The business case for Diversity, Equity, and Inclusion (DEI) is stronger than ever, but many companies’ DEI programs have stalled or retreated. Indeed, intentions are not the same as execution and process infrastructure, something Indhira Arrington learned during her first year at global alternative asset management firm Ares Management (Ares ), of which she is the Managing Director and the first DEI Global Director (CDO). Arrington believes that Ares needs to integrate DEI into many aspects of what it and its portfolio businesses do, including human capital, business and investment processes.

In an interview with Diana Ellsworth and McKinsey’s Drew Goldstein, Arrington explains why it’s important to listen and collect data before creating a DEI strategy and why she focuses on building a culture of representation, especially in in recruiting, retaining and developing talent. As an immigrant from the Dominican Republic, Arrington feels a tremendous responsibility to open doors for others, as sponsors and mentors have done for her. “Making the world a better place has never been a job,” she says. The following is an edited version of their conversation.

McKinsey: Why is DEI important to Ares?


Indhira Arrington: why DEI matters

Indira Arrington: The point of our DEI strategy is to be a force for the good of Ares, the companies in which we invest and the communities in which we operate. We recognize the power and influence we have to create change beyond our own walls. And we know that if we can help our portfolio companies become more inclusive, more equitable, that can help drive long-term performance. Before I was hired, DEI at Ares was largely employee-focused. But our leaders recognized that we needed a formal structure. And so my role falls under both the talent, that is to say HR, and the CEO.

We operationalize DEI through our people and our culture, as well as our business and investment process. We ensure we have the infrastructure, strategy, plans, targets and KPIs to hold ourselves accountable and select our portfolio companies. We drive DEI into our investment process because we believe it can lead to better ROI, and so we have a DEI lens when making investments. We have intentionally integrated DEI into our procurement processes, working to identify the various current spends and then find areas where we can shift the spend to various vendors. We seek to lead by example so that we are able to offer guidance to our portfolio companies and create a playbook on how they too can approach supplier diversity. We also look at the impact we have on our communities through our philanthropy, by maximizing our giving, employee volunteerism and matching employee donations.

What I like about our approach is that we are fundamentally data-driven. We establish key performance indicators and hold ourselves accountable for the change we want to see, because we believe what gets measured gets done.

We hold ourselves accountable for the change we want to see, because we believe what gets measured gets done.

McKinsey: As your organization’s first CDO, how did you get started?

Indira Arrington: I came focused on listening. In this work, there is work to be done everywhere you look. It’s hard not to rush and start trying to get things done right away. And I’m super type A, so it drives me crazy not to jump into performing. But I took a very pragmatic approach and spent the first 90 days collecting data.

We started with a quantitative and qualitative assessment of the starting point for us and a cohort of our portfolio companies. When I think of data from a human capital perspective, I keep it simple. For me, it’s a + bvs: recruitments plus promotions minus departures. Cut that by a diversity dimension and by title, and you can clearly see what your representation looks like at all times. It’s a good way to start mapping the people you need to spend time with and the processes to assess to understand how we got here.

I met over 120 team members one by one. I was looking for three things: to see how they felt about working at Ares, where they thought we were at in our DEI journey, and what they thought success should look like from a DEI perspective. I also looked at some external surveys to gain insight into how employees experienced the organization through the diversity dimension. Finally, I met functional managers.

The hardest part of being a CDO is that you don’t own a place where the work is done. You do not own any of the functions. I’m supposed to drive change through influence, which is great but can also be difficult. So I sat down with functional recruiting and HR leaders to understand our talent management process and with business leaders to understand how they viewed DEI from a business and procurement function perspective. I worked to gather as much information as possible.

McKinsey: How did you create your DEI strategic plan?


Indhira Arrington: What makes a good DEI leader

Indira Arrington: Once we understood where we were from a DEI perspective, we set out to form a strategic plan. Working with a set of our portfolio companies, we conducted a pipeline assessment to help identify our diversity gaps, an infrastructure assessment to see if we had the infrastructure in place to operationalize DEI, and an inclusion assessment which included a global survey of inclusion across all participating companies. This latest assessment gave us quantifiable inclusion scores, as well as our gaps by diversity dimension, industry, title and location. We could look within our businesses and be very surgical about how we were going to close those gaps.

We then worked with these portfolio companies to create strategic plans for each individual company, in addition to refining Ares’ strategic plan. Each has developed its own three-year DEI plan, with a vision, goals, initiatives and metrics to track. In total, more than 200 DEI initiatives were planned. Some targeted, for example, increased representation of women and Black, Indigenous and color colleagues at the executive level and above. Some aimed for greater diversity among suppliers. We honed our own team members who served on the boards of these holding companies so they could help bring DEI out of the boardroom. We have prepared each company to add DEI to the board agenda on a quarterly basis and we are helping them execute it. We have set up a community with members from each company, which meets monthly to share best practices.

McKinsey: Where have you seen the DEI strategy make the most difference?


Indhira Arrington: DEI is good management

Indira Arrington: One of the processes that we were able to change within Ares – and make it our new way of doing business – was our recruitment. We have undertaken to increase representation where we have gaps. We found that we were not seeing enough diversity in job seekers and qualified applicants. We also found that not enough candidates made it through our funnel and made it to the first-round interviews. We decided to change our process.

We started rolling out various talent rosters in the first-round interviews. We have started a pilot project in the United States where we require a minimum of four candidates in first-round interviews, and at least half must be diverse. We have worked with our recruiting team to source diverse talent for slate and with our recruiting firms so they can also support the diverse slate mandate.

We are also extremely proud to launch the AltFinance Investing in Black Futures initiative. The asset management industry is one of the least diverse in the United States, with a substantial lack of black talent. We decided to help solve this industry problem. Through the Ares Charitable Foundation, along with two industry peers, Apollo Global Management and Oaktree Capital Management, we jointly committed $90 million over ten years through the Ares Charitable Foundation to start a non-profit organization focused on engaging, attracting and creating a journey for HBCU [historically Black colleges and universities] students to join the asset management industry.
It also offers scholarships based on need.

AltFinance Investing is partnering with the Wharton School at the University of Pennsylvania to create a program for students to understand the different verticals and careers within the asset management industry, interview for study industry cases and hopefully join us for a successful summer internship.
And then it’s about converting interns into full-time employees and working with our companies’ recruiting teams to hire students and prepare them for success. I’m thrilled to share that we and other companies recently welcomed our first cohort of interns.