Social Responsibility in Supply Chain Management as it relates to Diversity Issues

There are two ways of looking at minority business enterprises and diversity issues in today’s business environment. The first way is to be resistant to social change and feel as though direct minority supplier participation is being jammed down business throats by social and government mandate. Or, on the other hand, you can look at the facts that have been collected and, hopefully, come to the conclusion that minority inclusion is, not only the correct business thing to do, but also the right thing to do.

Do diversity strategies work? That question was the basis for a recent study, c. 2001, of FORTUNE 500 companies conducted by The Diversity Analysis Research Team (DART) at the Wharton School of Business. Here are the results:

Overall, diversity initiatives help an organization maintain a competitive advantage, improve corporate culture, increase employee morale, increase employee retention and recruitment, and decrease complaints and litigation. Diversity encourages creativity, decreases interpersonal conflict among coworkers, facilitates progress into new markets and improves client relations, all factors that leave an imprint on the bottom line.

The report went on to say that diverse business environments have been categorically proven to enhance a company’s understanding of its particular diverse markets, especially when companies do business globally or in culturally diverse domestic arenas.

It’s not a changing world. The world has already changed.

According to the 2000 Census, for the first time, non-Hispanic whites are the minority population in the largest 100 US cities. Well, there goes the neighborhood.

And, consider this: in 2001, African Americans, Asians, Hispanics, and Native Americans represented $1.3 trillion in disposable income.

So, cultural diversity is here to stay, in the workplace. "Diversity is not only the #1 initiative in our entire business environment, but for me, personally, it’s my #1 goal," says Mary Watson, Senior Vice President, Human Resources, Philip Morris Company. "I am totally committed to creating a culture that embraces and celebrates our differences, one that creates an enriching and rewarding experience for all who come in contact with it."

Embracing cultural diversity is just the right thing to do. Human altruism aside, employees who do the right thing feel good about their jobs and the company they work for, which in business speak is called “feel good”. As the Wharton Study states: Increased labor productivity is always accompanied by “feel good”.

Further, says the Study, business groups that have practices that focus on the value of diversity outperform those that do not and they also maintain a strong competitive edge.

So, what do your customers think about all this? Per the Wharton Study: Ultimately, higher levels of social responsibility and engagement in diversity programs improve levels of supplier performance suggesting that diversity activities are more than just window dressing used for marketing campaigns; they have direct, tangible benefits in the form of improved supplier performance. And, further, a lack of diversity involvement can damage relationships with customers, the media, and regulatory agencies.

At the end of the day, of course, it’s all about what the customer thinks. And the conclusion of the Study suggests that the customer’s perceptions of a company’s diversity involvement reputation can act as a strategic asset and a source of competitive advantage. Usually, considerable money is spent on advertising and corporate donations with the goal of influencing customer perceptions of their firms. Customers who hold positive perceptions about a company also tend to have higher evaluations of that company’s products and services.