispanic grandchildren and family members.  No amount of studies about the business case for diversity can compare with the change in mindset when diversity touches your family. Personal experience leads to the true evolution of values and mindsets.

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CNBC: The story you tell of your undergraduate days with Bill Ford Jr. at Princeton and how that early somewhat adversarial relationship eventually led him to seeking you out for the Ford Motor Company board stands out as an example of the value you place on authenticity. What advice would you give the next generation of executives about staying true to their values and being their most authentic selves? What are some of the tougher lessons you’ve learned?

Casiano: Honesty/integrity should be an essential part of would-be executives, as people and as professionals. But I always emphasize that honesty and integrity must be 100%. There is no grey area when it comes to honesty and integrity. They are like pregnancy. You either are pregnant or you are not pregnant. There is no grey area. There is no such thing as being a little bit pregnant. The same with honesty and integrity. A tough lesson is that honesty often will not make you the most popular person. I am working on being more diplomatic, without losing my honesty. In the long run, I believe that honesty, integrity, and ethics must be non-negotiable. People are more apt to follow honest leaders, where they can respect the leader’s integrity and ethics.

I learned a second lesson about authenticity when I was at Princeton and Harvard Business School in the 1970s. Affirmative action was in full force and a day didn’t pass when someone didn’t say to me how lucky I was that affirmative action existed so I could get into Princeton. Or some other student would comment that I was “lucky to be both a woman and Hispanic” because that was “enough for me to get into Princeton!”  My freshman year at Princeton I asked my parents to mail me, via snail mail (the only option), my SAT scores so I could walk around with them in my purse. Every time someone said something, I would calmly take out my SAT scores and say: “These are my SAT scores. What were yours?” 

When I entered Harvard Business School in 1979, there were about 14 men for every woman. And I was the only U.S.-Hispanic woman in my class at H.B.S. Need I say more? So, I know about discrimination and unconscious bias at a time when women, and Latinas, were much more scarce than they are today. It was lonely back in the 1970s pioneering paths that were little traveled by Latinas or Latinos. A tough lesson I learned was to remember to always focus on merit and not have a chip on my shoulder. I believe that it is essential that we seek advancement because of merit because we have worked for it, and not because we think anything is owed to us. Merit must be the reason — not some tokenism or feel-good program simply because we are Hispanics or women.

CNBC: You’ve called yourself not a product of corporate America but rather a product of an entrepreneurial family. How has your background helped you when sitting in corporate boardrooms? What do corporations need to change to get more diverse, out-of-the-box, entrepreneurial thinkers in those rooms?

Casiano: Entrepreneurs are often more adaptable, more receptive to change, more flexible. In fact, studies have shown that immigrants who have needed to move from different countries and cultures before coming to America are uniquely suited to becoming entrepreneurs because of their greater tolerance for uncertainty and change. Successful entrepreneurs understand that there is not necessarily only one correct way of doing something. And isn’t different way of doing something the foundation for innovation?

In addition, being an entrepreneur is a team sport. Often, entrepreneurs are forced to be more human capital focused and are more protective of their employees and their communities. And we are all aware of how investors are increasingly looking for companies where strong ESG (environmental, social, and governance) is part of a company’s DNA. Many entrepreneurial companies are not public with quarterly guidance affecting long-term versus short-term decision-making. Therefore, the vision of entrepreneurs tends to be more long-term. I also believe entrepreneurs, who have much more limited resources and leverage than major corporations, are better at compromise and subtle persuasion. And are better at cutting waste and unnecessary expenses.

A board of directors’ search criteria when targeting potential board candidates needs to be more diverse.  Traditionally, boards looked for candidates from corporate America, often sitting or former CEOs. I believe that boards need to be balanced: some directors with specific skill sets critical to the strategy of a company and other directors with broad experience, who are broad thinkers, extremely smart, and keenly strategic in their thinking. Entrepreneurs should be part of the mix. But most important are collaborative board members who can ask incisive, insightful, and constructive questions. 

CNBC: You’ve said that companies looking at diversity as a business model rather than a “feel-good” decision has been driven in part by a rise in Hispanic talent in corporate America over the past few years. What’s the business case for diversity as you see it?

