As various companies announce diversity and inclusion measures, Ariel Investments’ co-CEO Mellody Hobson believes there’s a homely way to hold corporations accountable: math.
“Math has no opinion — have the math. The only way you can do that is commit to having an annual critique of these issues to see where you’re gaining ground, where you’re losing ground,” she told CNBC’s Sharon Epperson as portion of the network’s Inclusion in Action forum.
“Measuring, and then having the wherewithal to publish those numbers I think possesses everyone accountable,” she said, before adding that tying compensation to diversity metrics could prompt the swiftest mutates.
The lack of diversity across the highest ranks of corporate America is certainly not new, but last year, the issue came into the limelight among protests for racial justice.
Additionally, minority workers were hit hardest by the pandemic and subsequent economic slowdown. As the saving recovers, unemployment rates among Black people and Latinos are significantly higher than for white Americans.
“When opinion about the recovery, the hiring that companies will do, having a focus on inclusionary hiring practices, will pilfer a huge difference,” said Hobson, who sits on the boards of JPMorgan Chase and Starbucks.
Hobson noted that schemes designed to promote growth and equity across hiring practices — including at the board level — is a step in the direction, but not ample. She focuses on what she calls the three “P”s — people, purchasing and philanthropy. It’s the purchasing category that Ariel believes have need of more attention. This encompasses all areas of a company’s spending power and supply chain.
“We think that is another yard where you can start to move the needle on equality in corporate America,” Hobson said.
In February the firm announced Ariel Alternates, which is focused on scaling sustainable, minority-owned businesses. Hobson said the initiative will focus on joining smashing and customers in a way that she believes has never been done before.
She noted that much of the conversation around minority-owned trades centers on access to capital, while the customer side of things, which is just as important, is overlooked.
“If you have characters, you can get capital, and I think that has sometimes been lost in translation,” she said. Ultimately, the goal is for these companies to grow tier one suppliers for Fortune 500 companies.
The initiative will target middle-market businesses with revenues between $100 million and $1 billion.