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The Obama Stimulus and WMBEs, Diverse Suppliers Feeling Good as Delta Aims High with Northwest Merger, Darden, a Food Service Company that’s the Benchmark for Success, Managing the Multicultural Workforce, 10 Best Practices for Supplier Diversity Initiatives

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  1. 1. Trends & Issues The Obama Stimulus and WMBEs Is it a Lifeline or a Kick to the Flailing Small Businesses? By Ji Hyun Lee Y ou can stand on the left Business Report show that 175,000 jobs been disbursed, and it is 100 percent side or the right side were lost in the segment. With such guaranteed by the SBA. of the debate but your devastating numbers, the struggle has “ is bill gives us specific tools perspective will depend just begun and many business owners to make it easier and less expensive entirely on who you are are wondering if and when the newly for small businesses to get loans, give and what you represent. passed economic recovery plan is go- lenders new incentives to make more If you’re a consumer, an out-of-work ing to help stop the bleeding. loans,” says Darryl K. Hairston, acting Dad for example, you probably sup- According to the Small Business SBA administrator. “ e tax incen- port President Obama’s new stimulus Administration (SBA), a federal agency tives and credit stimulus elements of plan. If you’re a business owner with that protects the interests of small en- the Recovery Act will truly help small 100 plus employees, you probably de- terprises, there is much to be applaud- business owners affected by the credit nounce the new plan, seeing it as a ed in the new Obama plan. For one, crunch, and will provide financing op- financial trap for your company. But the stimulus provides $255 million in portunities to help them create new what if your business is fairly new and aid— Business Stabilization Loans— jobs in their communities.” small, with a staff of 15 or less even? If for companies overloaded with debt. e recovery package allocates a you are a certified minority or woman ese deferred-payment loans, limited total of $730 million to SBA to fund enterprise, what’s in it for you? to $35,000 per business, don’t have to troubled businesses: Some of its pro- Latest findings from the ADP Small be repaid until one year after it has visions include $375 million in tem-20 DiversityPlus Magazine | March/April 2009 www.diversityplus.com
  2. 2. Trends & Issues porary fee reductions or elimination on SBA loans, and $30 million in the expansion of Microloan programs. “ e advantages of the stimulus bill are in the contracts that it will create for our businesses, which will help us grow and help us employ more people,” says , CEO of Count Me In for Women’s Economic Independence, a nonprofit organi- zation that supports women entrepreneurs. “I believe that the focus on healthcare, energy, and education will have an overall positive effect on women and minority-owned busi- nesses.” Like many companies, Count Me In is seeing the affects of the recession— financial contributions have declined sig- nificantly over the last year and company-wide cost-cutting measures have been implemented. Although downsizing is still within the realm of possibility, it has yet to transpire so Merlino remains optimistic. To keep her business going, Count me In has initiated a new program called Make Mine a Million $ Business RACE, an effort that provides education and resources to aid women looking to go into business for themselves or for entrepreneurs trying to keep existing busi- ness afloat. e goal of such programs keeps her company operating in a time when most are closing its doors. “We’re all working hard to make our organization successful, as we’re helping others do the same,” she says.www.diversityplus.com DiversityPlus Magazine | March/April 2009 21
  3. 3. “The advantages ofTrends & Issues the stimulus bill are in the contracts that it will create for our businesses, which will help us grow and help us employ more people,” - Nell Merlino says Beverly Holmes, chair for CFW- BR. e organization, like many other women and minority-owned enter- prises, wants to see more government efforts aimed at contracting to women and minority-owned businesses and revamping of the education, training and loan packages out of the Small Business Administration. Lugo agrees that the Stimulus plan is just beginning to skim the surface Like many Americans, Merlino be- recent survey conducted by Discover of a larger issue. Likewise, Merlino lieves that the Obama administration Small Business Watch, an index that also recognizes that President Obama has its heart in the right place though measures economic confidence of could have done more to target aid she is quick to point out that the eco- small business owners, 59 percent said specifically to MWEs. “I would have nomic plan is not without its flaws. that their business would not benefit dedicated more specifically to entre- “Few people appreciate that small from the new economic package and preneurs, providing resources to