Measuring diversity in your supply chain is essential to your corporate ESG goals
By Fatima Durrani Khan
Diversity, equity and inclusion are factors that matter, not only in your travel program, but across your travel supply chain. A June 2020 Harvard Business Review report says that diverse supply chains "broaden the pool of potential suppliers and promote competition in the supply base, which can improve product quality and drive down costs." While those championing diversity initiatives in the managed travel space are aware of its benefits, others have criticized the authenticity of such initiatives, calling them a bare bones effort.
In fact, according to a 2019 Accenture survey of over 2,700 consumers from the airline, cruise and lodging segments across the US, UK and Canada, many travel companies still do not prioritize inclusion and diversity, in general. The report further states that: •56 percent of travelers say it’s important that the company they book with is committed to I&D practices •3 out of 5 travelers say it’s important that their preferred travel provider demonstrate a commitment to I&D values similar to their own •50 percent of travelers are willing to pay a premium of 5 percent to 20 percent to book their travels with a company that values I&D
”True sustainability ensures the balance between environmental, social, and economic needs, including diversity,” says Casey Oakes, director of global supplier diversity, global operations at Marriott International. So then, if diversity has been identified as such an important overall business factor, what’s all the stalling about?
The Nuts & Bolts For some organizations, the issue lies with the top tier. Without buy in from the C-Suite, diversity becomes a faint chant rather than a loud roar. “One of the first learnings that I’ve gained in building a more diverse culture is that DEI works best at a company when it starts from the top down – meaning that the CEO and executive board make a commitment to creating pathways for diverse recruiting and inclusive experiences,” says Shaka Senghor, head of diversity, equality and inclusion at TripActions. “They need to really be tuned into what’s happening through the company with staff, employees, external partners, and vendors.”
For others, the problem arises when there is a lack of alignment between a company’s goals and its business partner’s goals. “Travel managers should first ask themselves – what is important to our company in this space? Then ask your travel partners how they are thinking about diversity and inclusion. What commitments have they made? In what spaces have they chosen to be active?” Oakes advises. “What data can they share with you? Specifically on supplier diversity, are they able to report Tier II spend regularly? Do their diversity categories align with yours?”
When a lack of alignment surfaces, sometimes it’s because communication between vendors and companies is sub-par. Senghor recommends holding open discussions with diverse suppliers right out of the gate. “This starts when we’re onboarding vendors onto the TripActions platform,” he says. “We have discussions around our diverse companies and travelers. This conversation also covers corporate ethics and escalation processes.”
Another roadblock to creating robust DEI programs – especially across supply chains – is a lack of “equity literacy” among those who are integrating DEI initiatives. According to Emese Graham, DEI Manager, Flight Centre Travel Group – Americas, there are three stakeholder groups to keep in mind while building an equitable supply chain program:
“The first is underrepresented groups in your client market, equity-seeking supplier groups, and communities impacted by tourism,” Graham explains. “For instance, underrepresented client groups might include travelers with disabilities and/or accessibility needs, LGBTQ2+ travelers, travelers of size, and racialized travelers. As for equity-seeking suppliers, it’s important to pay special attention to the representation of women-owned and BIPOC-owned suppliers in your travel program. We’re still living with legacy of extractive colonialism, settler colonialism, slavery, and laws that discriminated against women and people of color throughout the Americas. Many people groups are still in the process of catching up to privileged travel companies. Finally, the needs of communities impacted by tourism include responsible ecological and economic policies, labor rights and fair compensation, tourism’s effects on the local economy, and Indigenous peoples’ rights.”
Metrics Mayhem As important as equity literacy is how to measure its progress. In other words, getting a grasp on how well your suppliers are supporting your organization’s diversity objectives requires solid data and meaningful metrics, including factors such as spend, growth within each diverse category, RFP inclusion of qualified diverse suppliers, etc.
Accurate data on spend is particularly important. According to Nicole Lewis, director of diversity, equity and inclusion for IHG Hotels and Resorts-Americas, ”Measuring the spend with diverse suppliers is a key metric used to drive our progress. And in 2021, our top three highest spend diversity categories were small businesses, women-owned businesses and minority-owned businesses. We have also identified a new analysis tool for hotel and corporate spending that will allow us to create a more informed global picture and identify opportunities to increase work with more small and diverse businesses.”
