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Should corporate diversity aim for ‘targets’ or ‘quotas’?

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As corporate America continues to reckon with race following the wave of protests this summer, staff diversity is on the mind of many looking to create an equitable and representative workplace. Companies have taken varying strategies, from committing to diversifying their boards to hiring more Black employees.

How should companies categorize these measures, and how strictly should they be held to their commitments? According to Mellody Hobson, president and co-CEO of Ariel Investments, language around the initiatives matters. A “quota” to fill ranks with more Black employees can sound intimidating, she says, while a “target” feels more attainable.

“I think some people find the term ‘quota’ is a nonstarter for them. It ends the conversation before it begins,” explained Hobson while in conversation with Fortune’s Michal Lev-Ram during the Most Powerful Women Virtual Summit on Tuesday. “Targets are objective, something we’re shooting for. Corporate America is very familiar with targets. There’s a whole nomenclature around targets directly correlated to what we deliver and produce on a day-to-day basis.

“Quotas by contrast are mandates, hard numbers. It’s not a goal. It’s a number you have to make,” Hobson continued. “As a result, people get uncomfortable because they become nonnegotiable. They’re imposed upon organizations. That immediately makes people bristle at ideas. We don’t have to do that. We can use language in the nomenclature around targets and still hit a goal. And in corporate America, if you don’t hit targets, you don’t have a job.”

Companies continue to face scrutiny over their diversity records. Poor diversity can have an impact not just on a company’s outward appearance but also on tangible results. “Companies’ consideration of diversity & inclusion is not only important on the basis of values; it also has a material impact on their long-term performance,” Barclays analysts said in a June research report.

Hobson advised young people of color looking to climb up the corporate ladder to “to be comfortable with who you are.”

“Once I became very clear about that, I could speak my truth,” she said. “It’s truth with a small ‘t,’ not a capital. But my truth I feel very strongly about, and I feel very willing to share. I will not hold in my point of view to appease other people.”

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