stim- businesses need more than just money 62 percent said they were not very ulate the creativity that will create new to grow. We need training, technical confident that the government could products, solutions and jobs,” she says. assistance, locally based support like adequately support small businesses. “ ere wasn’t enough in the bill, but Women Business Centers, and access Many simply believe that the I’m hopeful that the President will em- to contracts,” she explains. amount set aside for aiding the efforts brace the role that entrepreneurs have For Evelyn Lugo, owner of a resi- of small businesses— .05 percent of in creating jobs,” Merlino says. dential real-estate company ELo, the recovery plan— is minimal. When For the time being, she offers some advantages to the Obama recovery viewed with the amount of debt that words of advice for women business package is obvious. “ e stimulus it- the country has fallen into, it’s an owners— creativity, confidence, and self offers an $8,000 tax credit to first amount that many believe won’t even community. “Creativity is needed to time buyers if they purchase between begin to chip away at the damage that’s look at products, services, in a new or Jan 1, 2009 and Nov 30, 2009.” When already occurred in a segment that different way. Confidence comes from coupled with the declining home sales, drives more than 50 percent of the na- building a team that complements Lugo hopes that the tax credit will mo- tion’s economy. your strengths… Being involved in an tivate buyers into getting great deals According to the Center for Wom- active community of your peers will on homes, which in turn helps her real en’s Business Research (CFWBR), in help you recognize pitfalls, and stay estate business. Another bonus to the 2009 there will be over 10.1 million inspired… Women are most likely to stimulus is its homeowner mortgage WBEs that will employ close to 13.1 succeed when they set goals together, rescue plan. “ e foreclosure relief million people. e combined efforts create accountability, and share sup- package should help slow down the of women-owned and operated enter- port.” high rate of foreclosures, which will prises are estimated to account for over e plan won’t truly see its effect help to stabilize property values,” Lugo $165 billion in sales. “It is extremely until several years down the line. But explains. disappointing that the American Re- in a recession, even a little something Despite the incentives available covery and Reinvestment Act of 2009 is better than nothing, and the incen- through the economic stimulus plan, does not recognize the importance of tives offered thus far appears to allevi- many still remain dissatisfied. In a this critical segment of the economy,” ate at least a bit of the suffering. 22 DiversityPlus Magazine | March/April 2009 www.diversityplus.com
  4. 4. Corporate Feature Diverse Suppliers Feeling Good as Delta Aims High with the Northwest Merger With two of the largest airlines in the U.S. coming together, how will it affect doing business with MWBEs? by Ji Hyun Lee T he airline industry has seen its share of ups and downs in the technical operations area. When I say operations, I but the sinking economy has put ticket sales in serious mean engines, aircraft repair, maintenance and operations. decline with concerned travelers putting their plans on So it’s not your traditional technical operations space. It’s hold. Rising fuel costs have also resulted in loss of revenues more specific to the airline [industry],” says Valerie Nesbitt, for many airlines and additional surcharges and fare hikes manager of supplier diversity. According to Nesbitt, the few hasn’t helped in luring back weary customers. So while many good diverse suppliers that are out there often get pushed out airlines are forced to downsize staff and cut back on services, of their niche by the larger manufacturers which essentially Delta is expanding, and taking on more employees. They re- takes away opportunities for minority enterprises. “I wish I cently merged with Northwest Airlines creating, the world’s could create a minority-owned refinery,” she says. largest airline. Last year Delta lost $340 million in the last quarter and With service in over 375 cities worldwide and in 66 coun- to add to those costs are the fees associated with the merger tries, with an employee base of approximately 75,000, Delta’s itself, estimated at over a billion— a substantial number to global servicing mission is now that much larger and more put into the loss column. Still, the merger is good news for urgent. With expanded service comes the re-prioritizing of Delta and particularly for Northwest. “In today’s economic company efforts and on the agenda for the airline is better climate, this merger makes even more sense because we can meeting the needs of supplier diversity. capture $2 billion in annual synergies and build the founda- “The biggest challenge, quite frankly, is finding [suppliers] tion for profitable growth through improved revenues,” says12 DiversityPlus Magazine | March/April 2009 www.diversityplus.com
