In August of 2020, some of the world’s leading tech companies joined SurveyMonkey’s supplier diversity initiative and pledged to track the diversity, equity, and inclusion of the vendors they buy from.
The Justice Collective lent us their expertise to create a survey that helps companies quickly and easily assess the diversity, equity and inclusion of suppliers they use and companies they’re considering working with.
The insights help companies understand more about the makeup of their current ecosystem, better support the suppliers.
These leaders face far steeper obstacles than their peers, yet they pave the way for a future diverse workforce. You can help.
By prioritizing suppliers with diversity, equity, and inclusion programs, you support true inclusion rather than just “hitting the numbers.”
Move away from transactional relationships with your vendors and adopt an approach that emphasizes reciprocity and interdependence.
The following toolkit, developed in collaboration with The Justice Collective, is designed to help you your vendor diversity journey. You’ll get:
You might not realize it, but prioritizing diversity, equity, and inclusion (DEI) can be a business decision as well as an ethical one.
Depending on your customer base, increased supplier diversity can be a path to better mirroring—reflecting the demographics of your current audience—or an opportunity to gain unique market insights and tap into a different group.
Companies within the top quartiles for diversity are 21% more likely to have good financial performance.
The business case for DEI is well-established, but it is the innovation that is particularly relevant to procurement. It is important to ground procurement strategy in innovation: solving your company’s needs faster, more effectively, and more efficiently is an essential motivator. Therefore, a vendor with sophisticated DEI practices is better positioned to be an effective partner.
It’s ethical to design a purchasing strategy around responding to a social or political injustice, and it is a timeless good business practice to focus on finding the best solution for your needs based on a broad array of perspectives.
The business benefits extend just your organization, too. Proactively designing your procurement strategy to address DEI encourages the growth of people of color with a multiplier effect on their communities and beyond.
Job creation, increased wages, and community economic development flow from any successful enterprise. Commitment to supplier diversity ensures that those benefits reach further, making it vital for the survival of our national economy.
In this section you'll learn how to:
Starting and scaling a business is a complex process that often requires resources and guidance at critical junctures in the business lifecycle. The historical impacts of redlining as well as predatory lending have negatively impacted the access people of color have to home equity and individual or family savings—which are often critical for scaling a business.
These policies often target underrepresented groups, especially the Black and Latinx communities, which have now been excluded from opportunities to build wealth for several generations. This matters because more than 80% of the capital used to start businesses comes from personal savings (>64%) and business loans from a bank or other financial institution (>16%).
If an entrepreneur doesn't have family savings, strong credit, or access to other means of financing, starting a business from scratch is next to impossible. And the level of initial wealth has compounding effects too—according to the Ewing Marion Kauffman Foundation, “a higher household net worth of a founder is linked to larger amounts of external funding received, even after accounting for human capital, venture characteristics, and demand for funds.” In other words, people who start off wealthier are also more likely to get additional investments.
Black-owned businesses start with almost three times less overall capital than white-owned businesses.
While entrepreneurship is becoming more diverse, access to capital remains inequitable. One study compared sources of finance and found that new Black-owned businesses start with almost three times less in terms of overall capital than new white-owned businesses, and that this gap does not close as firms mature. Gender plays an equally powerful role: as women are substantially less likely than men to start new businesses, and when they do, they apply for significantly smaller loans than men.
The compounding impacts of our highly competitive environment with historic and persistent structural barriers means that people of color and other groups are underrepresented in the vendor ecosystem. Using your company budget to invest in these entrepreneurs might not be the same thing as a bank loan or venture capital investment, but that revenue is even more critical to those who have been locked out of traditional funding sources.
Additionally, investing in entrepreneurs of Color often means empowering a whole network, which we know tend to remain segregated, especially by race. More capital for People of Color and women-owned businesses allows them to scale, which in turn may create more opportunities for People of Color and women in the workforce as well.
You can’t expect that vendor diversity can be achieved simply by investing in underrepresented entrepreneurs. Many companies have preexisting relationships and dependencies on vendors, especially large ones, that are not owned by people from marginalized groups. The solution to this dilemma is slightly more upstream but nevertheless a valuable strategy: advocate for those vendors to improve their own DEI numbers by communicating its value to your organization as one of their customers.
To the extent those vendors supply you with services, stipulate that you expect delivery to come from staff members from underrepresented groups. For example, your organization may have a long-term agreement for legal services with a law firm that has only white partners. Rather than declare this a loss for your DEI goals, this can be an opportunity to request that only POC counsel represent you; if that means the firm has to hire more POC lawyers, then you’ve not only made progress towards your own goals but supported the vendor to improve on theirs.
For vendors that supply products, you can rely on The Vendor Workforce Diversity template for information about employee experience, representation across all levels of the vendor organization, and their own strategies for DEI. Data gathered in the survey can be used to develop benchmarks tied to future contracting opportunities: even if a certain big company will never be owned by a Black small-businesswoman, it’s still possible for them to improve their employee experience.
The guide also goes into detail about some of the key barriers in hiring and retaining underrepresented talent and leadership. Feel free to share the guide with vendors and potential vendors as you talk through ways that they can match your values.
