DIVERSITY RECRUITMENT INSTITUTE FOR VALUE AND EXCELLENCE: SUPPLIER DIVERSITY PART ONE

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1 DIVERSITY RECRUITMENT INSTITUTE FOR VALUE AND EXCELLENCE: SUPPLIER DIVERSITY PART ONE EXECUTIVE SUMMARY Research conducted by DRIVE and Green Park.

2 FOREWARD As our initial benchmark, DRIVE has pledged to deliver 100,000 diverse hires to the UK workforce over the next five years, via the impacts of our diversity effectiveness audits and programmes utilised through our membership. As part of our method to successfully achieve this, we are committed to producing pioneering and pragmatic research reports and evidence based tool kits into some of the key deficit areas currently facing companies all over the world across recruitment, talent management, procurement and employer brand. The third report detailed within is entitled Supplier Diversity Part One: When and where to get started. This topic was specifically highlighted by the DRIVE network as most were failing to meet their diversity objectives in auditing and managing effective diverse supplier networks across all tiers. The qualitative research was conducted by speaking with over 45 senior Procurement, Diversity and Inclusion, HR and Operations professionals, along with the DRIVE membership. EXECUTIVE SUMMARY Supplier diversity should be considered part of a business strategy that ensures a diverse supplier base in the procurement of goods and services for any business or organisation. It emphasises the creation of a diverse supply chain that works to secure the inclusion of diverse groups in the procurement plans for the private, public and third sectors. Research shows that companies who are embracing diversity are more profitable than companies that don t with one study confirming in 2015 that on average, supplier diversity programs add $3.6 million to the bottom line for every $1 million in procurement operation costs. The high return on investment (ROI) is undeniable; a positive ROI that boosts socially conscious reputation should push supplier diversity to the forefront of business strategy. There is a common misconception that diversity is a quota system or social program designed to benefit selected groups, adding little to no value to the bottom line along the way. This, paired with a general lack of subject knowledge and understanding around the diversity dividend, leads to a distinct difference between the rhetoric and reality of the conversation surrounding supplier diversity. THE RHETORIC: MAKING THE POSITIVE CASE FOR SUPPLIER DIVERSITY The case for supplier diversity is essentially no different from the case for diversity within your workforce. The sustainable impact that diversifying your supplier base can have is well documented because reaching into the widest pool of suppliers available helps business, means a better reflection of a diverse customer base and offers a greater opportunity for innovation. This is why it is suprising to find such a disconnect between where companies say they are with inclusive procurement verse where they actually are. 80% of our interviewees agreed that supplier diversity was too complicated for where they were in their diversity journey. PAGE 2 2

3 THE REALITY: SUPPLIER DIVERSITY IN ROOM 101 The reality of supply chain diversity in the UK is currently very different to the rhetoric, for several reasons. At its core is a story of Complexity, Confidence and Confusion. Complexity - The supply chains of most major businesses are complicated to describe, let alone manage and measure. One Chief People Officer said the concept of supplier diversity, was discussed and thoroughly endorsed but then immediately placed into the Too Difficult tray. Infact, 80% of our interviewees agreed that supplier diversity was too complicated for where they were in their diversity journey. Confidence As with many internal diversity and inclusion practitioners, there is a fundamental deficit in skills, knowledge and understanding in diverse supplier contract management and where you can go to find diverse suppliers. This results in a lack of ability to benchmark, performance manage and audit the diversity of suppliers to confidently and authoritatively follow through on the commitments made by suppliers during the tender process. Almost 90% of our interviewees said they had no accountability for failed supplier diversity programmes. Confusion - Many businesses believe they are working towards supplier diversity but in fact they are merely meeting equality compliance standards and 51% didn t even know what these were. Equality compliance, whether in the procurement process or elsewhere, is all about seeing whether an organisation complies with laws and other standards. Supplier diversity is a big step up from this. Establishing compliance is important, but much more valuable is knowing how to effectively measure the diversity of the supplier in terms of business ownership, workforce, diversity and in diversity proficiency. UK businesses are some way behind than those in the United States in recognising and delivering the benefits of supplier diversity. The UK Government supports the promotion of diversity in business and this is slowly becoming a feature of the procurement sourcing process, but many argue for more forceful action in the UK. The experience of the United States is that supplier diversity may have started through Government action, but that the enlightened self-interest from major corporations around supplier diversity has generated a massive accelerator effect for its adoption as best practice. Similarly, it will be mutual self-interest on the part of client and supplier that will drive supplier diversity in the UK. Our research identifies three forces at work in favour of supplier diversity. SUPPLIER DIVERSITY IS Inspiration for innovation 46% said supplier diversity is a driver of innovation because innovation comes from being different. Diversity of thought begins with diversity of origin and an acceptance that there are new and probably better ways to achieve the same results. A driver for better procurement 36% agreed procurement professionals are now under pressure to demonstrate their own innovation, curiosity and openness to change. The Social Value Act 2012 emphasises this, particularly within the Public Sector, as it drives some commissioning to look more broadly at the social aims and values being realised when working with a supplier. An enabler of greater resourcing flexibility 67% said diversity can only inspire if it is allowed to flourish within both clients and suppliers. This means that HR systems and processes need to serve diversity, not the other way around. A more diverse approach frees up a flexible approach to resourcing. 3 90% of our interviewees said they had no accountability for failed supplier diversity programmes. PAGE 3