  5. 5. Edward Bastian, President of Delta and chief financial officer Corporate Featurefor Northwest. “This is the most successful merger in airlinehistory.” Still, Delta’s finances have a positive forecast for 2009 andwith all the resources in place, enhancing supplier diversity isone mission that the company is committed to. The program,instituted 26 years ago, was revamped once in 1997 with theairline putting greater emphasis on establishing partnershipsand developing those partnerships with diverse suppliers.While Delta’s diversity program maintained a comparableachievement to other programs in its competing market, itstill lacks the organization and foundation that’s necessary fora corporation that is the newer and larger Delta. Shortage of financial support is one reason that Nesbittpoints as the reason for Delta airline’s lack of a quality and di-verse supply chain, though she admits that now the prospectis looking better than ever. “We’re going to pick up additional spend, additional re-sources, additional hubs… So it’s a huge opportunity for us togrow supplier diversity,” Nesbitt says. “We’re going to be theworld’s largest airline— global airline. There’s no way we cando that and not step up our game in supplier diversity… we’vegot to be the best.” Tina Teree Baker, President of Cadence Group, a 50 person Valerie Nesbittcompany that helps business and government organizationsefficiently acquire, organize and disseminate information, said about business opportunities. Delta appears to be very com-that Delta has stepped up and given them tremendous sup- mitted to having minority participation.”port even in hard times. “Valerie has give us an opportunity CSM recently participated with Delta in its Habitat forto meet with the new people within the Delta supply chain Humanity’s “Building Houses Without Limits” program.division and to get the chance to show who we are and look Delta has been an active champion of sustainable businessfor opportunities to help Delta with the information and the efforts by engaging in partnership opportunities with its sup-organization’s needs of the merger and ongoing business.” pliers in community involvement initiatives. The project One way of accomplishing a larger supply chain of diverse brought together the Georgia Minority Supplier Develop-business owners is by putting more emphasis on funding ment Council, Georgia Hispanic Development Council, thesecond tier businesses. With new revenues generated from Women’s Business Council in Georgia and other minoritythe Northwest merger, resources would become more eas- business owners to come together to network while beingily attained to manage these programs especially when some socially responsible at the same time.businesses show promise but aren’t quite at the level that is “It’s about having the opportunity to meet with our buy-required to fully supply its primes. In such cases, a little men- ers and to also build a home for a person that would other-toring might be required to help these second-tier businesses wise not have one. So it’s a community service as well assuccessfully make direct sales to Delta. building relationships with diverse suppliers,” Nesbitt says. To date, Delta’s efforts have been focused mainly on build- “That’s just one example of us thinking outside-of-the box…ing relationships with its suppliers and maintaining those and bringing supplier diversity into the game.”relationships. One such success story involves a minority- For Nesbitt, success is not measured solely by a corpora-owned business that now serves Delta aircrafts with house- tion’s spend. Rather, she believes that real success is depend-keeping services. Corporate Services Management (CSM) ent on developing successful, long-term relationships withstarted business in 1992 and has been flourishing ever since. diverse suppliers. “How many did I connect with? How well “Having the largest airline in the world on our client ros- do I understand what they do, what their capabilities are, andter has a major impact on our ability to be heard in the airline what they can do for me— for Delta.”industry. Working with a corporate culture that values excel- Because at the end of the day, buyers want to do businesslence is aligned with our objectives of being the best that we with someone they already know, someone they have alreadycan be,” says Eric Vinson, executive vice President at CSM. established a connection with. And with a new and largerMost impressive to Vinson is Delta’s commitment to diversity airline to support, developing a rock solid fleet of diverseespecially in the procurement process. “Delta has been an businesses to support Delta’s global mission is, as they say,active partner that readily includes us in their conversations simply a matter of time.www.diversityplus.com DiversityPlus Magazine | March/April 2009 13
