The History of Supplier Diversity and Inclusion
Still, a long way to go to bridge the gap between failure and success for minority, women, LGBTQ, and disabled entrepreneurs
Diversity and inclusion of ethnic minorities, women, disabled persons, and those with diverse sexual preferences have made great progress.
However, there are still mountains of barriers that must be overcome before any parity of equality will exist within our society, the workplace, and business opportunities for persons from diverse backgrounds.
This is especially true for diverse business owners and professional service providers.
This article covers the history, the struggle, the reality, and an overview of the current status of diversity and inclusion and how it relates to supplier chain diversity for minority, women, and disabled businesses within the corporate world.
Also covered is the concept of corporate social responsibility and how it is vital to accomplishing equity and inclusion from a diversity standpoint.
Without a serious and dedicated corporate management mindset to accomplish true diversity and inclusion as a combination concept, supplier diversity will never measure up to the conceptual ideology of diverse businesses getting a fair share of quality contracts to provide goods and services to corporations and the masses of the consuming public.
The two concepts, supplier diversity and corporate social responsibility must be merged as one in order to truly make diversity a reality. When that happens the nation and the world, in general, will be a better place and the global economy will be more prosperous.
Supplier diversity and corporation social responsibility, together, can bring about real diversification that makes a huge difference in the growth of diverse businesses and increase the bottom line of majority corporations that do business with them.
What Do Diversity and Inclusion Have To Do With Supplier Diversity?
According to Wikipedia, supplier diversity is a proactive business program that encourages the use of minority-owned, women-owned, veteran-owned, LGBT owned, service-disabled veteran-owned, historically underutilized business, and Small Business Administration (SBA)-defined small business concerns.
These are diverse populations and the goal of supplier diversity is to include as many as them as possible into the mainstream of opportunity to compete for and successfully obtain corporate and government contracts for the sale of their goods and services.
The intent is to ensure that all the identified categorized groups referred to above get a fair and equal opportunity to obtain jobs and contracts without regard to their race, gender, disability, or sexual orientation.
History shows that persons and companies in these identified groups have for a variety of reasons been excluded from the mainstream opportunity to participate in economic progress on the same footing as historically favored white males.
Conceptually, supplier diversity efforts are designed to change this fact and increase inclusion for those from diverse backgrounds.
The Concept and Origin of Supplier Diversity
The concept of supplier diversity, (inclusion) while not referred to by the same name at the time, has its genesis in America as early as 1940 when President, Franklin D. Roosevelt signed into law an order making discrimination illegal in defense contracting.
The term “affirmative action” was the term used historically for diversity and inclusion. This article should be read with this background knowledge for clarity and continuity.
After the 1940 legislation, in the case of Brown v. Board of Education, the U.S. Supreme Court ruled that “separate but equal” facilities based on race are unconstitutionally discriminatory.
While this decision made it clear that maintaining separate educational schools systems between blacks and whites was inherently discriminatory, and there was no such thing as separate but equal under the law, the decision laid the foundation and start of the civil rights movement in America and ultimately the civil rights laws that followed.
During the presidency of John F. Kennedy, through his 1961 Executive Order (E.O.) 10925, “affirmative action”, the forerunner of the concept of diversity and inclusion, was ushered into existence.
Executive Order 10925 required all federal contractors to take “affirmative action” to ensure that applicants for jobs and business opportunities are treated equally without regard to race, color, religion, or national origin.
In 1963, Civil Rights legislation was introduced during the Kennedy administration through Congresses HR 5271. This ultimately became the Civil Rights Act of 1964 and broadened the reach of Executive Order 10925.