Ultimately, DEI starts and ends at the top of organizations at the board or governance level, where decision-making power is most concentrated. Corporate boards exert influence internally (affecting employees), but also (more importantly) affect the operations of global marketplaces.
A board commitment to DEI in procurement can have considerable impact. Currently, just 4.6% of Fortune 500 board seats are held by Women of Color (4x less than white women, and 14x fewer than the white men, who hold two-thirds of these seats). It’s much easier to change the people on a board than it is to change the demographics of an entire organization’s workforce. Yet investing in that change could make an incredible impact on both the company and the business world as a whole.
It’s impossible to build a procurement strategy that emphasizes DEI in a vacuum. You have to know where you are to decide where you want to go. Collecting good baseline data is an essential first step, and that’s what our Vendor Workforce Diversity survey template can help.
The template covers basic supplier company demographics as well as the organization’s current efforts to promote DEI internally. It’s free for up to 40 recipients, so you can send the same survey to multiple organizations.
You can customize this survey template to align with your organization’s specific needs and goals. If you decide to do that, here are a few things to keep in mind:
However, it’s important to keep in mind certification is limited and tends to focus strictly on who owns the business in question. It likely won’t be the sole determinant for demographic information that’s relevant to your interests; it may not clarify other investments that vendors have made into equity and inclusion, and different countries may have different standards and definitions. It puts the onus on suppliers to do the work of getting certified, taking time and resources many don’t have. It can be a helpful data point, but doesn’t tell the whole story.
Once you have your survey the way you want it, you can create a link or send it through email straight from SurveyMonkey. You can also set up an automated reminder so that the supplier doesn’t forget to take the survey or lose it in their inbox.
Remember: It’s fair to ask—even if you aren’t perfect yourself
It is to be expected that some vendors may be put off when asked about the demographics of their company. It’s a sensitive topic—especially since many companies in search of diverse vendors refrain from publicizing their own demographic data. Is this a case where those who live in glass houses shouldn’t throw stones?
Your company may have its own work to do on DEI (spoiler: it probably does), but that shouldn’t stop you from asking others about theirs. There’s no contradiction in acknowledging that both your organization and its suppliers are all a work in progress. If a vendor is resistant to your inquiry, that suggests they may not be a great partner. Whether or not they meet your criteria for diversity and inclusion, if they’re not willing to have the conversation, that’s a problem.
Given your purchasing power, asking for this information is only as awkward or complicated as you choose to make it: vendors have an interest in providing the information you need to establish and maintain a successful relationship. Like cost or service options, DEI is just another lens for your decision-making.
Once you have your initial surveys back, you’ll be able to assess your current vendor diversity. From there, you’ll have to make decisions about your goals moving forward. Here are 3 things to keep in mind as you do.
The survey is intended to give you an overall snapshot, rather than define any metrics that might make a vendor “diverse enough” or “inclusive enough.” Having metrics is important, but what qualifies a vendor as “diverse enough” or “inclusive enough,” will vary from company to company depending on your needs, values, and flexibility.
Overall DEI can also be hard to discern. For example, many large corporations may score well on certain diversity metrics for their overall workforce, but not at the leadership level. Which angle should you pay more attention to? Many companies are now pledging to commit more deeply to DEI as a priority; is a pledge enough?
Without a clear vision of your own criteria for what progress looks like, it’s easy to tie yourself in knots before you’ve even begun. That’s one reason why establishing a baseline of your current vendors is so useful—it gives you a clear sense of where you might be able to grow.
From there, articulate clearly which aspects of diversity are important to your organization and why. Be grounded in that purpose, from both a moral and business-minded perspective, to solidify buy-in from leadership. It may take time, effort, and training to establish shared understanding in your company. That’s okay—the important thing is making progress.
It is true, however, that some vendors may struggle to provide fully comprehensive data. Global companies operating outside the U.S. face challenges collecting diversity data because employees might not feel comfortable self-reporting their data, and they’re entitled to keep it private.
That can be especially true with less visible aspects of diversity, like certain disabilities, gender expression, or sexual orientation. Even companies that emphasize diversity might not have the data to show for it.
However, while it may not be possible to confirm demographic data with certainty, it is still possible to evaluate suppliers on their ability to provide an inclusive and welcoming environment for all employees. That’s why our survey template asks about broader company strategies for ensuring anyone can thrive at the organization, whether or not they self-disclose a marginalized identity.
The survey template can help you gain information about your partners from their perspective, but you should also consider internal information about your relationship with that partner, like how this vendor fits into overall spending. Here’s what to do:
There are two main ways to improve your vendor diversity:
Both are incredibly important: You need to practice inclusion amongst your vendors just like they do amongst their employees.
Make it count. The easiest way to assess potential new vendors is to send them the Vendor Workforce Diversity Survey before you make a commitment. That will give you a good picture of where a potential vendor is on their DEI journey. From there, make a rubric for your vendor selection process. This will make it easier to incorporate these values into the complete picture of your company’s needs and keep your values front and center.
Make sure the word gets out. Be public about buying opportunities with your company, and transparent about your process. Advertise that you are specifically looking to support businesses that emphasize diversity, equity, and inclusion.
Use your website to share details about which specific products and services your company is looking to buy, as well as how you manage the bidding and contracting process. Underrepresented vendors with less access or understanding of how to maneuver in corporate workflows need clear information to participate in the process. Giving them some background info makes it easier for everyone to better meet your needs.
Start from the inside out. Success with supplier equity, diversity, and inclusion may be dependent on success with internal DEI efforts. To reiterate, it is not a prerequisite that your company meet internal benchmarks for DEI before pursuing a commitment to supplier diversity, but there is still some overlap.
If you think it could help, provide training! Equity training can and should be a part of the overall procurement training process.
Your organizational culture must have some grounding in DEI values in order for any DEI initiative to take root and for buying decision-makers to be equipped to mitigate their own biases. If you think it could help, provide training! Equity training can and should be a part of the overall procurement training process. That tells your employees that your company doesn’t see the two as separate. Don’t just incentivize outside firms to embrace your diversity mandate, incentivize your procurement teams by tying DEI objectives into their performance management.
Positive incentives, like bonuses for contracting with diverse firms, work best because motivating your team with fear of negative consequences links the work of DEI to potential personal loss rather than collective gain. Accountability for DEI progress is as positive as you choose to see and make it.
Don’t let internal stakeholders fall prey to the “pipeline problem” myth. It is important to pause and caution against falling into the trap of the “pipeline problem” myth, which suggests the reason why companies can’t hire underrepresented vendors is that these vendors don’t exist. They do exist, they just have much steeper paths to being noticed by companies and building the infrastructure to serve them at scale. Accordingly, companies interested in an DEI-centered procurement strategy will pick up the slack to find and be found by underrepresented suppliers. Tap the networks of current vendors that have membership in groups you’re finding are underrepresented. Ask them if they can refer you to other vendors in relevant fields.
Look for opportunities to invest in your chosen vendors. You may have the power to disrupt the “chicken vs. egg” problem of wanting to employ diverse suppliers but diverse suppliers lacking capacity to meet your needs. How? By sharing resources. Diverse suppliers often face structural inequity that keeps them from accessing the tools or connections they need to perform the best they possibly could.
It’s likely that your company has more resources to solve the problem than suppliers from marginalized communities. You can support scaling of smaller ventures by building a procurement strategy that includes technical assistance for underrepresented suppliers, mentoring, networking opportunities, and beyond. A small action from your company could make a huge difference in how well your suppliers are able to thrive with you.
Collaborate to solve problems. If problems arise in your relationship (and problems are inevitable in any relationship), take proactive responsibility for finding a solution. If the vendor is struggling to meet your demands due to a lack of capacity, ask them what they need and answer with a willingness to help them close gaps. Their success is your success and vice versa; it is necessary to build a mindset focused on interdependence rather than servitude.
Honest feedback is a part of this, too. Well-meaning people undermine their efforts to change the ecosystem when they don’t provide opportunities for reflection and growth with all kinds of partners. Don’t sugarcoat or avoid confrontation because you’re worried about how it will look (“will they think I’m racist/sexist/homophobic?”). Such mindsets already show a lack of mutual trust and authentic communication. Instead, make an effort to establish trust and respect at the outset of the relationship so that if issues do arise, they can be addressed directly in a constructive and mutual exchange.
Be conscious about communicating goals clearly, minimizing unnecessary urgency, and recognizing expectations on both sides. This might be something that you include in a training with procurement managers. It might also mean that the team driving the supplier diversity program at your company need to stay more hands-on in monitoring these new relationships and stepping in to help where needed.
Ensure your vendors are being paid what they’re worth. It is a well-researched fact that women and people of color under-price their services in comparison to their white, male counterparts. By demystifying the contract size or range of a project, you can help to mitigate that dynamic because it allows the bidder to have some sense of what you’re planning to pay for the work. If you find that a vendor prices their project well under what is expected, consider having an informal conversation to suggest that there may be an opportunity to renegotiate during the selection process. This is the type of kindness and equitable thinking that will bring us to a better future.
To ensure your company is building good habits, it is important to track not just demographics and expenditures, but the experiences of organizations in your supplier ecosystem.
Use surveys to establish an ongoing conversation with your suppliers to understand what their current diversity, equity, and inclusion looks like are and if there are other ways you could be helping them succeed at your company.
You can resend your original benchmark surveys automatically on a recurring basis (quarterly, bi-annually, or annually), or on a per-project, per-contract basis.
Bear in mind that you may want to make updates to the survey before you send it out for follow-up check-ins. You can also create a new survey that’s designed to check in on current ongoing projects and potential roadblocks. This survey might take a little more work, since it would be tailored to your company and its needs, but it could also be invaluable for working successfully with vendors.
When you get your results, look for trends:
The only way your organization can improve is by adequately understanding the issues, and user feedback surveys are a critical component.
The longer you keep your survey program running, the more information you have to work with—both on an individual relationship basis with each supplier and about your program overall.
Get step-by-step expert advice in our free guide.