For most small business owners, being labeled as an MBE is shorthand for subpar service. Despite government mandates that companies set aside a portion of their budget for historically under-represented peoples, the number of small businesses who identify themselves as minority owned is shrinking. Today, less than 25,000 of the 7 million minority or women owned businesses in this country have 3rd party certifications denoting them as such. By and large, companies have reported that there is a stigma associated with certifying oneself as an M/WBE. There is a (valid) fear that if a company is minority owned, they limit the business they might receive from larger organizations. Thus, certification is an undue burden on the holder.
The question we must ask is: why? In some respects, government mandated diversity spend programs are seen as handouts; oftentimes, the various challenges M/WBEs have historically faced are forgotten, overshadowed by government intrusion in the affairs of private companies. In the most extreme cases, supplier diversity programs are viewed as unfairly tipping the scales for businesses that otherwise wouldn’t be qualified for the work they receive. Despite suppliers’, OEMs’ and the government’s best efforts this perception will not go away.
There are, however, several ways in which we can champion diversity without losing sight of company goals and objectives. For one, more competitive procurement practices need to be established. In some large companies, procurement executives operate with little oversight into what they are buying and from whom; this leads to executives simply operating on the word of current suppliers as to which M/WBEs to do business with. In this example, it must be noted that the supplier you turn to cannot be expected to perform the same due diligence you would when procuring a vendor.
Another simple fix is to put in place systems to track the ROI of diversity spend initiatives. Attaching a hard dollar amount to the savings gleaned from diversity spend programs is crucial in winning the battle to erase the stigma of supplier diversity programs in your organization. Spend analytics best enables you to fight for maintaining—or even increasing—your supplier diversity spend.
Diversity Reporting Solutions, is a spend management system that streamlines internal information gathering, spend tracking and spend analysis for supplier diversity managers.
For more information on working with Diversity Reporting Solutions, contact Jaymie White at Jaymie.White@diversityreporting.com.