While clearly some companies are more advanced in their methods of measuring supplier diversity, why is it still a challenge for others? The issue may be that travel buyers often award business just because a supplier fits a certain profile – the proverbial “checking of the boxes” – instead of extending opportunities to those vendors who may offer more value, but aren’t accurately identified because they lack certification. And in the US, there isn’t a central agency that allows clients to vet, identify and certify vendors as diverse suppliers. Certification can be challenging when addressing the diversity of the suppliers’ supply chains, as those suppliers are sometimes smaller and have limited resources.
However, extending certification opportunities all the way down to the deepest legs of supply chains is a tool that can help position diverse, smaller suppliers for better success. As Oakes explains, “Certifications, particularly those from reputable third-party organizations like the National Minority Supplier Development Council, the Women’s Business Enterprise National Council, the National LGBT Chamber of Commerce, and WEConnect International, are useful for validating that your program is measuring spend with bona-fide diverse-owned companies. Businesses that become certified not only demonstrate a seriousness about pursuing corporate business but also connect themselves to a broad network of resources designed to help them succeed.”
Similarly, Lewis says such organizations “allow IHG to gain access to a broad network of diverse suppliers which have been verified by the development councils. We are grateful to partner with leading development councils such as the Women’s Business Enterprise National Council, Greater Women’s Business Council and the Georgia Minority Supplier Development Council.”
Changes in the Air In an effort to push the DEI agenda ahead, several changes are already afoot. Recently, major suppliers including American Airlines, Delta Air Lines and JetBlue have named chief diversity officers, who are embodying demonstrable commitments to diversity. Even the International Air Transport Association in Geneva contributed its part to the diversity equation when it announced the 2022 IATA Diversity and Inclusion Awards – which, according to Willie Walsh, IATA’s Director General – “are an important recognition of the inspiring progress that is being made.”
This sort of cultural shift is catching. For example, the World Travel and Tourism Council has launched new high-level guidelines for inclusion and diversity in the industry. Several collaborative platforms that celebrate diverse voices in the travel sector, such as Travel is Better in Color and The Collective, have emerged. Other initiatives include a new partnership formed between the US Travel Association and Tourism Diversity Matters, and a Diversity, Equity and Inclusion best practices roadmap launched by Destinations International.
Legacy initiatives such as Marriott’s Serve 360, the hotel group’s Sustainability and Social Impact platform, which lays out the company’s sustainability blueprint, continue to inspire others to follow suit. “If our industry is further along in this journey, it’s because it’s imperative to our business,” Oakes says. “There are certainly reputational benefits to this work, but at the end of the day, the fundamental truth that has driven our program forward for 25 years is that a supply chain rich with diverse-owned companies is a more stable, innovative and cost competitive supply chain.”
Lofty Goals The advantages of creating diverse workplaces are clear. Positive cost benefits aside, they also often promote greater cultural exchange, increased creativity and innovation, and are the core of many sustainability programs. For some, however, feelings about diversity run deeper. “Diversity is not just about identifying diverse suppliers that are ready to supply for commercial benefits,” Lewis says.
“Our purpose at IHG Hotels & Resorts is True Hospitality for Good and it is only good if it is for all. Championing a diverse and inclusive culture where everyone can thrive is our first Responsible Business Commitment. Our supplier diversity program is also about investing in the growth and development of diverse suppliers to embed social value, reduce inequality and create more resilient communities in our supply chain, which contributes to the 2030 United Nations Sustainable Development Goals,” she explains.
Moving forward, it’s important to hold a bird’s eye view – and realize that diversity initiatives can best translate into actionable policies when there is “shared ownership.” It’s also vital to help level the playing field for smaller, diverse suppliers by providing access to certification and other tools. While there is a clear business case for corporate social responsibility, and even duty of care when it comes to DEI, “What’s at stake isn’t just profitability or market relevance,” says Flight Centre Travel Group’s Graham. “What’s at stake is working together to transform a multi-trillion-dollar global industry into something that can be healthy and beneficial for everyone it impacts. Impact and profit do not need to be mutually exclusive.”