On June 4, 1965, President Lyndon Johnson, at a Howard University graduation class, spoke about the underlying basis for affirmative action. In that speech, he made it clear that civil rights laws alone are not enough to battle invidious discrimination. Portions of his speech stated:
“You do not wipe away the scars of centuries by saying: ‘now, you are free to go where you want, do as you desire, and choose the leaders you please.’ You do not take a man who for years has been hobbled by chains, liberate him, bring him to the starting line of a race, saying, ‘you are free to compete with all the others,’ and still justly believe you have been completely fair . . . This is the next and more profound stage of the battle for civil rights. We seek not just freedom but opportunity-not just legal equity but human ability-not just equality as a right and a theory, but equality as a fact and as a result.”
The substance of this speech is just as relevant now as it was then.
In 1967, President Johnson amended the previous Executive Order 11246 and created the Office of Federal Contract Compliance (OFCC). This introduced affirmative action for women. It required federal contractors to make good-faith efforts to make sure that ethnic minorities and women were provided equal opportunity for employment with any contractors that were awarded federal contracts.
Under this law, federal contractors were required to keep records to show the progress they made in hiring minorities and women on any work funded by federal government money.
Continuing with the concept of affirmative action, President Richard Nixon, through Executive Order 11458, created the federal Office of Minority Business Enterprise (OMBE). The purpose of this government agency was to create and oversee efforts of equal opportunity in federal contracting with ethnic minorities.
This agency became part of the Department of Commerce and ultimately was responsible, in part, for creating a process that identified and certified companies that claimed to be owned, controlled, and operated by minorities, women, disabled, and veteran-owned business enterprises.
On June 28, 1978, in the landmark Supreme Court case of Regents of the University of California v. Bakke, the Supreme Court imposed limitations on affirmative action.
Bakke claimed he was discriminated against by the University because there were two different admission pools used by the University to admit medical students. One for standard applicants like himself and another for minority and economically disadvantaged students.
The University regularly reserved 16 out of 100 placements for admission only to minority and economically disadvantaged students. Bakke had been rejected twice even though there were minority applicants admitted with lower scores than his.
Bakke claimed this was discrimination based on race (his white race) and therefore a violation of the Equal Protection Clause of the Fourteenth Amendment.
The Supreme Court ruled that race was a legitimate factor to consider in the schools’ admission policies, but the application of the policy created inflexible quotas, which were inappropriate as applied and therefor discriminatory against Bakke.
The court ruled in a 5–4 split decision in favor of Bakke but limited it to only certain circumstances such as the one before them. This essentially kept affirmative action intact.
July 2, 1980, the Supreme Court ruled in the case of Fullilove v. Klutznick that while Bakke struck down strict quotas, it nevertheless ruled that some quotas were justified based upon historical data and were not unconstitutional.
The Court, in that case, made a ruling requiring 15% of funds allocated for public works must be set aside for qualified minority contractors.
During the period from 1980 to the present, affirmative action has continually been attacked in the courts. Every instance is not appropriate for the notation in this article and therefore not included.
However, the most recent cases that refer to affirmative action and diversity, the forerunner of supplier diversity, still uphold that a form of affirmative action may be necessary and appropriate to ensure that fairness and equality are provided to persons from a diverse background.
In 2013 in the case of Fisher v. University of Texas the federal; court ruled that universities could continue considering race as a factor in admissions to achieve diversity.
On June 23, 2016, the Supreme Court, in a 4–3 decision upheld the prior lower federal court ruling in Fisher that affirmative action is legal, although with some limitations.
Inclusiveness and diversity in fulfillment of government contracts are still alive and in effect, although under constant attack.
The federal government spends 500 billion dollars annually on goods and services. It has goals that approximately 23% of those expenditures must be spent utilizing the goods and services of small businesses which include 5% to women-owned businesses, 5% to ethnic minority businesses, and 3% of service-connected disabled veteran businesses.
Corporations and private entities are awarded the contracts that make up the 500 billion dollar expenditures by the federal government. They are required to monitor and ensure that the goals for supplier diversity are met regarding these federal contract dollars.
Unfortunately, most of the goals are not met. This creates a gap and has existed annually for decards. This is a gap and a divide that is still steeped in controversy. For this reason, diversity and inclusion still have a long way to go in this sector as well as society in general.
