By: Fred McKinney Posted: May 27th, 2016

After 14 years of running a regional council of the National Minority Supplier Development Council, I developed an intuitive understanding that not all corporations are the same when it comes to the quality of their supplier diversity programs. Unfortunately, we really did not have tools that quantified where corporations were on the Ralph Moore spectrum of non-existent to world-class. More importantly, corporations also did not have the tools that could consistently track their performance relative to others. With this in mind, I came up with a tool that measures and scores corporate performance on supplier diversity.

The tool includes thirty (30) questions that each have a yes or no answer. This dichotomous approach allows supplier diversity professionals to focus on the fundamentals of what comprises an outstanding supplier diversity program and minimizes the collection of data. This approach also allows companies to track their performance over time and helps in the establishment of new objectives that can create positive change in their supplier diversity programs.

This tool was presented to corporate members at two regional NMSDC affiliate events in 2016 and was also taken by a handful of companies who wanted to answer the questions. A total of 66 companies were surveyed. I view these results as preliminary and in need of more in-depth analysis that will require more information on who and what companies are taking the test. At present, I cannot provide industry specific analysis. I cannot address regional differences or differences in the size of the corporation. I cannot address the issue of how long a corporation has had a program. With these and perhaps other limitations, I do believe the results from this preliminary study are interesting and perhaps even provocative. Perhaps the results will lead to increasing the focus of supplier diversity as much on the companies buying goods and services as we do on the diverse suppliers attempting to sell to these companies.

The score is divided into three major categories: Leadership; Processes and Outcomes. Leadership questions are attempting to get to the commitment of the CEO and the board to supplier diversity goals, objectives, strategies and outcomes. Processes questions are attempting to quantify actions taken by the organization to promote supplier diversity and utilize diverse suppliers. Outcome questions are designed to measure results of the leadership and processes.

Each company received a total score. The maximum score received for the 66 companies was 93 out a possible 100 points. The minimum score was 10, and the mean score was 47. Given this mean score, I can conclude one of two things; either we have much work to do, or that the tool is too hard. I choose to believe the former.

Instead of reporting in detail on these total scores, the analysis below reports the percentage of respondents who answered yes to each of the leadership questions. This analysis helps companies understand where specifically they are similar to other companies and where perhaps they need improvement. Perhaps in future articles, I can provide similar details on the Process and Outcomes questions.

Leadership Results

1. Does the company have a supplier diversity statement by the CEO on the company website?

62.1 percent of respondents indicated that they have CEO commitment statement.

Why is this important? We often state that effective supplier diversity starts at the top. For the CEO to go on record and state his or her commitment indicates that the company is aware of supplier diversity and that the professionals in the organization have their support.

2. Has the CEO attended a supplier diversity conference in the past two years?

40.9 percent of respondents indicated that their CEO had attended a supplier diversity event or program.

Why is this important? When the CEO shows up at anything, that event becomes important. The time of CEOs is one of a company’s most valuable assets. For the CEO to show-up is often enough to enliven an event and give it gravitas.

3. Does the supplier diversity leader have a meeting at least once a year with the CEO to discuss supplier diversity performance?

 

66.7 percent of respondents indicated that this meeting occurs.

Why is this important? Former GE President and CEO, Jack Welch famously said “if it is not measured, it is not important.” Similarly, if the CEO and the supplier diversity leader cannot find an hour in a year to sit down and discuss goals, strategies and progress on supplier diversity, there is going to be a problem having a meaningful program.

4. Does the CEO meet with an advisory committee comprised of the companies main diverse suppliers at least once per year? 1

0.6 percent of respondents indicated that such a committee exist that meets with the CEO.

Why is this important? It is generally recognized as a best practice for senior corporate leaders to engage in a dialogue with suppliers in general. It also considered a best practice for senior corporate representatives to hear from a select group of diverse suppliers. These committee meetings not only build specific relationships between corporate leaders and diverse business leaders, the insights learned in these meetings can lead to more effective policies and procedures that improve conditions for all diverse suppliers.

5. Is at least 5 percent of the CEO’s compensation tied to supplier diversity goals?

19.7 percent of respondents indicated that supplier diversity entered into the CEO’s compensation package.

Why is this important? Many things motivate behavior. One important motivator is money. Having supplier diversity performance as a determinant of CEO compensation is an indication that at the board of director’s level, supplier diversity is important to the corporation.

In your service,

Dr. Fred

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