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HR Magazine: Say ¡Hola! to the Majority Minority

By Susan J. Wells  9/1/2008
 


Vol. 53, No. 9

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When employees and customers walk into the Citizens Union Bank branch in south Louisville, Ky., they won’t find any of the traditional trappings of bank interiors—dark wood furnishings, tellers behind glassed-in counters or quiet Muzak.
Instead, they see bright, colorful walls of yellows and blues, large-scale photos of Latin American countries, comfortable couches, sit-down desks, a children’s play area, a television tuned to Hispanic programming and even a vending area stocked with popular Latin American-brand soft drinks and snacks.

Along with its interior design, this branch has a different name: “Nuestro Banco,” Spanish for “Our Bank.” It serves a growing Hispanic community—25 percent of Shelby County’s 40,000 people—and is operated by bilingual employees of Hispanic heritage, all of whom were involved in its design.

Since it opened in August 2007, the only all-Hispanic branch in the state has drawn at least 60 new accounts per month—a pace that usually takes more than a year to reach.

Billie Wade, chief executive officer of the $600 million bank based in Shelbyville, Ky., terms the branch a “huge success” and plans to repeat the model elsewhere. It’s “about the future—if we’re able to get in early, learn about and understand our community, we’re likely to be a recipient of beneficial customer and employee relationships for the long term.”

Citizens Union’s leaders number among many executives getting serious about courting the Hispanic market—and engaging employees to help.

More employers are embracing the U.S. Hispanic population as a smart human resource move and a necessary business strategy. Hispanics, in fact, are being elevated to a key business—and diversity—force for employers today.

Growth in Numbers

Hispanics constitute the largest and fastest-growing minority in the United States, now numbering 45.5 million, or 15.1 percent of the U.S. population, according to 2007 data released in May 2008 by the U.S. Census Bureau.

Projections call for the Hispanic population to nearly triple in size and account for most of the nation’s population growth through 2050, according to a February 2008 report by the Pew Research Center and the Pew Hispanic Center, both in Washington, D.C. Hispanics will number 128 million by 2050, researchers predict, making up 29 percent of the U.S. population.

The number of Hispanics ages 18 to 64 will double—rising from 15 percent to 31 percent of the total working-age population by 2050, reports Pew Research Center researchers who base projections on detailed assumptions about births, deaths and immigration levels—key components of population change.

“If HR needs a way to grasp the seismic shift now unfolding within the Hispanic population, consider this comparison: The last time a demographic change of this magnitude occurred was in the second half of the 20th century when, after World War II, women entered the labor market,” going from 15 percent to 50 percent of the workforce in a generation, says Louis E.V. Nevaer, an economist, director of New York-based consulting firm Hispanic Economics Inc., and co-author of HR and the New Hispanic Workforce: A Comprehensive Guide to Cultivating and Leveraging Employee Success (SHRM/Davies-Black Publishing, 2007).

But not all HR professionals are fully using their positions and abilities to leverage, attract, develop and retain the Hispanic workforce in concert with overall business goals, experts contend.

“There is room for improvement in how companies ensure Hispanic representation, and in the effectiveness of diversity programs geared to them,” says Carlos Orta, president and CEO of the Hispanic Association on Corporate Responsibility (HACR), a Washington, D.C., advocacy coalition working to advance the inclusion of Hispanics in corporate America on behalf of 13 national Hispanic organizations.

“Assisting language [-challenged] and culturally challenged Hispanics is a skill that many HR leaders have simply never been trained for,” says Glenn Rodriguez, Ph.D., dean of the Kentucky campuses of McKendree University in Louisville. “The HR professional learns and develops effective recruiting, retention, training and development programs and platforms only for the native English speaker. All materials are developed ethnocentrically,” he says. “All programs must be adjusted for language and cultural integration.”

Last spring, HACR surveyed mid-level Hispanic professionals to identify Hispanic-inclusion strategies. Researchers found fully integrated diversity programs primarily in large companies with 20,000 or more employees. Even among this segment, only about one-third offer each of these programs:

  • Succession and career planning.
  • Informal and formal mentoring.
  • Hispanic communities or councils.
  • Hispanic recruitment.

When companies have strong diversity programs in place, it positively affects Hispanic employees. HACR researchers found that companies with these types of programs enjoy higher employee satisfaction. Employees are more optimistic about their career growth and find that their ethnicity and culture add value to the company.

Lagging Trends Persist
Despite increasing numbers overall, Hispanics’ education and earnings profiles—both of which affect labor force success—currently fall behind that of other groups, according to the U.S. Census Bureau.

