Before Kelly Chapman accepted the job as Microsoft's director of diversity recruiting two years ago, she had two main requests. They were to significantly boost the diversity-recruiting budget and increase the staff that handles diversity recruiting from one to seven. Microsoft honored both requests.
"I know that Microsoft is committed to diversity because the company gave me everything I needed to do the job right," said Ms. Chapman.
After aggressively increasing its vendor and employment diversity effort a few years ago, Microsoft is quickly catching up with other major corporations with much older programs. Because Microsoft is so carefully scrutinized and often emulated by other companies, the company's focus on diversity is especially important.
The software giant has shifted into high gear to capture more of the Hispanic consumer and business-to-business market. "A diverse workforce that includes Hispanics helps Microsoft market products and services to ethnic communities," said Jose Pinero, director of multicultural marketing at Microsoft. Fernando Hernandez, Microsoft's director of supplier diversity, added, "When you look at the growth of the Hispanic market, any corporation that thinks about the future wants to do business with small- and mid-sized Hispanic firms."
Microsoft's vendor diversity program is catapulting to the head of the corporate class. Next year, Microsoft expects to crack the $1 billion mark in spending with minority- and female-owned businesses, up from $833 million in 2007. The head of a Hispanic diversity monitoring organization applauds Microsoft's vendor hiring efforts, but notes that the company has lagged other top Fortune 500 corporations for years. Other companies, such as AT&T, IBM, General Motors, and Procter and Gamble, reached the $1 billion mark several years ago and now spend up to four or five times that amount, said Carlos Orta, president and CEO of the Washington, D.C.-based Hispanic Association on Corporate Responsibility. However, he added, "For Microsoft to expand its level of diversity activity so much in a relatively short time is a good indication they are very serious."
Microsoft doesn't track its number of minority vendors by ethnic group. However, the Hispanic count grows each year, said Mr. Hernandez. "We know that because we are constantly bringing in Hispanic businesses and nurturing their development," he said.
For Microsoft's Hispanic vendors, contracts with the company are often worth much more than the monetary value. In May 2006, the Milan, Illinois-based Group O Companies signed an agreement to provide Microsoft with an online platform to manage rebates for the company's business customers. The contract will account for only around $2 million of Group O's expected 2008 revenue of $400 million, but doing business with Microsoft is a valuable marketing tool, said Group O CEO Gregg Ontiveros.
"Using their name helped us land other clients," Mr. Ontiveros said. "Doing business with Microsoft has pushed us to elevate our offerings to meet its expectations and those of other potential clients."
Microsoft's diversity hiring program also cranked up its efforts. The company doesn't reveal minority employment statistics, but Microsoft's number of Hispanic employees, managers and executives grows every year, said Ms. Chapman. Microsoft now has eight Hispanic corporate vice presidents, up from five in 2003.
One of Microsoft's diversity hiring goals is to bring aboard more Hispanic executives and managers to help the company develop and market products and services to appeal to Hispanic consumers. The effort is working. The number of business groups within Microsoft that practice multicultural marketing increased from three in 2006 to 16 currently.
It hasn't taken long for Hispanic diversity to bear marketing fruit. As Microsoft prepared to introduce its new Zune media player last year, Javier Farfan, multicultural marketing manager for the device, pushed for more Hispanic marketing efforts, said Mr. Pinero. "He kept saying there is a way for us to gain penetration within the Hispanic community, if we partner with the right parties, if our music portfolios offer the right music, and if we create relationships with the right Hispanic artists," said Mr. Pinero.
Mr. Farfan's efforts yielded results. Last October, Microsoft introduced a limited-edition Zune music player loaded with the latest album from Grammy-nominated Hispanic reggaeton group Wisin y Yadel, before it was sold in stores. The device was available exclusively at Wal-Mart. Now, the Zune group is talking with other Latin music stars about similar deals.
In April, Microsoft announced that Zune is the exclusive music sponsor for MSN Latino, establishing the MSN Latino Zune Musica channel. Zune also signed on as music sponsor for Remezcla.com, a trendy Hispanic cultural Web site.
"Javier opened a lot of eyes to the growth that was available in the Hispanic market," said Mr. Piniero. "Now when you look at Zune's marketing plan, Latinos are one of the core components. It's not an afterthought."
At Microsoft, diversity will increasingly have an impact on strategy and the bottom line, Mr. Pinero added.
Billion Dollar Roundtable
Microsoft hopes to reach the $1 billion mark in spending with minority- and female-owned businesses soon. When it does, it will join the Billion Dollar Roundtable (BDR), a Dallas-based organization of businesses that spend at least $1 billion a year with minority- and woman-owned suppliers. Microsoft would be the newest technology member of the BDR, which lists 13 members. The current technology-related members are AT&T, IBM, Verizon Communications, Boeing, Chrysler, Ford, General Motors, Johnson Controls, Kroger, Lockheed Martin, Procter and Gamble, Toyota Motor North America, and Wal-Mart.
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