Diversity and inclusion will continue to be an issue, socially and legally. Unfortunately, more litigation may be necessary in order to eradicate the effects of historical disparities between those in power and privilege and those still seeking to close the gap for equality in employment and contracting opportunities.
Corporate social responsibility plays a huge part in bridging the gap between equity and inclusion. In fact, corporations could help bridge the gap in a relatively short period of time. However, it won’t happen until the ecosystem of privileged position and blind bias is removed from the boardrooms of corporate America.
What is Corporate Social Responsibility?
Corporate social responsibility (CSR) is a self-regulating business model that helps a company be socially accountable to itself, its stakeholders, and the public.
By practicing corporate social responsibility, companies can be conscious of the kind of impact they are having on all aspects of society, including economic, social, and environmental.
To engage in CSR means that, in the ordinary course of business, a company is operating in ways that enhance society and the environment, instead of contributing negatively to them.
In today’s socially conscious environment, employees and customers place a premium on working for and spending their money with businesses that prioritize corporate social responsibility
Progress and equality in diversity will never fully be obtained without a concerted effort by corporate America. No amount of legislation or government intervention can cause the full integration of equality for jobs and business opportunities.
Although legal rules and regulations have gone a long way to close the gap of lack of inclusion, legislation cannot regulate habit and unconscious bias. It is impossible to do that on a consistent basis. Only men and women of goodwill and good faith can make diversity and inclusiveness happen.
Game-changing goodwill and good faith must come through corporate organizations and their social responsibility commitments working with local, state, and national government as well as local communities where they operate.
“A well-designed [ diversity and inclusion] training program can elevate employee morale, boost customer satisfaction, and drive bottom-line business success.”
The Reality Gap Between Diversity and Inclusion for Diverse Suppliers.
No matter how well-meaning corporate responsibility initiatives have been and are, there are gaps between the goal of supplier diversity and obtaining it in an optimum quantity as desired.
The inclusion of diverse persons and businesses, from a corporate standpoint, has often been all talk and no action. Let me hasten to say this is not the case with all corporations at all.
Most corporations are well-meaning with their efforts toward creating an inclusive environment and implementation of their diversity programs.
Nevertheless, there is still a gap to be closed to reach ultimate equality. One gap is the fact that having a diverse employee population, or a diverse database of diverse suppliers does not equate to inclusiveness.
The two are not the same. However, they each must be addressed appropriately in order to achieve the goal of equality within the workplace and the supply chain.
If diverse employees or suppliers are present and shown in numbers, the question is how are they being engaged? Are they made to feel they belong? Is there a concerted effort to create an environment where they feel comfortable and they have worth and can contribute to the mission of the corporation?
Are diverse suppliers within the corporate database actively sought out and informed of supplier opportunities through nontraditional, yet very relevant resources, like community churches, social organizations, and specialty organizations like African American Chambers of Commerce, Hispanic Chambers, etc.
These are inclusive steps among many others that can send a clear inclusive message to the diverse target market that they matter and are important to corporate progress and profitability.
The one thing that is certain. Equality and inclusiveness will never be accomplished by itself. It must be accomplished through people. People who have the mindset, the will, and heart to do the right thing and have the courage to get out of their comfort zone.
How To Bridge The Inclusive Gap of Diversity Within The Corporate Supply Chain
Bridging the gap of diversity and ensuring inclusiveness within corporate supply chains can be greatly enhanced by adopting standards across the board that apply to the qualifications, certifications, and the equities needed along with meeting the expectations of the stakeholders within the corporate ecosystem.
International Standardization of Diversity Programs Should Be Established
Standardization is common to corporations through the International Organization for Standards (ISO).
The ISO was established in 1947, in Switzerland and is comprised of 163 countries, including the U.S. and Canada.