4 SIX STEPS TO IMPROVING SUPPLIER DIVERSITY I. Audit your current suppliers and set clear Key Performance Indicators (KPIs) and Service Level Agreements (SLAs) Identify existing minority suppliers and determine spend with them Research areas where there is concentration of minority suppliers Understand past and current success with minority suppliers Ensure clear and consistent performance indicators and service level agreements are in place across network 2. Ensure equality of opportunity for minority suppliers Include minority suppliers in all processes Consider developing a supplier diversity web page on your company website Attend outreach events like Meet the Buyer Event to meet minority suppliers 3. Set clear goals for your commitment to supplier diversity Appoint supplier diversity champions in individual departments to coordinate supplier diversity activities Establish cross-department groups to share best practice and promote success Work with external advocacy organisations and share future sourcing plans with them to identify potential contracting opportunities for minority businesses 4. Work with your supply chain to work with theirs too Encourage 1st and 2nd tier suppliers to use minority businesses and consider subcontracting opportunities Organise 1st tier supplier briefing events to make them aware of company Supplier Diversity policy Evaluate 2nd tier subcontracting opportunities 5. Own the development of your minority supply chain Leverage company resources to address supplier capacity constraints, perhaps through supplier development or mentoring programmes Develop an effective feedback mechanism for all successful and unsuccessful minority business Identify areas for improvement as well as opportunities for expansion for minority suppliers e.g. through partnerships or joint ventures 6. Consistently report the success of your programme Drive behaviour change through use of goal setting within procurement team objectives Ensure continuous and robust monitoring of action plan amongst employees and 1st tier suppliers through quarterly review Include supplier diversity performance in employee annual review We are committed to producing pioneering research reports and putting a spotlight on best practice wherever we find it. PAGE 4 4

5 ABOUT GREEN PARK Over the last decade, Green Park has become one of Europe s most trusted suppliers of executive search, interim management and board advisory solutions across the private, public and voluntary sectors, boasting vast diverse networks throughout. Since our inception in 2006, we have focused on building a company with a reputation for delivering results and customer satisfaction through collaborative and high-quality solutions. We know what customers don t like about headhunters and, as such, hold ourselves accountable for not only setting but meeting a higher standard. Our dedication to supplying sustainable and right first time talent solutions has enabled us to achieve a 98% average client satisfaction scoring across our business. We also generate over 68% of our annual mandates through repeat client business. ABOUT DRIVE The Diversity Recruitment Institute of Value and Excellence (DRIVE) is a social enterprise established by Green Park in It is comprised of a membership of motivated organisations who are passionate to understand what current equality programs are actually delivering sustained behavioral and statistically validated change and DRIVE is leading the conversation and practical outputs making success more achievable. DRIVE will continually produce pioneering UK focused research, thought leadership and delivery tool kits throughout the year. Using the Green Park Diversity Dividend Model, we will also create achievable and pragmatic pathways for all members to work towards the relevant employer of choice status, whilst achieving our collective primary goal of delivering 150,000 new diverse, socially mobile hires to the UK workforce and beyond. To find out more about how DRIVE can support you in the audit and roll out of your supplier diversity strategy and across all diversity program measurement and implementation, please contact us on the information below. joseph.williams@drive.exchange Telephone: