LGBT employee resource groups (ERGs) have an important role to play in the future success of supplier diversity programs. As a consultant working in this space, I recently had the chance to speak with diversity and procurement leaders within some organizations where the business case for LGBT ERG involvement in supplier diversity is becoming more compelling.
Participants in this roundtable-like discussion include Trung Tieu, co-chairman LGBTA Steering Committee at PepsiCo; Matt Luginbuhl, project manager in the office of diversity and inclusion at Aetna; and Manny Diaz, manager of advanced analytics and projects at Johnson & Johnson. The following are edited excerpts from our discussion.
Jennifer Brown: How did LGBT-owned and certified businesses come to be included in your company’s supplier diversity program?
Trung Tieu, PepsiCo: We already had a long-standing supplier diversity program with minority and woman-owned businesses. After going to my first National Gay & Lesbian Chamber of Commerce (NGLCC) conference, I came back to our supply chain and diversity chief and said, “Why aren’t we doing this with LGBT-owned businesses as well?”
PepsiCo has values around being the brand and employer of choice for our communities. Expanding our breadth of suppliers within the supplier diversity program made simple business sense for us.
Brown: Are your companies’ procurement operations centralized or segmented? What about your ERGs? How are the two connected?
Matthew Luginbuhl, Aetna: The individual business units make buying decisions, so there is a need for education on the importance of supplier diversity throughout business units. ERGs across the company can help communicate this message.
Aetna has a centralized ERG strategy and structure. We have monthly calls for our 330 ERG leaders, and supplier diversity is discussed in this forum. Many local ERG leaders have begun to make connections with local businesses, helping to facilitate certification.
Tieu: In terms of the higher-level procurement, we divide it into segments based on our largest purchases. That is typically centralized, although we have multiple headquarters, so it is by headquarters location. Our ERGs are decentralized in that each location, and sometimes each plant, has its own. They typically have the same goals and objectives, but the size and operation of each ERG is different so expectations on deliverables may vary.
Regarding how we make the connection between procurement teams and ERGs, we have shared messaging about what supplier diversity is and where ERGs can make small impacts.
Brown: Do your ERGs identify business-related goals relating to supplier diversity? What does success look like?
Manny Diaz, Johnson & Johnson: We have deployed from the senior leadership team three main pillars to which all ERGs are now aligned. The first pillar is community and resource outreach. This is how our ERGs help us reach out to communities through activities and contributions.
The next pillar is champion leadership growth. For ERGs, this is about how they can help internally to develop the talent of our diverse employee base. The third pillar is support business growth. This one is directly related to business results and is where supplier diversity falls.
By having all ERGs aligned to these three pillars, it is very clear what senior leadership expects. We ask that chapters pick one of the pillars as their main area of focus, but they are still expected to cover all of them.
Luginbuhl: J&J is a partner with Aetna on ERGs, so we have similar pillars around workforce, workplace and marketplace. Each of our 85 local chapters and 15 national leadership teams are responsible for an annual action plan for the year, broken down into eight categories of work. In the LGBT space, local connections to chambers of commerce are being made more frequently than in other ERGs, due to our strong national partnership with NGLCC. Much remains to be done on the education front, so metrics aren’t appropriate yet.
Brown: What has been different about making the business case for LGBT diversity versus other categories that are more established?
Tieu: I think a lot of companies forget that the purpose of supplier diversity is diversity broadly. Within our company, I have to remind people that diversity is everything. And it’s not just LGBT, veterans and the disabled. There are other invisible minorities that should be counted. In making the pitch to include LGBT, I wanted to make sure we included all other diverse groups.
In terms of metrics, we started from zero and asked where we could grow. We didn’t have the same goals as some larger groups that have been in our supply chain for a long time. We made reasonable goals based on what we see in terms of bringing on LGBT-certified members.
Brown: How do you identify LGBT businesses that are supplying your company?
Diaz: We track LGBT-owned businesses through our website and through our partnership with NGLCC, while our monthly supplier diversity metrics include spending with LGBT-owned businesses. Businesses may come forward and say, “We’re not certified but we’re LGBT-owned.” In those cases, we have a conversation with them on the merits of supplier diversity.
We have had a few suppliers come forward based on relationships already established within our company, with our procurement partners. Through embedding procurement in the ERG infrastructure, we have identified suppliers that are LGBT-owned. If they’re not already certified, we may recommend that they take a look at LGBT certification. It is important that they know we as a corporation value the money we spend with them and that we track it.
Brown: How do you know for sure that you are looking at a diverse supplier, especially when dealing with invisible types of diversity such as LGBT?
Diaz: It is mostly driven by self-identification. Either the business says it has certification or we find out through the website. We don’t pursue our suppliers or prompt conversations about their status. It develops organically. We offer the opportunity to become certified if they are not already.
Brown: The National Gay & Lesbian Chamber of Commerce came up a few times during this discussion. Do your ERGs engage with NGLCC? What benefits does it provide?
Luginbuhl: Aetna Chairman, CEO and President Mark Bertolini is the first straight ally to sit on the board of the NGLCC. I’m on the corporate advisory council, and our supplier diversity leader is on the procurement council.
These roles allow us to show visible support and also stay connected in the supplier diversity space as well as with LGBT-certified businesses. Our national relationship is very important to us, but connecting with the local NGLCC affiliate chambers is equally powerful.
In fact, a useful metric for an ERG could be the number of local ERG chapters that maintain relationships with local chambers. There’s no question that local connections have a huge impact.
Jennifer Brown is founder and president of Jennifer Brown Consulting. She can be reached at firstname.lastname@example.org.