Having finished a big presentation to the management of a Mexican resort, Oscar Munoz, the 47-year-old CFO of transportation giant CSX Corp., was passing through the pool area when he was interrupted by a white-American couple on vacation. "Can you take care of these?" the husband asked as he thrust wet, dirty towels into Munoz's hands.

Munoz, a Mexican-American, tells the story with a laugh — he even found an appropriate spot for the towels. As the finance chief for a $9.5 billion global company, he can afford to take a generous view of his mistaken identity. Still, he's not unaware of the implications. "Everyone has images in their mind of what to expect from different groups," he says.

For decades, companies have been trying to modify their own perceptions and expectations of underrepresented groups. Through diversity programs, special recruiting efforts, and affinity groups, they have reached out to women and minorities in hopes of creating more parity in the upper ranks. But while women have made some progress, minorities have made little.

That's particularly true in finance departments. While the number of women CFOs in the Fortune 500 has risen steadily, from 24 in 2001 to 38 this year, for people of color only the names have changed: six years ago CFO magazine counted 14 minority finance chiefs among those companies, the same as in 2006 (see "The Great Divide").

At lower levels within the finance department, the disparity between women and minorities is even more dramatic. CFO estimates that 16 percent of Fortune 500 controllers are women, while only 4 percent are minorities. The numbers are similar for treasurers, with 16 percent women and 6 percent minorities. Sixty percent of respondents to a recent survey of CFO readers estimate that their finance departments have more female employees than the rest of the company; in contrast, about half surveyed say their department lags the company as a whole in terms of African-American, Hispanic, and Asian-American staff.

Few finance chiefs have a fix on why more women than minorities have moved up the corporate-finance ladder. "The only thing I can point to is that we have a great pool of women to choose from because we have been hiring talented women for the past 20 years, whereas the push to hire minorities is much newer," says Doreen Toben, CFO of $93 billion Verizon Communications Co. And unfortunately, if the statistics from the CFO survey — which show that more than 60 percent of respondents do not consider diversity efforts a high priority — are any indication, the situation will not change anytime soon.

Power in Degrees
One reason more women than minorities have succeeded in finance is simply a function of demographics. Women make up about 50 percent of the U.S. population, while minorities total about 30 percent (male and female combined). And women are evenly dispersed (and in fact outnumber men) in nearly every state. In contrast, non-white populations are heavily concentrated in certain states, like Texas and California, and all but absent from others, like Maine and Montana, according to 2005 data from the U.S. Census Bureau.

Socioeconomic factors also play a part. For most female CFOs, the majority of whom are white, going to college was a given. Some, such as Janet Clark of Marathon Oil and Patricia McKay at Office Depot, had fathers who were finance executives and mothers who encouraged ambition in their daughters. Linda Harty, CFO of a $77 billion division of Cardinal Health, recalls that her parents "never differentiated between what boys and girls should do," an attitude underscored by her mother's decision to pursue an advanced degree once Harty and her brother started school.

Socioeconomic status can, in fact, complicate the definition of "diversity." PepsiCo Inc. CEO (and former CFO) Indra Nooyi, for example, was born and reared in India and is representative of a growing class of affluent, well-educated internationals who, while small in number, may have little in common with U.S.-born Hispanics and African-Americans, who have historically been at a relative socioeconomic disadvantage.

Members of those latter groups often count themselves lucky to have attended college at all. Both Munoz of CSX and Derica Rice, CFO of Eli Lilly and an African-American, were the first in their families to attend college. "When I was in high school, a guidance counselor asked me if I had ever thought about going to college, and I said, 'What's a college?'" recalls Munoz.

Role models for minorities remain scarce. James Bell, CFO of $63 billion Boeing Corp., didn't meet many business executives, much less a CFO, growing up in south-central Los Angeles. He majored in accounting at California State University simply because that seemed like a solid route to employment. Rice, an engineering major, planned to go to law school after graduation, and applied to the MBA program at Indiana University only because one of his roommates was applying to similar programs.