The purpose is to establish intellectual, scientific, technological, and economic cooperation between member countries (Bureau of Business Practice). It makes sets of guidelines that bring together and standardize world industries.
The standards established by the ISO are recognized by the participating countries and implemented in order to create and maintain consistency across the board for quality, safety, environment, technological, economic and best practice in some 19,000 identified standards. Certifications within these categories is also a part of the ISO.
ISO/Dis 30415 is the standard set by this organization for diversity and inclusion (D&I). It is the starting place in which all corporate diversity programs should start. This would establish homogeny across the board for (D&I).
Of course, each company may add different tactics and techniques that ultimately implement their own diversity programs, but the standardization concept is the point made here. It would and should create basics guidelines for every such program so there is a way to have a consistent foundational measurement for D&I.
This would go a long way toward bridging the supply chain gap regarding inclusion.
Make Diversity and Its Implementation a C-level Corporate Position
Another important step toward narrowing the diversity gap is the establishment of and empowerment of corporate personnel in charge of such a program.
Companies that are all in about inclusion should establish the position of accomplishing the goals of diversity at the C-level, such as the Chief Officer of Diversity (COD). This would send a strong message.
The C-level authority carries with it the concept and perception that the title is top-level and very serious, and expectations are assigned accordingly.
The person appointed to the C-level position should be held accountable for the results tied to performance evaluations. The company must provide full support for that position.
Establish Training and Support To Eliminate Ethnic and Gender Unconscious Bias
The “elephant within the room” within many corporate boardrooms, executive suites and management towers is the fact that inclusion of different ethnic groups and women often fall prey to “unconscious or unintentional bias.”
The reality is that most boards of directors, top-level executives, and top-level managers within corporations are still while males. Almost none of them come from the same or similar background as ethnic minorities.
Decisions made by them often are made with an unconscious bias that has adverse effects on diverse employees and suppliers.
In addition, many have been raised in a cultural environment that unfortunately still fosters unconscious and hidden thought patterns in their minds that women don’t measure up to men when it comes to running businesses and being as smart.
Of course, this is not the truth. Nevertheless, it still exists. Unconscious bias hinders a corporation’s ability to achieve goals of inclusion. It must be dealt with and approached with an attitude of empathy but eradicated wherever found.
In real-world people like to deal with, support, and benefit people who look like them, act like them and see the world around them the same as they do. They like to help and assist people they know like and trust and have an affinity for.
This is natural and tribal and perhaps understandable to a degree. Nevertheless, it cannot be tolerated. It fosters and perpetuates bias and the excuse that it may not be intentional is unavailing.
When someone from a different background, culture or opinion comes within the midst of those in dominate cultures or environments and used to having it their way, the dominance thought process often makes decisions based unconsciously from the viewpoint of their background and culture and the lenses they’ve looked at life through all their lives.
When this happens, people from other cultures, genders, etc. may be ignored. They may not be taken seriously and are made to feel that what they have to contribute is not important or not taken seriously.
Sending such a message within the workplace, or supply chain, unintentional or not, prevents the effectiveness of inclusion, and achieving diversity is made more difficult. This is an example of unconscious or unintentional bias.
This bias must be guarded against and eliminated within the workplace and within the decisional making process of deciding purchases within the supply chain of the corporation involved.
In some cases, the concept of legacy preference like the practice of special preference for college admission for whites over any other race or culture exists within corporate ivory towers.
This type of bias is based on the concept that one is entitled to a position with or without merit and actions are taken to prevent anyone else who is different from obtaining equality.
Where this exists corporations must be swift to correct it and make sure that it never exists again within that organization.
Human Resources Department Must Be A Proactive Participant In Inclusion, Equity, and Diversity Strategies
According to the Society for Human Resource Management, (HR) employers often recognize the theoretical value of diversity and inclusion programs.
However, they lack a practical guideline for determining whether their diversity programs will be effective in their organizational culture, or how to measure the return on investment for their initiatives. This is where HR standards for diversity and inclusion should be applied.
