Ariel Investments’ business success is tied to its prioritization of organizational culture.
Disclaimer: This case study emanates from Willis Towers Watson’s Chief Human Resources Officer Thinking Ahead Group, which examines the approaches organizations are taking to address ESG-related factors involving sustainable human capital value. Its contents in no way reflect an endorsement of Ariel products or investment strategy or any other fund advisor by Willis Towers Watson.
By aligning its human capital management philosophy with principles from its own investment philosophy, Ariel Investments LLC, the oldest minority-owned asset management firm in the U.S., is able to offer perspective on the role human capital value creation plays in its business success.
Ariel’s Talent team is dedicated to recruiting, engaging and retaining talent by creating workplace experiences that foster personal and professional accountability, growth and development. Diversity, equity and inclusion are inherent in the way work gets done and are fundamental to the DNA of the firm as evidenced by the following actions and their measurement:
- People: When diversity and inclusion spans all levels of an organization, corporations are better.
- Purchasing: When contractual relationships with minorities are encouraged, corporate reputations grow.
- Philanthropy: When philanthropic contributions also target minority and civil rights organizations, corporations are ultimately supporting their consumer base.
This approach was forged by the firm’s co-CEOs, Mellody Hobson and John Rogers, long before human capital measurement, sustainable investing and ESG were mainstream.
Consistent with recent research from Willis Towers Watson and others, institutional investors continue to prioritize and apply valuation premiums to companies that excel on environmental, social and governance (ESG) measures, with continued emphasis on “social” factors, such as human capital value.
Ariel’s longstanding commitment to these principles as both employer and investor provides a unique lens into the performance impact of doing so.
Ariel began as a small- and mid-cap value manager and evolved strategically over time to $16 billion in assets under management to include international, small-cap concentrated and other products, by continuing to stress taking the long-term view, as do many fund managers. Ariel’s investment philosophy is rooted in assessing the human capital value of any company it considers adding to its portfolio.
Rogers, Ariel’s co-founder and chief investment officer, frequently conveys in public forums that it is no accident that the firm’s logo is a tortoise with a trophy. Ariel employs a rigorous analytical approach when considering ESG risk factors, which increasingly focus on human capital value factors, such as diversity, equity and inclusion, workforce financial literacy and wellbeing, workforce health and safety, pay and benefits equity, engagement and culture alignment. These also factor heavily into the company’s decision-making on internal priorities and programs.
Ariel’s leaders frequently discuss how boardroom “Jackie Robinson moments,” as well as rethinking retirement savings policies, company culture, employee wellbeing and other key people policies drive their success. Rogers told Market Watch, “If your management team and your board looks and acts like a 1940s company, it’s hard for us to have confidence in you as an investment. We want a company that looks like a 21st-century company.”
The foundation of human capital value inside Ariel is culture, and the company belief is that culture…
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