Spring 2003 Cover Story: Forging a business model for diversity

Spring 2003 Cover Story: Forging a business model for diversity

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Supplier Diversity

Xerox Corp. believes that in order to grow revenues it needs to bring a diverse mix of business partners to the table. That mix is able to penetrate new markets that help to increase the company's bottom line.

Although the company has been engaged in supplier diversity, it formalized the process in 1985. "We took the successful diversity model used in employment and hiring and applied it to our purchasing model," says Dan Robinson, manager, global purchasing/market access at Xerox Corp.

"Companies engage in supplier diversity because that's what their customer and their customer's customers want," he says. "The population is shifting and customers want their business and buying decisions to reflect that shift."

It is no longer enough to say minority or female business enterprises account for 10 percent to 15 percent of your contracts. You have to demonstrate that fact.

Xerox uses several approaches. A tier one solution, according to Robinson, gives Xerox the opportunity to spend a certain percentage of money with a minority or woman-owned business for supplies. A second tier solution is targeted at products that contain parts and assemblies manufactured by minority or female-owned businesses.

Robinson estimates that $3.5 billion of its annual revenue is associated with minority or female-owned businesses.

"This process is not infallible. We conduct due diligence and have corrective steps because ultimately this company is going to represent Xerox as a business partner," he says. But is all this extra work really necessary to obtain business?

Robinson says that, all other things being equal—quality, service, price and cost-savings—the extra work done by a company diversifying its workforce will give that company an edge over another company that isn't taking those measures.

"Ten years ago we did a study on supplier diversity and found that in 10 states where we overlooked calls for minority or female-owned businesses we lost those bids. We're beefing up our efforts in diversity of purchasing. From 1990-92 we spent 7 percent to 8 percent with minority businesses. We've gone as high as 27 percent domestically. In 2002, 23.5 percent of our purchasing was spent with minority businesses."

Those efforts have not gone unnoticed. In 2000 Xerox was recognized for its diversity efforts with the triple crown of diversity awards: Award of Distinction from the U.S. Small Business Administration as an accomplished contractor in supplier diversity; The Frances Perkins Vanguard Award for Excellence in using woman-owned small businesses as prime contractors, subcontractors and suppliers; and the Dwight D. Eisenhower Award for Excellence that honors large business contractors who use small businesses and subcontractors.

Diversity Inc. Magazine also recognized Xerox in 2002 as one of the top companies for supplier diversity, ranking ninth out of 50. e

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More emphasis is being placed on being diverse in business as a whole. It begins with your hiring policies. Where do you find your talent? Expand who you hire, where you look and at what levels you require help.

"Today's workplace is a microcosm of American society," says Williams. "A lot can be avoided if companies do a better job of crafting good policies and procedures that are well communicated and consistently applied. Remove the mystery from employment policies and procedures."

Our demography is changing. There are more diverse people in this country than 15 to 20 years ago. More diverse people are in positions of authority. They are asking, "How is business being run? How can we make it better? How can we keep others from struggling?"

That begins by opening our minds to the concept that we all carry prejudices. We need to focus on values and how those shape our expectations of others. It means broadening your expectations.

The Xerox example

Xerox Corp. has long been considered a benchmark company in diversity and for good reason. It has an executive diversity council that reports directly to the president of the company. And it supports six national caucus groups: Asians Coming Together, National Black Employees Association, Black Women's Leadership Council, Professional Women's Association, Gay and Lesbian Employees at Xerox, and Hispanic Employee Association.

Xerox has always been progressive about diversity. "That's one of the reasons I came to work with them 30 years ago," says Ernest Hicks, manager, corporate diversity office operations.

It wasn't always so. In the late 1960s, Rochester, N.Y., which is home to Xerox corporate headquarters, was experiencing racial riots. Joe Wilson, who was the CEO at the time, sent a communication to all of Xerox in the United States saying that not only was this unjust, but it also signified a failure to use key resources, "and we didn't have to look far beyond our own front door," adds Hicks. The racial strife of the time spoke to Wilson's personal and professional values and he launched an aggressive campaign to hire minorities.

"I've had conversations with senior-level women and minorities and gays and lesbians who told me they decided to come to work here because of our diversity efforts. We're acquiring a diverse set of intellectual capital," says Hicks.

The need for diversity is revealed in the U.S. Department of Labor's Workforce 2000 report, which indicates the demographics of our population increasingly reflect diverse cultures and ethnicities. "If this is where the future workforce resources are, you have to have an environment that can tap this potential," says Hicks.

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