DEI remains a force in business success

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Diversity, equity and inclusion, aka DEI, has taken a hit in 2024. The nation’s political winds have associated DEI with preferential hiring practices at companies and universities. Where once many companies were actively promoting their DEI initiatives, the tide has turned. More and more, companies are rolling back, or at a minimum, downplaying their DEI programs.

A Gartner survey released in early 2024 found that 49% of supply chain organizations had formal DEI goals in 2023, a more than 50% increase over the companies that did so in the 2022 survey. Additionally, the survey found that candidate attraction and retention were the top reasons for setting DEI goals and objectives.

 

That aligns with current workplace trends. A LinkedIn employment survey released in April 2023 found that 82% of employees said it was important to them to work for a company in which the culture and values align with their own. A 2023 survey of 5,902 U.S. workers by Pew Research Center found that 56% believe DEI in the workplace is a good thing, and 61% said their companies have policies that ensure fairness in hiring, pay or promotions. The Pew survey was not focused on the supply chain, but the results do confirm what Gartner’s employer-based survey found.

DEI drives internal value

Dan Pellathy, an associate professor of practice at the University of Tennessee, Knoxville, recently wrote about DEI inside organizations.

“A six-year study by the consulting firm McKinsey confirms the strong business case for gender, ethnic, and cultural diversity in corporate leadership. Put simply, diverse companies outperform less diverse peers. Linking [DEI] to supply chain success entails developing talent from underrepresented groups and tapping their knowledge and experiences as resources for learning how to improve core work,” he wrote.

Pellathy added that “a robust DEI program has enormous potential to benefit the entire planning organization, especially individuals not directly impacted by DEI recruitment and retention efforts.” He noted that DEI programs can impact ambiguity tolerance, awareness, change leadership, compelling communication, conflict management, cultural leadership, empathy, negotiation skills, and team leadership.

DEI can be divisive

Many executives (63%) in the Gartner survey are concerned that DEI is divisive, but almost 80% agreed with the following statement: “DEI values are an important part of my organization’s mission.” While executives are concerned, employees are not, with just 21% finding their organization’s DEI initiatives divisive.

Dana Stiffler, vice president and distinguished analyst in the Gartner Supply Chain Research & Advisory group, told Supply Chain Management Review that an employee’s values play a role, but she is also seeing companies adopt DEI programs out of FOMO as the competitive nature of securing talent today weighs on operations.

“We thought we would see a decrease in focus, a decrease in investment—that was our hypothesis going in,” Stiffler says. “We would see a downshift [in DEI efforts] and we were fascinated that is not what we saw. We were surprised to see that there was an increased focus.”

Supplier diversity is the present of procurement

While DEI is often associated with employee programs, its broad cover brings in other aspects of an organization. Supplier diversity is one of those.

A 2023 report from supplier.io, a provider of data and analytics, found that while $1.4 trillion is spent annually on diverse suppliers, the top 10 diverse suppliers received 17% of all diverse spend. The 2023 Supplier Diversity Benchmarking Report tracked actual supplier spend across 466 companies in 15 industries to compile the results.

Diverse spend was defined as “certified diverse spend” from suppliers that have an industry-recognized certification that can be confirmed. Self-certified suppliers were not included in the analysis.

The report noted that companies that wanted to support diverse suppliers but included small businesses in their reports received mixed results. In all spend, the report found that 3.6% was spent in certified diverse suppliers across all industries, but when small businesses, which may not be diverse businesses, are included, that figure jumps to 7.5%, potentially leading to misleading results for companies invested in diverse suppliers.

Alphonso David, president and CEO of the Global Black Economic Forum, though, said that including diverse suppliers in procurement spending improves a business’s opportunities.

“Investing in supplier diversity programs can also impact a company’s talent recruitment and retention. In a survey conducted by Hootology on behalf of UPS, 52% of respondents said they consider a company’s supplier diversity and inclusion programs when seeking employment. As ESG investments become more important to potential recruits and companies with robust initiatives addressing their ethical footing have a better chance of attracting more diverse and talented candidates,” he wrote for Supply Chain Management Review.

According to the National Minority Supplier Development Council (NMSDC), certified minority-owned businesses generate more than “$400 billion in annual revenue and economic output that leads to the creation and preservation of 2.2 million jobs and $49 billion in annual revenue for local, state, and federal tax authorities.”

Educating on DEI

With quantifiable business benefits to DEI programs at all levels, how do companies educate their workforce on DEI initiatives, both at the supplier level, and at the workforce level to achieve supply chain success? Pellathy offered 10 tips. They are:

1. Engage individuals across different levels and functional areas of the organization
2. Align DEI to a range of goals related to outcomes, company culture, and professional development
3. Evaluate options from alternative points of view
4. Highlight ethical considerations in decision-making
5. Build connections with a wide range of people
6. Develop employee resource groups that foster community and belonging
7. Set data-driven targets for the representation of diverse talent
8. Place core business leaders and managers at the heart of DEI efforts and hold them accountable for progress
9. Enforce a zero-tolerance policy for bullying, harassment, and discriminatory behavior
10. Explicitly assess belonging through participation in internal surveys and focus groups

While DEI is no longer front and center in many company’s annual reports, it remains important in both the talent acquisition (and more importantly retention) process as well as in the supplier procurement process. Companies have not shied away from DEI—they just may not be promoting it in the same way.

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