If viewed as an investment in minority markets, diversity programs appear to be money well spent, since the sums look paltry compared to minority marketing expenditures. Domino's and Avon spent around $200,000 each annually for "diversity outreach," although they spent $7.25 million and $5.6 million, respectively, to reach Hispanic consumers. On the high end, cereal maker General Mills spent $2.5 million for total diversity efforts, Ford spent $4 million, and Coca-Cola $5.1 million – all less than a third of the money spent on the Hispanic market alone, not counting advertising campaigns targeting the African-American and other minority segments.
While keeping the market connection uppermost, many survey respondents frame their diversity efforts in language reflecting the federal government's historic role in encouraging work force inclusion. For example, both Southwest Airlines and PepsiCo maintain affirmative action programs. General Mills and PepsiCo hold periodic compliance reviews, while Domino's, Philip Morris, and PepsiCo employ diversity consultants to design their programs. Ford and Coca-Cola support education, recognizing the obvious tie-in to recruitment and marketing (see related story, "Spotlight: Higher Education").
MISSING ELEMENT: PROCUREMENT
Besides the traditional ingredients of people and product advertising, contemporary diversity encompasses minorities in the supply chain as well. Again, this trend comes in response to the growth of minority companies capable of selling to Corporate America. In the 1992–2002 period, the number of minority-owned firms doubled, to 4.2 million companies. In the same time frame, the number of Hispanic companies grew 75 percent to 1.5 million firms.
Respondents to the Hispanic Business Corporate Diversity survey include four members of the Billion Dollar Roundtable, a group of major corporations that spend at least $1 billion annually with minority firms. Ford emerges at the head of the procurement pack, buying $3.1 billion from minority firms. Its programs feature capital assistance, technical consulting, and volume discount deals on industrial inputs. The automaker takes a technical approach to its supply chain by turning Ford engineers and retired executives into consultants for minority firms. Minority suppliers account for 6 percent of Ford's total procurement expenditures.
In second place, SBC reports spending $2.8 billion with minorities. A staff of 15 supplier diversity professionals works with minority firms to attain SBC's goals. Since 1996, SBC has increased spending with minority suppliers 172 percent; in 2001, it exceeded its goal of 15 percent minority procurement by making 23.5 percent of its purchases from minority- and female-owned firms. In 2002, SBC co-sponsored the Supplier Diversity Blue Ribbon Task Force to study how to strengthen inclusion of minority firms in the telecom industry's supply chain. This year the task force will release its final report and recommendations.
Philip Morris, following SBC with $1.4 billion in minority spending, won the National Minority Supplier Diversity Council (NMSDC) Corporation of the Year Award in 2002. Wal-Mart comes in next with $1 billion in minority purchases, accomplished by working with minority purchasing councils and chambers of commerce.
The federal government originated the idea of minority procurement as a catalyst for economic growth, and federal programs continue strong today (see related story, "Big Goals, Small Steps"). A new creative strategy for expanding supplier diversity focuses on second-tier contractors. Ford, Philip Morris, and Verizon have programs to encourage subcontractor relationships, with Ford reporting $1.4 billion in second-tier purchases. Coca-Cola's Office of Supplier Diversity runs a mentor-protégé program for minority firms with an established record as suppliers to the corporation.
SPOTLIGHT: HIGHER EDUCATION // By Tim Dougherty
Hispanics who want to make their mark in the business world but lack the means to get the necessary credentials and training may be eligible for financial assistance from the Robert Toigo Foundation or the Consortium for Graduate Study in Management.