  6. 6. Focus on Women Darden, a Food Service Company That’s the Benchmark for Diversity When your customers and employees are one and the same, it’s hard to find a place to compromise. by Ji Hyun Lee I f you like dining out, chances are that you’ve probably eat, which would naturally mean more customers. eaten in at least one or two of the restaurants owned by The company also doubled its transactions with minority Darden— Red Lobster, Olive Garden, The Capital Grille— and women suppliers through their Supplier Diversity Initia- are just a few of their six nationwide chain eateries. This com- tive. Darden has also helped suppliers scale up by mentoring pany-owned, full-service restaurant boasts annual sales in the them during critical periods in their growth phase. “Many of range of 6.7 billion with more than 1,700 locations in the U.S. the minority suppliers that have been able to achieve a level and Japan. Darden employs close to 180,000 people and of of longevity with us —that’s how they got started,” explains these employees, 40 percent are minorities and 36 percent of Donna Dozier Gordon, senior director for restaurant support the Board of Directors are minorities themselves, the CEO services at Darden. To become a supplier for Darden, women Clarence Otis, Jr. included. Darden has even established the and minority businesses are carefully vetted. “We spend a lot Six Diversity Commitments: To grow an organization rich of time on total quality, making sure that in the manufactur- in all facets of diversity, represent women and minorities at ing environment that the suppliers have a very good proc- all levels of the company, nourish everyone including guests ess, and process control that would ensure track-ability and of diverse backgrounds, increase supplier diversity, leverage traceability,” she says. She also emphasizes that it was Darden community involvement and evaluate diversity performance that championed the food safety and total quality in the food of company executives. services industry. Last year, the National Restaurant Association (NRA) hon- In order to qualify for Darden’s diversity initiative, the ored Darden with the Faces of Diversity Award for its commit- supplier must be at least 51 percent owned, operated or con- ment to diversity in the workplace. In the ever-changing face trolled by minorities or women and those companies are re- of the food service industry, the company remains steadfastly quired to provide certification of minority status through the principled in its original founder Bill Darden’s vision from National Minority Supplier Development Council. It stands 1938— welcoming people of different backgrounds to work to reason that Gordon takes special pride in Darden’s efforts would naturally welcome people of different backgrounds to here. “I think the account we’ve established for our supplier16 DiversityPlus Magazine | March/April 2009 www.diversityplus.com
  7. 7. diversity program is a best practice,” Gordon says. Focus on Women It comes as no surprise then that it has been somewhat of achallenge finding diverse suppliers that can not only measureup to the stringent quality requirements of Darden, but alsoare of the scale and scope to support the large multi-chainrestaurant. “When I first joined the company, when supplierswould tell me that if they approached another company aboutdoing business with Darden, all of the safety hurdles at thatcompany they had in place were let down,” Gordon recalls. Brooks Food Group (BFG), purveyor of specialty foods,is a minority supplier that has been servicing Darden for thelast 12 years. They started out supplying Red Lobster withmozzarella sticks for the restaurant’s appetizer menu itemsbut this partnership has helped Brooks Food to open anotherfacility and expand their product line. Now they also supplyfor Olive Garden and are an active participant of Darden’spoultry program, producing the now famous Stuffed ChickenParmesan. “Today we supply two poultry products, millions of poundseach year,” says Robin C. Brooks, CEO of Brooks Food Group.She credits Darden with the success of the partnership andits longevity. “For Darden there is consideration toward be-ing a minority or woman-owned enterprise. Considerationis provided in the way of information about what is goingon, opportunities for us to work with them on new projects,”Brooks says. She also points out that unique to Darden is Donna Dozier-Gordonthat they provide concept support people working with dif-ferent brands, which helps the suppliers better understand food through the Darden Harvest program, has awarded $6when developing new menu items. “It is a relationship that million in grants to non-profit organizations in underservedrequires a lot of diligence on our part to make sure that we are communities, and contributed thousands of hours of time toconstantly in touch with the concept, culinary and purchas- serve in youth development programs.ing people to provide as much value as we possibly can.” Currently, Gordon is in discussion with the Food Indus- Lina Hu, Chairman and CEO of Clipper Corporation, a try Council to train and guide suppliers to be more green inmanufacturing and distribution company, says she is very their manufacturing practices. All of this is still in the works.grateful for the support shown