For example, in 2007:

  • 60.3 percent of Hispanics age 25 and over completed high school, compared with 90.6 percent of whites, 82.3 percent of blacks, and 87.8 percent of Asians.
  • Among U.S. residents, 12.7 percent of Hispanics completed four or more years of college in 2007, compared with 31.8 percent of whites, 18.5 percent of blacks and 52.1 percent of Asians.
  • Overall, Hispanics are significantly less likely than non-Hispanic whites to have annual earnings of $35,000 or more; 23 percent compared with 49 percent, the 2007 data show.

Helping the Hispanic community overcome these disparities presents a challenge and an opportunity for U.S. companies and their HR leaders, experts suggest.

Gains Made
At the same time, Hispanic professionals are poised for future leadership, report advocates at the Hispanic Alliance for Career Enhancement, a nonprofit career development network of 30,000 Hispanic professionals and 32 corporate partners in Chicago.

Beyond education, its members say cultural and language skills aren’t barriers—instead, they may give an extra edge to Hispanic professionals. Almost 63 percent of members surveyed in 2007 said that speaking Spanish is important in their current job, and 35 percent said their heritage had helped them in their most recent job search.

More than 70 percent of these professionals did not have college-educated parents, yet “they are quickly becoming more educated and civically involved,” says Andrea Saenz, executive director.

Competitive Stance
HR professionals have advantages in leading company strategies that ensure Hispanic inclusion. Hispanics will be a critical component of the next generation of workers—and employers must learn, understand and develop proactive strategies to recruit and retain this workforce segment.

“HR professionals, as ‘strategic solutionists’ for their organizations, need to start thinking about what these changes mean,” says economist Nevaer.

Back at Nuestro Banco, CEO Wade finds his Hispanic branch of Citizens Union Bank to be on the path to a diverse future. From a business perspective, “There’s a lot to be said for being truly inviting, rather than exclusionary.”

The author is a business journalist in the Washington, D.C., area and a contributing editor of HR Magazine.

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Culture Plays a Part

Every ethnic culture has its own defining characteristics and demographic distinctions that build over time to produce closely held values tied to heritage. Immigrants from many nations contribute to the United States’ growing Hispanic population; they bring a range of cultural and economic experiences. They share some common cultural values—and cultural and practical differences separate the many groups.

According to multicultural experts, these common qualities may influence policies tied to recruitment, retention, career development and employee benefits. A few traits:
Younger. The Hispanic population in 2007 had a median age of 27.6, compared with the population as a whole at 36.6. Almost 34 percent of Hispanics are under 18, compared with 25 percent of the overall U.S. population, according to U.S. Census Bureau data.

Family bonds. “Family is the nucleus of Hispanic life,” says Pegine Echevarria, founder of leadership and diversity consulting firm Team Pegine in Ponte Vedra Beach, Fla., and a member of the Society for Human Resource Management’s Workplace Diversity Special Expertise Panel. “Hispanics, far less than non-Hispanics, are often very reluctant to relocate far from family.”

Cultural identification. Hispanics tend to be passionate about their culture and heritage. Economic and social expectations can be as varied as their countries of origin, Echevarria notes.

 

 Rising Clout

 

HR professionals who need to prove the business case for Hispanic inclusion should consider this: The buying power of Hispanics exceeded $860 billion in 2007 and is whizzing its way to more than $1.2 trillion five years from now, according to a report on minority buying power by the Selig Center for Economic Growth at the University of Georgia’s Terry College of Business. Buying power, also referred to as disposable income, represents total personal income available for spending on goods and services after taxes.

Largely the result of immigration and population growth, increased Hispanic buying power also is fueled by better employment opportunities, says Jeff Humphreys, director of the Selig Center and the report’s author.

In fact, Hispanic buying power has risen from $212 billion in 1990 to $862 billion in 2007, representing 307 percent growth over that time. The combined buying power of all non-Hispanics in the United States grew 125 percent during the period.

The relatively young Hispanic population, whose members are either just entering the workforce or moving up career ladders, adds to gains in buying power. Humphreys suspects that Hispanics’ spending patterns already help determine the fate of many youth-oriented products and services.

Hispanics’ buying power is much more geographically concentrated than that of non-Hispanics, the report shows.
The 10 states with the largest Hispanic markets, in order: California ($228 billion), Texas ($154 billion), Florida ($91 billion), New York ($66 billion), Illinois ($38 billion), New Jersey ($33 billion), Arizona ($28 billion), Colorado ($20 billion), New Mexico ($17 billion) and Georgia ($14 billion).
Humphreys’ conclusion: Hispanics represent a vital segment to consumer industries looking to tap into minority markets for growth. In 2007, the value of the U.S. Hispanic consumer market was about the same size as Mexico’s entire gross domestic product, Humphreys says.



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