Why the great divide? Respondents to CFO's survey cite the dearth of minorities in accounting and business-degree programs as a key reason why recruiting minorities is so difficult. African-Americans and Hispanics are underrepresented at all levels of education relative to the overall population, with only about 20 percent of either accounting graduates or MBAs coming from traditional (as opposed to recently arrived) minority groups, according to data from the American Institute of Certified Public Accountants and the Association to Advance Collegiate Schools of Business International. Women, by comparison, make up more than half of all accounting graduates and about 40 percent of MBAs.

Cultural Muddles
Of course, education isn't the only barrier. Asian-Americans are disproportionately represented in higher education compared with the general population, but rarely make it to the C-suite. Michael Fung, the CFO of U.S. Wal-Mart stores, for example, left an otherwise promising career at Deloitte 30 years ago because he didn't see any partners who looked like him — a Chinese-American. As he moved on to head internal audit at Beatrice Foods, with the hope of running a division some day, he realized (thanks mostly to white male mentors) that he needed to work through some cultural obstacles to accomplish his goals.

Fung was raised to value "the idea of placing others' needs above yours, operating in harmony, and deferring to authority figures," he says, "but as a senior finance executive, you can't work in a deferential mode." Even subtle differences in body language can have a huge impact, he says. Traditional Asian culture, for example, holds that making direct eye contact is rude, while in American business culture, avoiding a direct gaze generally connotes deception. "You don't need to lose your values, but you need to adapt to what's considered successful in [your] company or industry," says Fung.

A generation ago, women faced similar issues as they struggled to rise from the secretarial pool, but they had two important advantages. First, their presence throughout the educational pipeline helped build a better rapport between men and women from their undergraduate years through business school and into the halls of Corporate America. This is part of a broader "comfort factor" that, as Boeing CFO Bell notes, may make it "easier for white women to speak with white men," and thus inaugurate a mentoring relationship.

That comfort factor may be further enhanced by the fact that, if women require any special accommodations in the workplace, companies find them relatively easy to meet. As CFO's past research has found (see "What Women Want," June 2006), one of the critical differences between men and women executives is the value that women place on flexible schedules, in part because they tend to disproportionately bear child-rearing responsibilities. Indeed, Cathie Lesjak, recently appointed CFO of Hewlett-Packard, says the company's longstanding flextime policy was a key reason she stayed with the $92 billion tech giant after successive reorganizations led her to consider a switch. After interviewing at other companies, she says, "the decision to stay was driven, frankly, by the fact that I wasn't convinced the other places would give me as much flexibility" to meet the demands of parenthood.

Female finance-job candidates are still far more likely to ask about day care and flextime than males, even when the men are otherwise "very involved" dads, says Lorraine Hack, an executive recruiter with Heidrick and Struggles. That means "there are some obvious things, like breastfeeding rooms and on-site day-care centers" that companies can offer women. For minorities, though, "it's not obvious what to do, and anything you try to do might be perceived as politically incorrect."

Differences with Distinction
Publicly, most companies will say they're fully committed to promoting diversity. Many have hired chief diversity officers and implemented rigorous training programs to back up those claims. But few measure the effectiveness of their efforts in any meaningful way, and recent research shows that they may do more harm than good.

In studying Equal Employment Opportunity Commission data for 830 companies, Harvard sociology professor Frank Dobbin (along with Alexandra Kalev of the University of California–Berkeley and Erin Kelly of the University of Minnesota) has found that diversity training programs are only modestly successful at bringing white women into management. For people of color, the effects are often negative, likely because they frame diversity in terms of legal compliance, which can be patronizing. Hiring a chief diversity officer isn't a cure-all either, says Dobbin, "because that can sideline the issues, pushing all the responsibility to one person."