by Darden in helping her busi- Darden is looking into offering more organic items on theness grow. “It has been a great advantage to be one of Darden’s menu, realizing that there is a trend with its customers to-top minority vendors. They give us opportunities along with ward being health-conscious about their dining experiences.outstanding support to help us grow our business with them. “A lot of our food and menu development is driven byThey want to see us succeed.” what our customers are telling us they want,” Gordon says. Another aspect of Darden’s business is its push for sus- And these policies are simply just a few aspects of doing goodtainability programs. Being in the foodservice industry, the business and Gordon adds that in the end, it’s still alwayscompany is highly selective about the companies they do about the consumers.business with. “We’ve always been involved with the NGOSthat are involved with responsible fishing, animal welfare,so that’s part of our heritage,” Gordon says. There is evena newly appointed position created at Darden— director ofsustainability—to oversee the company’s efforts in runningthe most ethical and socially responsible business. “This kindof carries for some of the things that have been part of Dardensince its inception,” she says. Community outreach is also another initiative thatDarden is putting into the practice of being a responsible cor-poration. Through their Community Alliance Program, thecompany devotes a good percentage of its efforts to servingneedy communities in which they operate. To date, DardenRestaurants has donated more than 6.5 million pounds ofwww.diversityplus.com DiversityPlus Magazine | March/April 2009 17
  8. 8. Workplace Managing the Multicultural Workforce W hen diversity is working right, it benefits the entire business but some companies are find- ing it difficult to achieve measurable goals and still keep everyone happy. In today’s global marketplace, com- panies are coming to the realization that having a diverse workforce is a ne- cessity for the good of the bottom line. With the grim economic conditions however, it’s becoming harder than ever to make diversity a priority when jobs are in such scarce supply. Espe- cially for MWEs, creating a multicul- tural staff is a given but sometimes it also creates conflict. Usually problems can occur when there are interperson- al issues between employees. Other times tension can arise out of per- ceived bias in the hiring and promoting of workers. These issues are especially prevalent in companies without a solid diversity and inclusion policy. Robert C. Holland, an economist at the Wharton School of Business, conducted a study to gauge the effect of diversity in work environments. The Diversity Analysis Research Team all executives and company CEOs help matched in number,” writes Holland. (DART) comprised of 11 other profes- promote a company-wide diversity If there are just two or three minorities sors and researchers found evidence policy. The successful implementa- within a department, the study showed that showed an overwhelming effect tion involves active participation from a tendency for those employees to that diversity plays on team perform- all levels of management and periodic “buddy up” and form their own bub- ance. That effect was positive only evaluation of diversity efforts. Trans- ble, creating distance from other em- when diversity management policies parency and compliance are also valu- ployees. Thus the best answer to such were well implemented and struc- able in ensuring that all facets of the issues is for the company’s diversity re- tured, while poorly managed programs company’s efforts are working to the cruitment team to make a broad reach proved that performance of the em- fullest extent. to a number of minority and women ployees suffered. Holland’s DART team also discov- candidates so that a good number of “Open communication, coaching, ered that successful implementation diverse candidates are hired. and feedback are really important. of diversity management hinged on All things considered, Berry still More importantly don’t avoid the el- overcoming minority employees’ rela- advises companies to hire and manage ephant in the room. Don’t let conflicts tionship and task differences with their according to performance and merit. linger,” says Philip Berry, president of majority colleagues. The research con- The diversity program, if instituted Philip Berry Associates, a global man- cluded that while these factors play with careful planning and organiza- agement consulting and executive some role in the success or failure of tion should reap its own reward and coaching firm. “Help people find con- a diversity program, the most influ- the result will be visible to everyone structive ways to address their issues ential factor involved the number of involved. “If there is great teamwork, and develop skills which foster a more minority employees within the subset. people are energized and happy to positive work atmosphere,” he says. “Diversity achieved the most positive work even above and beyond the call This points to the importance of and quantifiable results when a gen- of duty, then something right is going proper management strategy in which erous number of diverse people were on,” says Berry.18 DiversityPlus Magazine | March/April 2009 www.diversityplus.com
