This year begins unlike any other — surrounded by a global pandemic, economic recession and political transition. While business leaders face many competing priorities in Q1, supplier diversity is emerging as a critical topic at the forefront for many of them.
Supplier diversity presents a massive opportunity for organizations to improve their bottom line while strengthening their local communities. As business leaders revisit their supplier diversity programs in 2021, we've highlighted five key points to consider.
1. A new administration could mean a change to diversity targets
We recommend staying informed on new legislation from the Biden administration and local government bodies, as it may impact your supplier diversity targets.
2. Supplier diversity as a reflection of your corporate values
In 2020, several tragic events sparked a national conversation around racial injustice, which has continued in 2021. Motivated by these conversations, business leaders are reevaluating their supplier diversity programs, and asking the critical questions: Is this program in line with our diversity goals? Can we do better? Can we do more? More often than not, there is room for improvement. Use your supplier diversity program as a way to affirm your corporate values and strengthen your local community.
Did you know?
- People of color held less than 10% of nonprofit CEO and trustee positions.1
- Organizations with more diverse management teams have 19% higher revenues due to innovation.2
- Organizations that allocate 20% or more of their spending to diverse suppliers can attribute 10%–15% of their annual sales to diversity programs.3
- 99% of diverse suppliers meet or exceed expectations.3
3. Adapting to new business standards
A new proposal was recently put forth to the US Securities and Exchange Commission (SEC) to adopt new listing rules on board diversity and disclosure. According to the proposal, "The goal of the proposal is to provide stakeholders with a better understanding of the company's current board composition and enhance investor confidence that all listed companies are considering diversity in selecting directors4…". If this proposal is implemented, there may be a residual impact felt across the business landscape. Organizations should anticipate how they'll be impacted and update their diversity program accordingly.
Additionally, businesses are increasingly requiring their vendor and business partners to report on their supplier diversity spend and work with diverse suppliers to compete for their business. As they work to increase their supplier diversity spend, companies expect and demand a similar commitment to supplier diversity from their business partners.
4. Tapping into supplier networks
With current restrictions in place at state levels, work may continue to operate on a remote model for the immediate future. In this remote work environment, organizations may not have access to the same supplier diversity forums or resources they normally would. Whenever and wherever possible, organizations should leverage supplier diversity networks — such as the National Minority Supplier Diversity Council, the Women's Business Enterprise National Council, National LGBT Chamber of Commerce or Gallagher Connect Partners — to stay connected and engaged.
5. Identifying industry-specific suppliers
All industries were affected by the events and restrictions of the past year, but not all were affected equally. When looking to partner with a diverse supplier, find a supplier with expertise tailored to you. They will know the ins-and-outs of your industry — safety regulations, ethics, state of the market, etc. — and can help proactively plan for any market disruptions that 2021 has in store.
Optimizing your supplier diversity spend
Altogether, several factors are moving the needle towards higher diversity targets. Higher targets on supplier diversity may be challenging for some organizations to meet through traditional suppliers. In this case, organizations should take a closer look at their insurance spend; insurance is an underutilized industry for supplier diversity.
As many organizations look to strengthen their supplier diversity programs, Gallagher Connect Partners can help. Gallagher Connect Partners is an inclusive network of minority-owned, woman-owned, veteran-owned and other diverse, certified insurance firms strategically selected based on their unique specializations, shared values and proven ability to best serve our clients' risk management, insurance and supplier diversity needs. As a team, we support the growth of Minority/Women-owned Business Enterprises (MWBEs) in insurance and help attract more diverse talent to the industry.
Through a growing network of 60+ diverse-certified partners in 40+ states and providing tailored risk management programs to clients through partners’ local expertise and Gallagher's global reach, we empower clients to meet or exceed their supplier diversity goals through their risk management spend.
1 Leading with Intent. 2021.
2 Lorenzo, Rocio, Nicole Voigt, Miki Tsusaka, Matt Krentz, Katie Abouzahr. "How Diverse Leadership Teams Boost Innovation." BCG Henderson Institutue. Jan. 23, 2018.
3 The Hackett Group. "Top Supplier Diversity Program Broaden Value Proposition to Drive Increased Market Share, Other Revenue Opportunities." Feb. 16, 2017.
4 JDSupra. "Nasdaq Proposes Rules to Diversify Boards and Standardize Diversity Reporting." McGuireWoods LLP.