Making diversity part of a company's business strategy, with the goal of broadening customer, employee, or supplier bases, is probably the most effective solution, says Dobbin, but few finance chiefs approach diversity in that way, at least according to CFO's survey. The vast majority said diversity efforts were not a high priority; even more troubling, many respondents (20 percent) at companies with $1 billion or less in revenues said diversity efforts were not a priority at all. Few finance chiefs participate in corporate efforts to improve diversity; up to 15 percent of respondents don't know if their companies even have such efforts in place. "Too many CFOs leave diversity to HR," says Steve Ehrenhalt, a principal in Deloitte's finance consulting practice.

Lawsuits, of course, can prove galvanizing. Coca-Cola recently spent six years implementing and measuring various diversity efforts after African-American employees charged the beverage giant with discrimination. As a result, the percentage of women executives increased by 60 percent between 2000 and 2006, and the percentage of minority executives increased 250 percent in that same period. The morale of minority employees improved as well.

Companies that have made strides in fostering diversity often find they can leverage minority employees to learn more about customers and gain a recruiting advantage. Wal-Mart, for example, has encouraged Fung to get involved in a nascent scholarship fund that the company is co-sponsoring for Asian and Pacific Islander students, speak to chapters of the National Asian American Society of Accountants, and mentor eight employees (some of whom are white males). In fact, he says that 15 percent of his bonus rides on his efforts to help bring diversity into finance. Ironically, that has meant getting reconnected to a part of his identity that he had put away for many years. "It may seem odd," he says, "but I'm much more attuned to my heritage now because of Wal-Mart's desire to understand more about different groups."

That strategy can pay off, says Dobbin. "We're finding that having just one woman or minority among the top 10 managers is very effective in bringing others into management," he says. Good for the company, but it can pose a burden to the employee. "I want to be considered based on my skill set as a financial professional, not as an Asian," says Fung. "If I ever felt that I was in a role because I am Asian, I — and I daresay almost any other Asian — would quit."

All the executives interviewed for this article were quick to downplay the impact that being a minority or a woman has had on their careers. All point to substantial track records of hard work and opportunities seized. But even as they frame their own achievements in strictly personal terms, many female and minority CFOs feel an obligation to help others rise to the top. Toben tries to help women who report to her change jobs every two to three years to give them the same opportunities for promotion that she had. Verizon's head of internal audit and treasurer are both women, as are several key executives who report to them. Bell, who admits that "we don't have enough Black representation throughout finance or other areas of the organization," makes a concerted effort to create a diverse slate of candidates for all executive-level assignments. That "helps the finance leadership team [about a dozen of the company's most senior finance executives] know about more people, and it helps me know we have a level playing field."

The Road Ahead
Conscientious efforts to level the playing field will no doubt help companies wean themselves from the "comfort factor" and cast a wider net for talent. And companies are increasingly realizing that it's to their advantage to move further downstream and help academic institutions improve the educational pipeline (see "Going to the Source" at the end of this article). The most important lesson for companies, however, may be that success depends on doing two things well: making a business case for diversity and sticking with it. Coca-Cola, for example, didn't see big changes in morale among African-American employees until the fifth year of its program, long after most companies tend to declare victory or defeat and move on. The long-standing presence of women in the finance pipeline does appear to be bearing fruit, but it has taken decades for them to ascend from the rank-and-file into positions of leadership.

As useful as those corporate efforts can be, successful women and minorities stress the importance of self-determination. Munoz recalls what happened at that Mexican resort the day after he was mistaken for a pool boy: while relaxing on the beach with his family, he bumped into the couple who had handed him the towels. He greeted them warmly, and the couple, certain they had never met Munoz before, happily chatted with him about work and played with his children. In the end, differences were erased rather than exacerbated. "Minorities are victims of perception on a regular basis," Munoz says, but, "it's how you react that will either motivate you to achieve or consume you and hold you back."

Alix Nyberg Stuart is senior writer at CFO Magazine.