Casiano: It is important to remember that gender diversity on corporate boards came years before ethnic diversity started to show its head. Since women on boards came before African Americans or Hispanics or other ethnic groups on boards, I believe women are paving the way for minorities in the C-suite and on boards. So, it is logical that the first studies supporting the business case for diversity were focused on gender diversity.

However, studies proving the business case for women on boards could not have happened if women had not gotten to a level of critical mass. Gender critical mass is usually defined as having at least three women on a board. McKinsey, Bank of America, Morgan Stanley, Catalyst, Deloitte, to name a few, have studied at length U.S. companies with three or more women directors and have demonstrated clear results that these companies outperform their peers in above-average profitability, less volatility, higher return on equity, higher earnings per share as compared to companies with no critical mass of women. Mixed gender boards have fewer instances of fraud, corruption, bribery, and shareholder battles. They also have more effective risk management practices when investing in research and development.

So, just as a critical mass of women on a board — not just one or two women — was essential to studying the business case for women on boards, so too a critical mass of ethnic/racial diversity on boards is essential before credible research can be done to support the business case for diversity. Unfortunately, there are relatively few public company boards that have a critical mass of ethnically/racially diverse board members.

We are beginning to see the release of research by prominent entities analyzing the business case for ethnic/racial diversity. Interestingly, some of these studies have looked at gender diversity alone and then gender diversity combined with ethnic diversity. A McKinsey study, for example, showed that companies with gender diversity on their executive teams were 21% more likely to experience above average profitability. Companies with both gender and ethnic diversity on their executive teams are 33% more likely to outperform their peers. 

These studies, combined with evolving personal experiences with diversity and bias, will hopefully accelerate and convince decision-makers and influencers to evolve from a mind-set of “feel-good tokenism” into a mindset that diversity makes good business sense.

CNBC: Can you speak on the evolution of diversity initiatives and in particular what top organizations are getting wrong about these initiatives currently, especially as it pertains to appealing to Hispanic talent in corporate America?

Casiano: I can think of two areas that organizations need to recognize when it comes to diversity initiatives. Both these areas are sensitive, subtle, and often unconscious. Obviously, my experience is focused on the boardroom, but I believe it is also applicable to Hispanic talent throughout corporate America.

First, the credibility of diverse directors versus white directors. We know, as Latino directors, that the most effective way to get other Latinos on boards is not when we push for it. It is when a white director tells other white directors to get more diversity on the board. It is when a white director tells other white directors that they specifically recommend a woman or Latino or Black or Asian candidate. 

As a woman and Latino director, sadly I must proceed cautiously in recommending other woman or Latinos for the board or for top positions in corporate America. When a white director recommends a white candidate, no one ever questions whether the candidate is being recommended only because they are white. Merit and qualifications are looked at first and foremost. But all too often, when a female or Hispanic director recommends a female or Hispanic candidate, subtly and perhaps even unconsciously, other directors will wonder if the candidate really has the qualifications or is only being recommended because of their gender or ethnicity.  

The same applies to the issue of racism. Subconscious bias must be fought with subconscious bias.  White people need to step up. White people need to tell other white people not to be racist. White voices from the boardroom and the C-suite are critical. Most recently, on a board call, I warmly encouraged my white colleagues to speak up regarding diversity and I candidly let them know that their voice holds more weight than mine.

Second, the last few years has been a unique time in diversity history. There is heightened public respect for issues of systemic racism, social equality, and justice. Previously, many people politely nodded in agreement regarding the wrongness of racism and injustice. Today, many of the polite nods have been substituted with outrage. Today’s nods are different. And even though, without a doubt, the largest share of the social injustice is targeted to Blacks in the form of racism, I, as a Latina, have clearly felt cultural bias and social injustice. 

We must seize this chance. Board colleagues are more receptive to conversations about diversity. Without detracting from the importance of the dire systemic racism issues that Blacks face, we must be brave enough to engage our board colleagues in a heartfelt and diplomatic conversation firmly emphasizing that issues of diversity and inclusion extend to other groups beyond the African American community. Hispanics must not be pushed to the back burner as I see happening all too often these past few years.