Inclusion of minority and women-owned companies isn’t just the right thing to do – it’s the smart thing to do to economically benefit the region.
That’s the message from the Northeast Ohio Economic Inclusion Forum Series. The series aims to engage the public, private and nonprofit sectors in creating a targeted, comprehensive economic inclusion action plan for Northeast Ohio.
“A lot of growth in the economy comes from small businesses, and minority small businesses are an important part of that fabric,” says Sandra Pianalto, president and CEO of the Federal Reserve Bank of Cleveland. “It is very important to our economic growth, both from a region and a country, to have every individual, every part of the workforce, fully engaged.”
The March panel for the third phase of the series, “Perspectives from the Private Sector,” discussed the role larger companies can and should play in fostering economic inclusion, and how this benefits their business.
Create a diverse staff to foster innovation
Inclusion begins internally with the hiring of a diverse workforce, says Chris Connor, chairman and CEO of Sherwin Williams. This ensures you can provide relatable service to your customer base.
“We look to hire, recruit, train and develop the leadership of our company from this broad spectrum of different folks so that we can, in fact, emulate and look like our customers,” Connor says.
A diverse staff also fosters innovation and creativity by bringing together diverse perspectives.
“Diversity of ideas is critical to better decision-making,” Pianalto says. “We made it a part of our strategic direction almost 10 years ago to make sure that we had a very diverse and inclusive organization and culture.”
To ensure an inclusive culture, inclusion must be embraced, communicated and incentivized from the top down.
“This is a topic that gets discussed in the boardroom; it’s a goal that I’m measured on by my board,” Connor says. “There are compensation and incentive goals on this topic of inclusion, so it’s on everybody’s hearts and minds. We just made this a business prerogative as opposed to a check-the-box, to-do project.”
How you can help
Although Pianalto says bank lending is on the rise, the current economic state makes it difficult for small companies to gain access to capital. That’s where larger companies can step in to help their client companies.
Paint manufacturing companies commonly support professional painting contractors by selling them the equipment and materials they need on credit. This enables the contractors to begin work, hire others and generate cash flow.
“You’re seeing more businesses step in in a very focused, strategic segment of supporting customers in providing some of that financial quota to get these things going,” Connor says. “We’ve done a lot of that for minorities, and we’ve been richly rewarded by that.”
Larger companies can also ensure smaller companies are able to do business by “unbundling” large projects, breaking it down into smaller pieces so that people have the chance to bid on types of business that they’re capable of handling.
This method was adopted in the building of Cleveland’s Horseshoe Casino, with a point scale used to evaluate potential contractors’ levels of inclusion.
“It takes a little bit more coordination on the front end, but at the back end, the rewards, the mentality, the excitement it creates within the job of people that would have never been afforded this opportunity before is immeasurable,” says Jeff Cohen, CEO and founder of Rock Cos. and vice chairman of the Cleveland Cavaliers and co-visionary of the Ohio Casino Initiative.
While this unbundling can help small companies on a local level, Warren Anderson, president and general manager of Anderson DuBose — the 17th largest African American-owned industrial services company in the U.S. — says this unbundling can hurt growing minority and women-owned companies by making a job too small.
“If you’re a small-to-medium company like mine, a small contract is too small,” he says. “But a national contract with a bundled approach across the country is too large.”
With that in mind, companies can also take another approach to inclusion by giving big contracts to prime contractors that are capable of handling the magnitude and encouraging them to partner with smaller subcontractors for local materials and labor. Cohen says such partnerships added value to potential contractors on the casino project’s inclusion evaluation scale.
Women- and minority-owned firms have an obligation to earn business through top-notch service, says Anderson.
“I compete for contracts based on superior price, service and personnel,” he says. “So to me, in terms of running my business, it’s about being as good as anybody and being attractive … for companies to award contracts to, so I’m included in the bids.”
Successful women and minority-owned firms also have an obligation to help other women- and minority-owned businesses with their growth.
“We encourage those who have been successful to turn around, reach back and lend a helping hand to those who have not been as fortunate,” Cohen says. “You need to provide those opportunities, because in many instances, that’s all it’s about — being given the opportunity to perform.”
For more information:
Watch “Rachel Talton of Synergy says economic inclusion action plan will benefit northeast Ohio”
Watch “Jodi Berg of Vitamix Corp. says inclusion promotes innovation and inspiration”
How to reach: The Northeast Ohio Economic Inclusion Forum Series, http://theciviccommons.com/issues/neo-economic-inclusion