Only 10% of Fortune 500 CEOs are women. And among the chief financial officers—a pool for CEO talent—a measly 10% account for CFOs in Fortune 1000 companies, according to statistics from IMD International Search and Consulting, a global network of executive search firms.

When it comes to minorities in the top ranks, the numbers dilute even more: Only 4% of minorities are in executive positions. Although Fuller isn’t optimistic about seeing the immediate growth of women and minorities in top spots, he thinks that when corporations finally wake up to the talent crisis, they will have to put more minorities and women in senior positions.

Like Mellard, Fuller also believes economics will play an important role in advancing diversity. All companies have to do is look at where a greater slice of their revenue stems from, primarily Asia and other developing countries. If corporations are selling to Indians and Asians, who better to understand the customer, Fuller says. “The issue of diversity is no longer just trying to comply, but it’s become a key competitive strategy.”

As baby boomers, those born between 1946 and 1964, begin leaving the workforce, younger workers, Gen X and Gen Y, will replace them. This presents a challenge, says Albert Hiribarrondo, chairman of the IMD International board and managing partner at the Paris-based executive search firm Sirca/IMD. “They are smart, tech-savvy and free agents,” he says. “Time spent at a position is growing shorter and shorter.”

Let’s says boomers do retire in droves, creating an opportunity for younger women and minorities. Corporations may think all they have to do is push them into leadership positions to solve the senior executive crisis. It’s more complicated than pushing people up the ladder, says McGrath.

“You’re moving into a new neighborhood and it can be very isolating,” McGrath says. “Mentoring helps, but executives need to act as sponsors and be accountable for the success of the people they move into higher ranks.”

Julie Fasone Holder, vice president of marketing and sales, human resources and public affairs at Dow Chemical Co., says when they began to hold their geographic presidents accountable, it started to make a difference. “This allowed presidents of regions [from around the world] to take action depending on local needs.”

Dow uses a matrix to track results, which includes the number of offers accepted by women and minorities, as well as what positions they hold. An employee survey also provides feedback on how diversity programs are working. “We want employees to see a career path for themselves,” Holder says. “The biggest challenge for businesses is to keep people and help them change and reinvent themselves.”

Training is an expensive proposition, which is why corporations are loath to lose employees. In 2006, American organizations spent $109 billion in training and development, according to Dr. Michael E. Echols, director of the Human Capital Lab at Bellevue University. Echols, along with several experts in research and training, have launched a lab that measures the effectiveness of education and organizational training in the workplace with three Fortune 500 companies, including Sun Microsystems and U.S. Bank.

If large corporations don’t move beyond their inflexible cultures and prejudices, it will impact the bottom line, says Patrice Hall, vice president, global equality, diversity and inclusion practice at ORC Worldwide, a global compensation-consulting firm. Corporations need people that know the global markets and who can connect to the international consumer, Hall says.

 “In the talent war, it’s not the compensation offered that will break a corporation, but the work experience and career progress offered.”

TAV

Cultivating Talent

Corporations need to get beyond the lip-service phase and implement flexible work hours for women; removing the stigma that flex-work is for slackers.

Developing mentor relationships among women and minorities can provide a clear view on how to advance to higher levels in the corporation.

Executives need to be held responsible for developing women and minority leaders.

As corporations derive a greater deal of their sales from foreign countries, having minorities in senior positions will help U.S.-based companies understand the markets.

As with many corporate initiatives, diversity has to start at the top, including the board of directors.

A matrix can help keep track of results, as well a frequent employee surveys.