01.02.2018 Sky Kelley

(A continuation of our earlier post:

Lou Gerstner and the turnaround of IBM is one of the great business stories often taught in business school but their success with workplace diversity and diversity in the supply chain is not often discussed. In the September 2004 Issue of the Harvard Business review, David A. Thomas discussed how IBM’s focus on understanding diverse and multicultural markets had significant bottom-line results. In “Diversity As Strategy,” Thomas explains how IBM created 8 groups, which would be called Employee Resource Groups in today’s vernacular with the goal “to uncover and understand differences among the groups and find ways to appeal to a broader set of employees and customers.” One result of the women’s task force was to focus on growing the market of multicultural and women-owned businesses in the US. By “partnering with vendors to provide much-needed sales and service support to small and midsize businesses, a niche well populated with minority and female buyers,” the business unit grew sales from $10 million in 1998 to over $300 million in 2001. Another successful effort focused on partnering with diverse suppliers to improve accessibility from the People with Disabilities task force produced an estimated $1 billion in revenue over a ten-year period.

GM was the first automotive company to establish a structured Minority Supplier Program. In 1968 after race riots in Detroit a year earlier left 43 people dead and hundreds injured, GM started providing loans to businesses near the company’s headquarters to hire diverse employees from the community. In addition to their altruistic intentions, they saw this as an opportunity to grow market share in communities that were largely Chrysler buyers. GM has a long history with the African-American community going back to 1932 with Nicholas Dreystadt, the Cadillac division head who opened up sales to “the Negro market” but the 1968 investment into the community paid off in a big way. Since that time, GM has purchased nearly $62 billion in goods and services from direct and indirect minority suppliers. But they are not the only ones. Ninety percent of the Fortune 100 has an established Supplier Diversity process focused on integrating minority, women and LGBT owned suppliers into the supply chain. However, according to an article by Selena Rezvani, a SHRM report confirmed that among the Fortune 1000, a full one-fifth of respondents indicated their organizations have very informal diversity efforts with nothing structured at all, with 41% of study respondents specifying the underlying reason being that they’re “too busy”. What is the disconnect? Despite the stats, some executives still just don’t care.

Notwithstanding the existence of the aforementioned initiatives and results, diversity in the supply chain is given much less attention, and in some companies much less focus, than diversity in the workforce. A fairly recent phenomenon, job titles for “Diversity & Inclusion” now include the word “Innovation.” The Corporation for Public Broadcasting employs a Senior Vice President for Diversity & Innovation; Genentech has a Head of Innovation, Diversity & Inclusion while Abbott has a Director of Next Generation Recruitment, Diversity & Innovation. Perhaps the first step to solving the problem is to have a holistic, innovative strategy that equally focuses on including diverse talent for both internal employees and external vendors. This also takes the onus off of the “diverse” employee. As Anne Holmes writes in her essay, hiring a small amount of African-American, Hispanic, Disabled and LGBT employees “puts significant pressure on the few ‘diverse’ folks who are allowed into any given club, where they are expected to be ambassadors of sorts, representing the minority identity while conforming to the majority one.” By linking the two initiatives and increasing the number of “diverse” employees as well as vendors, you are creating an end-to-end diverse solution alleviating employees of the ambassador pressure. It also allows your non-diverse staff to form a different type of relationship with diversity, as the employee-to-employee relationship is different than the client-to-vendor relationship.

Under the auspices of innovation, let’s assess the approach of not viewing diverse suppliers separately than non-diverse suppliers. Separate is almost never equal and asking buyers to use a different system (often multiple different systems) to find a diverse firm that could potentially be evaluated for a business opportunity immediately signifies that they are “lesser than.” Does separating the search for businesses in this way offer any real value?

By: Sky Kelley