  9. 9. Best Practice10 Best Practices for Supplier Diversity Initiatives By Ji Hyun LeeDoing business with minority suppliers is no longer just about socialresponsibility. Many businesses are realizing that now it’s the competitivedifference that gives a company its edge. To streamline the process ofcontracting to women and minority suppliers, here are some best practicestrategies recommended by the National Minority Supplier DevelopmentCouncil (NMSDC) and management consultant company Diversity TrainingGroup.1) Establish Corporate Management SupportA unified effort is crucial to the success of any diversity strat-egy and the best way to accomplish this is by incorporating itfrom the top down. “ e company CEO must support minor-ity supplier development in order for it to become embed-ded in the corporate culture of the company. WithoutC-suite support, success will be limited,” says HarrietR. Michel, president and CEO of NMSDC.2) Develop a Supplier DevelopmentPlanA clearly documented policy should state thecompany’s commitment to women/minority sup-plier development efforts. e plan should definethe scope of the procurement process with detailedexplanation of how the program will be managed.3) Create an Internal and External Commu-nications Strategy e supplier diversity team should regularly update com-pany staff on the progress of the development initiative—Web site, newsletters and annual reports are some ways ofachieving this. External strategy might involve highlightingsuccessful vendor relationships through various public rela-tions efforts— articles in minority-focused publications andattendance at diversity-aimed trade shows could work verywell in delivering the message.4) Mentor Current and Prospective SuppliersTo maintain relationships and build new ones with suppli-ers, it’s important for businesses to provide mentoring andcoaching for vendors that show promise. Mentorship oppor-tunities go a long way in succession planning for companiesbecause it helps ensure long-term growth of both minorityand majority businesses.www.diversityplus.com DiversityPlus Magazine | March/April 2009 33
  10. 10. 5) Institute a Workplace Diversity Steering companies are allowing their supplier diversity efforts to beBest Practice diminished to the point where their effectiveness can be ques- Committee tioned,” says Michel. “Companies should commit themselves In order for a company to understand the needs of diverse to finding out how minority supplier development relates to suppliers, they need to understand it from the perspective their revenue as well as their cost savings.” of the minority-business owner. Having a steering commit- tee dedicated to building diversity within the organization 8) Nurture Second-Tier Suppliers through recruitment and training helps build teamwork to- ough mentorship helps in developing new suppliers, a full wards the goal of doing business with MWBEs. commitment to second-tier should be implemented to plan for continued growth of the company and vendor relation- 6) Track the Management of Supplier Diver- ships. To that end, second-tier businesses not only accom- sity Program modate first-tier suppliers but they also help create a multi- Mauricio Velasquez, president and CEO of Diversity Train- layer approach for succession planning. ing Group, advises on having an orientation for new MWBEs 9) Conduct Frequent Seminars for MWBEs entering the supply chain. “We should think about keeping It’s always important for businesses to be up to date on all the a checklist… to help new suppliers, or remind experienced new technologies and innovations that are available for faster ones, understand how [companies] do business,” he says. e production and delivery of goods and services. Companies suppliers should be well informed about specific standards with supplier diversity programs should provide seminars for and needs of its prime. Velasquez says that tracking system vendors on the most innovative and cost-effective way of do- should entail regular onsite visits to vendors and meetings ing business. with their operations staff to ensure top quality and timely delivery of products. And of course, to keep par with good 10) Active Involvement in Diverse Communi- services, recognizing and rewarding those businesses that ties excel in its commitment helps in sustaining ongoing partner- To successfully establish relationships with diverse suppliers, ships. companies will find it easier to gain respect and trust from 7) Establish Accountability and Transparency diverse businesses if they became active in the community. is can be accomplished through community outreach pro- ese two factors often get overlooked in diversity initiatives grams and attendance at minority business and career fairs. but without it, there is no visible benchmark. “Too many