In my almost 14 years as leader of the Greater New England
Minority Supplier Development Council, I had the opportunity to observe on
multiple occasions corporations wanting to know how they were doing in terms of
their supplier diversity performance.
There were some measures like the Ralph Moore categorization, and there
were awards given out by the GNEMSDC, regional councils and the NMSDC that
rewarded corporations for superior performance.
Additionally, the Billion Dollar Roundtable was created to distinguish
the largest corporations in total spend and total minority and diverse
spend. But none of these measures or
categorizations were easy for the supplier diversity professional to take a
snap shot of where their company was, or measure how they were doing. And I might add, this is not meant to replace any of the established metrics used by organizations or corporations. Think of it as one more tool.
The McKinney Score is an attempt to close
this gap and provide any corporation, of any size, a number that can be
measured year to year and compared against other companies in and outside their
industry. The purpose of the exercise is
to develop a number that eliminates the bias of size and industry. It has always been my opinion that the awards
and the categorizations were good but were missing an important point; a small
company can be doing an excellent job even when their spend with diverse
businesses was small, and a large company could be doing a relatively poor job
even when their spend in absolute dollars was large.
The Score is also not designed for self-congratulatory award
seeking by corporations and their supplier diversity teams. I am not a big fan of awards for awards
sake. Cervantes said the road is better
than the inn. John Wooden the great UCLA
basketball coach preached fundamentals and despite winning 10 national
championships never set that as the goal for his teams. (I was at UCLA during the final years of the Wooden era and witnessed 88 straight wins and two national championships.) Great performers whether on the basketball
court, or in the business world, are motivated by something that is deep
inside, not the fleeting appearances of success.
Like any measure, this score is not perfect and will most
likely be updated as we learn more how companies are scoring. As an economist and a former teacher, I have
always been in favor of scores and grades that were valid, transparent and
quantifiable. A score that is valid is
measuring the behavior or the results that it is intending to measure. The last thing we would want is a score that
did not acknowledge the good work of a company,
or gave a company that was a poor performer an excellent score. A
score that is transparent is one that before the year (class) begins, the
corporation (student) knows beforehand what it will take to achieve a
particular score. In the best case
scenario, the corporation or student knows from a transparent score where they
stand at all times, and what it will take to improve. A score that is quantifiable is one that
eliminates the grey areas and is comparable across corporations. Qualitative measures certainly have their
place, but having a score is sometimes necessary to get the attention of those
who care, or those who should care.
This score attempts to accomplish these characteristics. I can
imagine there is a part of me that would hope that Saint Peter has a score that
has these characteristics. Although, on second thought, I believe I would be
better served by a more heuristic measure.
The Score has two major components, the basic score and the
bonus score. The basic score has a total
of 100 points. The basic and bonus scores
are based on a simple yes or no answer to a series of questions. A yes gives the company the full points for
that question. A no answer gives the
corporation a zero score on that question.
This dichotomy between “success” on a question or “failure” with no
in-between will certainly cause some to complain that an almost yes is
equivalent to an absolute no. The
teacher in me used to respond to this type of complaint with the simple
observation, “who said it was going to be easy?”
The purpose of the bonus score is not to add the basic score,
but to give corporations credit for other activities and successes that might
be more reflective of size. The basic
score in contrast, is designed to minimize the effect of corporate scale. It is not advised that the bonus points be
added to the basic score. These are
designed to be separate measures.
The Score is divided into three major categories: Leadership, Process and Performance. It has been long been acknowledged that
supplier diversity success requires leadership.
Corporate leaders do more than just set the tone. Good corporate leaders
find the time and energy to demonstrate through their actions that what they
say is important enough to measure, to spend real resources, and to
reward. Processes are the language of
corporations. Everything a large organization is a series of processes. Supplier diversity is no different from any
other corporate process. The question is
whether or not the corporation has invested in understanding and developing its
supplier diversity process. And we know
that not having a process is a process.
And finally, the Score must capture the performance that come out of
these processes and leadership. The
measures of performance have attempted to eliminate the impact of scale so that
companies can score well even if their spend is small or score poorly even if
their spend is large.
