Supplier diversity: bringing new voices to the table and effecting change in communities
When we’re working with clients to build a supplier base, we want to offer the best contractors possible from within our extensive networks. A crucial part of this offer is introducing a diverse range of people to the table who bring innovative ideas and alternative perspectives to a project.
All data shows that having a supplier diversity initiative leads to more business, higher productivity and innovation, and better economic and social outcomes for local communities.
By encouraging the use of diverse firms - including but not limited to minority-owned, women-owned, veteran-owned, LGBTQ+-owned, service-disabled veteran-owned, historically underutilised businesses and small businesses - we are able to bring people from varying backgrounds when sourcing into a company’s supply chain.
The use of these traditionally excluded groups expands diversification, promotes vendor competition and enhances competitive advantage.
Setting up a supplier diversity programme takes time, but it is vital to implement in order to create and nurture fruitful partnerships that support the growth of diverse firms.
Implementing a supplier diversity programme
To successfully implement a diverse supplier programme within a particular project, there are six key steps that need to be taken:
- Encourage buy-in from the leadership team: a client’s senior team needs to understand that diversifying its contractor base is a business imperative.
- Change company culture: we want clients to recognise that diverse companies often have more innovative solutions to offer, and by presenting these companies as partners, we can bring new ideas to their attention.
- Engage local diverse businesses: we work to connect with under-utilised businesses by targeting networking events, local membership organisations and using state-wide directories of certified firms.
- Build capacity within the client organisation: we want to change the way our clients do business; adjusting their procurement processes, policies and procedures to create more inclusive outcomes.
- Create a data-driven programme: setting reasonable targets helps to manage expectations and enables clients to monitor progress towards goals.
- Incorporate compliance mechanisms: there must be accountability across the programme to ensure that all stakeholders are engaged and providing support, accordingly.
Public sector organisations often have equity and diversity goals related to their contracting and have implemented these programmes for decades. Public sector activity in this space tends to dictate what happens in the private sector, and we are seeing a shift in direction for the vast majority of our clients. Indeed, companies who aren’t seeking to diversify their contractor base risk being left behind.
Second, we want to change the wider company culture, so that clients recognise that diverse companies often have innovative solutions to offer. It’s also about helping them to better their public perception through the opportunities that are created for diverse groups of people.
Society wants to see that large companies are spending their money in different places and supporting different types of businesses.
Finally, to do all of this, we need to engage local diverse businesses and build their capacity. This helps to create better business partners for us and our clients.
We’ve worked with a number of high-profile US clients to use a diverse range of suppliers and successfully deliver major projects, demonstrating that it is possible to not only meet ambitions for a more diverse workforce, but exceed them.
Wells Fargo, for example, set out a 20 percent goal for the use of diverse suppliers.
Thanks to our programme, we achieved 51 percent utilisation and more than $145m of diverse capital spend, equal to 46 percent of the overall spending for the project.
At Denver Airport, the client set a goal of 20 percent for use of diverse suppliers, and we proposed almost doubling that, committing to at least 35 percent for the project.
We’re using the services of a local minority- and woman-owned firm to provide support with community outreach and compliance monitoring and have expressed interest in Denver’s upcoming mentor protégé programme which will further build the capacity of the diverse firms who participate in the programme.
Building a benefits cycle
By offering to partner with small and diverse firms, we are creating future opportunities for businesses to access major contracts beyond their work with us.
Companies that partner with us get the chance to enhance their capabilities, and often gain access to future work because they can demonstrate experience of tackling large, often complex, projects.
But there is a much wider benefit too: in the US, our supplier diversity efforts are mainly focused on ethnic and gender goals, and we find that using these companies has a domino-effect on local communities.
For example, Hispanic-owned firms tend to employ more individuals of Hispanic descent, black- or African American-owned firms tend to employ individuals of African descent, and woman-owned firms similarly. This means money that is spent by large companies through contracting with smaller businesses are now in the hands of a much more diverse group of people. Those businesses and people pay taxes, they spend money in their community, and there is a cycle of change that improves economic outcomes across the board.
The general public wants to see that large companies are implementing inclusive initiatives and supporting different groups of people through business engagement and opportunities for growth. There needs to be a greater commitment across the construction industry.
Larger firms must dedicate resources to create avenues for inclusion, boost exposure for those who might otherwise be missing out and ensure that they are creating a business environment where diverse businesses can get involved and perform successfully.