What Will the End of Affirmative Action Mean for Supplier Diversity?

In the past few years, it's been clear that affirmative action's writing is on the wall. In a decade -- or perhaps significantly sooner -- specific quotas and preferential treatment programs will be outlawed in many states. According to a recent CNN article, in November, five states -- Arizona, Colorado, Missouri, Nebraska, and Oklahoma -- will vote to either keep or do away with affirmative action programs in government-funded projects and public schools. Each ballot initiative is similarly worded: "The state shall not discriminate against or grant preferential treatment to any individual or group on the basis of race, sex, color, ethnicity or national origin in the operation of public employment, public education or public contracting." In addition, according to the same article, the Supreme Court recently "threw out public school choice plans that relied on race" leaving "many states uncertain about whether their affirmative action policies will stand up in court and against political scrutiny in this election year."

So the open-ended question that I'd like to pose to the Spend Matters community is what the future of supplier diversity programs will look like in an era without affirmative action. For example, it's plausible that the federal reporting of diversity information on both the tier one and tier two levels, which various Federal and State authorities require today, could go away tomorrow. My guess is that this will happen slowly, but I do believe that it will happen eventually if individual states and the Supreme Court begin to strike down laws that grant preferential treatment to certain types of businesses and individuals over others.

Personally, I think this will be a good thing for supplier diversity programs. How do I figure this? As one who tends to side with libertarians on most issues, I believe that Federal and State authorities should not be in the business of encouraging discrimination of any sort. But by the same token, I would also defend the right of an individual business to take into account any type of criteria it wants to in making business decisions. And in this regard, I have become more convinced in the past year that supplier diversity -- especially diversity in regards to small, entrepreneurial businesses regardless of female or minority ownership -- is essential for innovation and to keep larger incumbents on their toes. There's also a reasonable argument -- though I've yet to see it fully quantified as a general rule -- that supplier diversity investments have disproportionate potential payouts on the revenue side of the equation.

In my view, once supplier diversity becomes more of a commercial and business issue and less of a reporting one, we'll all be the better for it. Just as companies in North America like Wal-Mart are actively pursuing green for the benefit of the market -- and lining their own pockets -- companies will embrace diversity for what it can bring rather than what they must report. When I was talking at CVM Supply World Chicago earlier in the week, I had this same conversation with a few of the attendees -- one was a diversity manager and the other was a VP of procurement. And they both agreed that for supplier diversity to maintain its footing, it would have to extend far outside of serving just as a compliance / reporting function.

- Jason Busch

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