Before closing I need to review some assumptions and
definitions.
1. Certified
means certified with NMSDC, WBENC or State Department of Transportations. Certification by states or municipalities or
self-certification should not count in a company’s analysis.
2. The year is the company’s fiscal year.
3. Leaders of a company are considered C-Level
Executives only.
Everything else should be self-explanatory. But if there are any questions, feel free to
write or call me.
The McKinney Score
|
||
Leadership (20 Points)
|
Points
|
Score
|
1. Does Company Have a SD Commitment Statement
by CEO on Website?
|
2
|
|
2. Has CEO attended a SD Conference in past 2 years?
|
5
|
|
3. Does company SD Leader have a meeting at
least once per year with CEO to
discuss company SD performance?
|
3
|
|
4. Does the CEO meet with
an advisory commmittee comprised of the company's main diverse suppliers at
least once per year?
|
5
|
|
5. Is at least 5 percent
of the CEO's compensation tied to SD Performance to Goals?
|
5
|
|
Process (40 Points)
|
||
1. Does the Company have
at least one SD FTE per $5 billion in purchasing?
|
5
|
|
2. Does the company have
a formal on-boarding process for diverse suppliers?
|
3
|
|
3. Does the company have an advisory committee
of outside diverse companies that meet with senior company officials at least
once per year?
|
4
|
|
4. Does company require outreach to diverse
suppliers on all contracts below $1 million?
|
4
|
|
5. Does company set-aside some products and
services exclusively for diverse suppliers on a competitive basis?
|
3
|
|
6. Are company buyers
compensated for meeting or exceeding SD goals?
|
4
|
|
7. Does company have SD annual spend goals?
|
2
|
|
8. Is your company a corporate member of the
NMSDC?
|
4
|
|
9. Is your company a member of WBENC?
|
4
|
|
10. Does your company financially sponsor
NMSDC/WBENC(including regional councils) events at the $20,000 level or higher?
|
7
|
|
Performance (40 Points)
|
||
1. Does your company spend at least 15 percent
of total spend with certified diverse suppliers?
|
6
|
|
2. Does your company
spend at least 10 percent with certified MBEs?
|
5
|
|
3. Does your company spend at least 10 percent
with certified WBEs?
|
5
|
|
4. Does your company
spend at least 5 percent of total spend with certified diverse suppliers who
are not certified MBEs or certified WBEs, i.e. LGBT, SDVETS,?
|
4
|
|
5. Excluding your top 10
certified diverse suppliers (in terms of spend), does at least 50
percent of your total diverse spend
come from the remaining certified diverse suppliers?
|
4
|
|
6. Has your company formed a formal strategic
alliance or joint venture with a certified diverse business in the past two
years?
|
4
|
|
7. Does your company pay certified diverse
suppliers within 45 days of being invoiced?
|
4
|
|
8. Has your company sponsored at least one MBE to attend a minority business
training program at Tuck or Kellogg or University of Washington in the past
year?
|
4
|
|
9. Does the company require large Tire 1 Suppliers (suppliers who alone
represent at least 5 percent in spend, or $50 million whichever is less) to
report certified diverse spend?
|
4
|
|
Total Basic Score
|
100
|
|
Bonus Points
|
||
1. Do you have at least 5
domestic certified diverse suppliers who are also supplying the company's
facilities outside the U.S.?
|
5
|
|
2. Does company require all procurement
professionals to get trained in supplier diversity?
|
5
|
|
3. Does the company have employees who serve
on NMSDC or WBENC Boards of Directors at the National or Regional Level?
|
5
|
|
4. Is your company in the
Billion Dollar Roundtable?
|
5
|
|
Total Bonus Score
|
20
|
I would be happy to discuss your score and what it means. Feel free to contact me at frederick.w.mckinney@tuck.dartmouth.edu.
Also, the Tuck MBE Programs will hold a 6-day "Growing the Minority Business to Scale" class from August 2 through August 7. Come and experience what it takes to get your business to the next level. For more information about the program visit http://exec.tuck.dartmouth.edu/programs/minority-programs.