According to Deb Cohen, Ph.D., and former SPHR Chief Knowledge Officer “There are many areas within HR that we could have targeted first to begin creating standards, but it is our belief that Diversity and Inclusion is one of the key areas, to begin with, because of the criticality of this issue to the success of organizations today.
Competition for talent is keen as it is clear that there is a skills shortage — regardless of the current unemployment rate — and this points to the need to understand the diversity within the workforce and be inclusive in hiring and developing talent.”
Human resource data also shows that effective inclusion tactics affect a company’s bottom line. It is profitable. It is just good business to include different cultures, races, and females in every aspect of a company’s business.
Make Sure The Proper Metrics Are Being Used To Quantify Diversity Efforts
If it’s not properly measured even the best efforts employed in establishing an inclusive diversity program will not be as useful as it could be. If it’s not measured, it can’t be managed.
Installing the proper metrics should be one of the top priorities in managing diversity.
Community Outreach and Involvement
Corporate social responsibility and the goal of inclusiveness can be enhanced in a multitude of ways through a company’s community involvement.
Community involvement allows a company to engage employees on a variety of different levels. This ultimately increases engagement in the company and enhances favorable perceptions from community stakeholders.
Developing a relationship with a community is just good business. Businesses that make a point of engaging communities through sponsorships, philanthropic gestures in crisis events, educational programs, creation of jobs, and positive environmental impact initiatives reap tremendous rewards.
In short, consumers recognize and appreciate when a company gives back to the community. Such activity is perceived as valuable and promotes the perception and reality that the company “really cares.”
Communities reward companies in return by consuming that company’s goods and services on a continued loyalty basis and directs others to become buyers as well.
The community can also become a huge factor in helping the company reach its goals for inclusion and achieving diversity goals.
One avenue that can be extremely effective is to create a community advisory board that consists of identified community leaders that meet periodically to advise a company of the best way to reach community residents for feedback, market research, job creation, and supplier chain suppliers that may not otherwise become known to the corporation.
This can be significant regarding supplying the company with essential goods and services to help it become more profitable as well as meet diversity goals.
Create A Tier 1 and Beyond Responsibility and Accountability Plan For Accomplishing Diversity and Inclusion Goals.
A very efficient and effective way for corporations to fulfill corporate social responsibility and diversity objectives and to narrow the gap in getting there is to create a program or process whereby the corporation’s Tier 1 suppliers (suppliers that provide direct goods and services to a corporation without middle persons) are encouraged and incentified to educate, support and assist Tier 2 and Tier 3 that support the efforts of the Tier 1 suppliers.
Creating more incentives for Tier 1 suppliers to train and support lower-tier suppliers would generate more brand presence and corporate inclusiveness.
It would also help Tier 1 suppliers become better able to reduce their cost of delivering goods and services to the corporation, which increases the profitability of the corporation and all the suppliers within the various tiers.
Efficient Use of Organizations That Can Enhance Diversity Platforms
Attaining the ultimate goal of any company’s diversity program can be enhanced through establishing strategic relationships with organizations that can act as feed lines of information and communication between diverse suppliers seeking opportunities with corporations and corporations.
Through this process corporations seeking to enhance their database of qualified suppliers can enhance and assist diverse suppliers to become qualified and certified to do business with them.
There are several organizations that exist that can assist in this regard. Some have been in existence for a long time but perhaps underutilized such as:
Women’s Business Enterprise National Council (WBENC)
WBENC’s mission is to certify women-owned businesses, (WBE’s) along with connecting them with corporate members that support the organization and provide real-time business opportunities and resources for women-owned business success.
National Minority Supplier Development Council (NMSDC)
The NMSDC, headquartered in New York City, is comprised of 23 affiliate regional councils across America, all of whom provide minority business certification and business development opportunities.
Its goal has been to provide a direct link between corporate America and minority-owned businesses.
