How to Ensure Your Diversity Spend Helps Improve Communities in Need
Increasing supplier diversity can benefit companies in multiple ways, such as by improving innovation, recruitment and customer experience. With diversity can come new viewpoints and access to new talent pools, while providing opportunities to marginalized groups. However, simply choosing a supplier with diverse leadership/ownership doesn’t go far enough.
To get the most out of supplier diversity efforts, companies should make sure diversity spend also makes a broader impact on communities in need. For example, if a company wants to address gender inequality, instead of just selecting a women-owned supplier, they could choose a women-owned vendor that hires women from disadvantaged communities.
The impact that a supplier makes on communities in need can trickle up to the company hiring that supplier, such as in terms of affecting brand reputation. Plus, if diversity efforts have an altruistic component, then companies should want their suppliers to make a positive impact.
So how can companies ensure their diversity spend helps improve communities in need? Three ways to do so include:
- Assess Suppliers’ Community Involvement
When selecting suppliers, go beyond just assessing whether or not the company has diverse ownership. Choosing a minority-owned, women-owned or veteran-owned business does not necessarily mean that those businesses have much of a broader impact on communities in need. Instead, look for ones who put into practice actions that align with your impact goals.
For example, if you want to work with minority-owned businesses as part of helping to reduce racial inequality, look for vendors who take action such as donating to or volunteering with racial justice organizations. Vendors might also help communities in need through their own business practices, such as their hiring initiatives or their own supplier diversity efforts.
Pharmaceutical company Gilead Sciences shares in a guest post on SpendMatters that the company wants to go beyond assuming a supplier will have a positive impact by default. Instead, they aim to “confirm that impact by adopting location-based indicators, such as jobs supported by state and economic contribution by state.”
Gilead’s article provides the example of a minority-owned IT services vendor that “established customer care centers in Chico, California, rather than turning to offshore solutions and added 140 additional jobs in the city.”
- Promote Diversity Efforts
Part of making an impact is spreading the word. At payroll/HR company ADP, for example, one of the main objectives for its supplier diversity efforts is “Communicating the value of supplier diversity both internally and externally to all stakeholders.”
For companies with supplier diversity programs, publicizing these efforts can serve as examples for other businesses interested in increasing their own diversity spend. That in turn can help more communities in need, as more entrepreneurs from underserved communities could have opportunities to win contracts.
Promoting diversity spend can also help the broader public become aware of the importance of representation. Highlighting the impact you’re having, such as if you partner with a vendor on a philanthropic endeavor, can also inspire others to make a difference.
Making sure internal stakeholders are aware of diversity spend initiatives can also help. If employees are aware of supplier diversity efforts, for example, they might engage on related issues, such as working to improve recruitment from underserved communities.
- Leverage Third-Party Experts
Trying to find the right suppliers can be hard enough on its own. So when you add in attempting to assess community impact and promoting diversity efforts, it can be too much for just one company to take on internally. That’s why companies often benefit from working with third-party experts to source diverse suppliers and review their impact.
For example, the Harvard Business Review reports that UPS “employs a third-party firm to validate supplier certifications every quarter and conducts audits of diversity spend and the economic impact of programs.”
Similarly, engaging with organizations like the National Minority Supplier Development Council can help companies find diverse suppliers and learn best practices to improve the impact of this spend.
By following these three actions, companies can get more out of their diversity spend. GoProcure, a diverse supplier itself, can help provide you with the resources needed to assess vendors and choose diverse ones that make a positive impact on communities in need.
Have questions about how you can get more out of your supplier diversity efforts? Request a free consultation with our product experts today.