5 min read.Updated: 14 Mar 2021, 02:19 PM ISTHEATHER HADDON, The Wall Street Journal
The co-CEO of Ariel Investments on progress for people of color, pandemic solitude and her caffeine obsession
Mellody Hobson has seen corporate pledges to increase workplace diversity come and go over the years. Starbucks Corp.’s new chairwoman believes this time is different.
As co-CEO and president of minority-run, asset-management firm Ariel Investments LLC, Ms. Hobson is one of the country’s most prominent Black investors. As of Wednesday, she will also be the only Black chairwoman of an S&P 500 company, when she assumes that role at Starbucks.
She’s one of a handful of Black women to recently take on a leadership position in the highest echelons of American corporations, where Black female bosses are few and far between. Another is Rosalind Brewer, a longtime friend of Ms. Hobson, who left her role as Starbucks’s operating chief and will become chief executive officer of Walgreens Boots Alliance Inc. on Monday.
Ms. Hobson says roughly 20 other women of color in her orbit have been elected to corporate boards recently. Companies face more investor and regulatory pressure to diversify board rooms, and the death of George Floyd in police custody, the killing of Breonna Taylor and other prominent cases involving Black Americans and police have pushed many to redouble efforts to help Black workers advance. “I joke, we have to be headhunters in our spare time at Ariel," she says.
Ms. Hobson, 51, rose from intern to the top of Chicago-based Ariel, which manages roughly $13 billion in assets. She joined the Starbucks board 16 years ago and counts former CEO and chairman emeritus Howard Schultz as a friend and mentor. She recently spoke by phone to The Wall Street Journal from the southern California home she shares with her husband, filmmaker George Lucas.
WSJ: What are your goals as chairwoman?
Ms. Hobson: My job is to partner with [CEO] Kevin Johnson to help the organization continue to scale to new heights. I’m the band leader. I’m a person of color and that adds a fascinating dimension to our story. I think that will be really powerful for our people.
WSJ: What about for yourself?
Ms. Hobson: I have this friend who says being the first or only Black anything is a proud and lonely walk. I’m ecstatic, but I understand the importance of it. You have to do a good job so that there will be more opportunities for others.
WSJ: Starbucks last year announced new management diversity goals. Where does that stand?
Ms. Hobson: It’s not time for any kind of victory lap, but I know we have a plan. We’re holding people accountable. I really give Kevin a lot of credit for tying performance around diversity to pay. That’s where the rubber meets the road.
WSJ: What have been hurdles to making those advancements before?
Ms. Hobson: We’ve had this conversation in our boardroom for many, many years. Now, the work is very comprehensive and there’s complete alignment.
We have the worst problem—where your good people get picked off. We just had that with [Rosalind Brewer]. Of course I didn’t want to lose Roz at Starbucks, but the outcome is pretty great for her and for Black women.
WSJ: Ariel has launched an investment arm to help fund minority-owned service providers to companies. How diverse is Starbucks’s own supply chain?
Ms. Hobson: Business diversity includes all areas of corporate spending. About 2% of Fortune 500 spending right now is with minority business enterprises. Starbucks has been focusing on this for some time. Last year, we spent more than $600 million with diverse suppliers, about 8% of our spending.
WSJ:You’ve said we’re in a “civil rights 3.0" phase in the U.S. What signs of real change do you see?
Ms. Hobson: The broader society is keeping score. There are consequences that exist for not living up to those commitments. It’s going to be super hard to be a Fortune 500 company without a diverse person on your board.
WSJ: What grade would you give the U.S. in terms of board diversity?
Ms. Hobson: B-minus. White men make up 30% of the U.S. population and 70% of the board seats. The reason it’s not in the “C" category is because in the last year or so, there has been a sea change. I know how many calls I’ve gotten and how many people I’ve recommended.
WSJ: Starbucks has lost other top executives lately. What does that mean for the executive bench?
Ms. Hobson: We’ve had people retire. Covid also had people soul-searching about what they wanted to be. That said, I think the executive leadership team is strong. That’s reflected in the success we’ve seen in the business, especially during a very challenging time.
WSJ: Starbucks has made a commitment to get its U.S. baristas an average pay of $15 an hour. What are your thoughts on the $15 minimum-wage debate, also in terms of shareholders’ returns?
Ms. Hobson: Sometimes I think that the minimum-wage number has oversimplified the problem. The living-wage math can be different than the minimum-wage math, $15 an hour in San Francisco is different than $15 an hour in Selma. At Starbucks, we always had a belief that treating our partners very well ultimately drives our business outcomes. Happier workers are workers who make for happier customers.
WSJ: How has the pandemic impacted you?
Ms. Hobson: I told our team, I want to slingshot out of this period. I don’t want to limp out of it. We’ve done really good work. And I’m a hard grader.
WSJ: Is there anything you’re particularly looking to get back to when pandemic restrictions lift?
Ms. Hobson: The solitude hasn’t bothered me. People are really surprised by that because they think of me as this extrovert. I’m very happy in a room working alone, which no one would ever expect.
WSJ: Your favorite coffee is just Starbucks black. Why?
Ms. Hobson: I didn’t originally drink coffee. I drank tea. And then when I had my child, I became obsessed with coffee. It never stopped but I only liked it plain. The first thing I do when I wake up, I work out. But I get my caffeine in me before I get on the treadmill.
This story has been published from a wire agency feed without modifications to the text.
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