Council for Supplier Diversity
The Council for Supplier Diversity is headquartered in San Diego, California, and is a national organization with its mission to be a gateway for diverse suppliers to expand and increase their bottom line.
The organization accomplishes this goal by creating market share growth for minority, women, veteran disable businesses, and LBGT businesses through interaction with corporate members of the Council.
United States Hispanic Chamber of Commerce (USHCC)
The USHCC is the largest networking venue for Hispanic businesses in America. For over a generation, the USHCC has served as the nation’s leading Hispanic Business Organization, working to bring more than 4.37 million Hispanic owned businesses to the forefront of the national economic agenda.
U.S. Black Chambers, Inc.
The U.S. Black Chambers, Inc. (USBC) provides committed visionary leadership and advocacy in the realization of economic empowerment. Through the creation of resources and initiatives, they support African American Chambers of Commerce and business organizations in their work of developing and growing Black enterprises.
National Black Chamber of Commerce
The National Black Chamber of Commerce is dedicated to economically empowering and sustaining African American communities through entrepreneurship and capitalistic activity within the United States and via interaction with the Black Diaspora.
National LGBT Chamber of Commerce(NGLCC)
The NBLCC is the exclusive certifying body of LGBT owned businesses. They have local affiliates across the U.S.A.
National Veteran-Owned Business Association (NAVOBA)
NAVOBA connects corporate America to Certified Veteran Business Enterprises. It provides a direct link for contracting between corporations and VBEs (Veteran Business Enterprises) and Service-Disabled Veteran’s Business Enterprises (SDVBE).
U.S. Pan Asian American Chamber of Commerce(USPAAC)
USPAACC has a mission to be the gateway to corporate and government contracts for Asian Americans (includes, East, South, and Southeast Asian and Pacific Islanders), suppliers.
Adopt a B- Corporation Mission Mindset Where Appropriate
An innovative way for corporations to bridge the gap of inclusion for diverse suppliers as well as establishing a fully engaged diverse employee population is to consider and implement some attributes of B-Corporation (benefit corporation) philosophy and business practice.
In America, a benefit corporation is a type of for-profit corporate entity, authorized in approximately 35 states and the District of Columbia whose charter includes a positive impact on society, workers, the community, and the environment.
The mindset of this type of corporate entity is not to have profit only as it’s motive and operation. Rather the philosophy is to combine all the attributes of doing good for humankind and earning a profit as well.
B Corporations are changing the face of corporate social responsibility and solving some of the most challenging problems faced by society. Regular corporations could do well incorporating some of the attributes of B Corporations and not only be more effective at reaching goals of diversity but also increasing their bottom lines.
Examples of Progress With Diversity and Inclusion Through Corporation Social Responsibility
It would be remissive for this article to fail to show the tremendous strides and progress that several corporations have made in developing and implementing platforms and programs that have helped thousands of minority, women, disabled veterans, and LBGT businesses enter into the mainstream of corporate America.
To those corporations, thanks and appreciation are extended. However, there is still more work to be done and improvements that can be made.
Work within the vineyard of diversity, inclusion, and supplier diversity continues.
Click on this link to see a listing of the top 50 corporations engaged in inclusion efforts for 2020. The list also includes several others that have honorable mention and are equally deserving of appreciation.
The struggle for equality and opportunity to share in the mainstream of corporate America and to compete on equal footing continues for diverse suppliers.
Often the difference between participation within the abundance of opportunities available within the supply chain of goods and services delivered to corporate America and not is simply the lack of knowledge and information of what is available.
How to qualify for the opportunity and how to gain an introduction to a company or organization that is seeking the goods and services offered by diverse suppliers is still a mystery to thousands of diverse suppliers. This should not be the case.
Our firm helps solve that problem by bridging the gap between diverse suppliers and the companies seeking to do business with them.
We assist with introductions, certifications, qualification preparedness, and contract acquisition.
Originally published at https://landerslaw.com on December 15, 2019.