What Does Supplier Diversity Have to Do with Employee Diversity?

Many companies realize that the term “diverse” applies to more than just the demographics of the people who work for their organization.  Diversity is also important in determining who to market your company to (and how) and the means by which your company purchases goods and services.

When I talk to companies about adding a military hiring component to their overall diversity strategy, they are often surprised when I ask if veteran-owned small businesses (VOSB) and service-disabled veteran-owned small businesses (SDVOSB) are included in their supplier diversity programs.

Think about it: If your company is profiting from selling its products or services to the military community (either the Department of Defense or the actual service members and their families), it is simply good business to both make an effort to hire military as well as purchase your own goods and services from businesses owned by veterans.

This can be a differentiator when it comes to marketing your company to prospective military applicants.  I advise my clients to promote the fact that their company actively seeks to do business with VOSB’s as a way to attract veterans to their workforce.

In recent years, the Census Bureau has begun collecting data on veteran-owned businesses.  In 2007 veterans owned 2.4 million non-farm U.S. businesses and accounted for 9% of all non-farm businesses in the United States.  Thirty-two point five percent of VOSB’s operate in the professional, scientific, and technical services industries (NAICS 54) and the construction industry (NAICS 23). Wholesale trade (NAICS 42) and retail trade (NAICS 44-45) account for 41.1 percent.  The bonus for companies that are focused primarily on minority and women-owned businesses is that many veterans also qualify under one or more of those demographic categories as well.

A certain percentage of companies have just never thought about expanding their definition of diversity to include VOSB/SDVOSB.  However, the most common reason I hear as to why VOSB’s and SDVOSB’s are not part of the supplier diversity program is because employers don’t know how to verify that a business is, in fact, what it claims to be.  Minority-owned businesses and women-owned businesses have certifying bodies (for instance, the WBENC for woman-owned businesses) that will audit the company and obtain verifiable proof that the company is majority owned by a woman or a minority.  So, supplier diversity specialists know to look for those certifications.

So, how can a company confirm veteran status or service-disabled veteran status?  The most direct way is through the Center for Veterans Enterprise (CVE), a part of the Department of Veterans Affairs.  The CVE certifies VOSBs and SDVOSBs.  The veteran-owned companies listed within their database provide every type of product and service you can imagine, and have gone through the certification process in order to be able to do business with the Federal Government.  However, just because they are focused on pursuing government work doesn’t mean they wouldn’t be happy to do business with your company as well.

Another option is the US Business Leadership Network’s (USBLN) Disability Supplier Diversity ProgramSM, which recently developed a certification program for businesses owned by an individual with a disability, including service disabled veterans.

Two additional ways to find VOSB’s/SDVOSB’s, some of which may not be registered with the CVE because they are not focused on selling to the government, are:

  • The annual National Veteran Small Business Conference and Expo. The next conference is August 15-18, 2011 in New Orleans.  Fifty-seven percent of last year’s exhibitors were SDVOSB’s and 16% were VOSB’s.  The other 27% were Federal government agencies and corporations.  In addition to the big defense contracting firms you might expect to see exhibiting, corporations like Merck, UPS and Johnson and Johnson also had booths.

Really large corporations should also encourage their 1st tier suppliers to both hire military and contract with VOSB’s, much like the federal government does with its prime contractors.  VOSB’s generally don’t have to be told to hire more military – oftentimes the majority of their employees are veterans.

Supplier diversity professionals can utilize the knowledge of their company’s current veteran-employees to help them with this task.  If your company has a veteran affinity/networking/resource group, tap them to assist with locating and vetting VOSB databases and expos.