Minority Business Development: Report frames lingering perception gaps

Despite widespread efforts to accelerate minority business development, lingering misperceptions and instinctive resistance to purchasing from minority suppliers remain among managers at both majority and minority-owned firms in Baltimore region.

That’s the conclusion of a 2006 report to the Greater Baltimore Committee by Mid-Atlantic Marketing Consultants, Inc. The report, entitled “Recalibrating the Region’s Business Practices,” was developed from in-depth interviews of more than a dozen owners and managers of minority and majority businesses in the region. It captures, anecdotally, attitudes of managers on the front lines of minority business development.

“There is a compelling need to change the business landscape in Maryland,” Kelvin T. Jenkins, president of Mid-Atlantic Marketing Consultants, Inc., and author of the report, wrote. “In Maryland, it’s time for business leaders to take a pragmatic approach by articulating and promoting a best practices model for minority business development.”

The report cites research for the GBC by Sage Policy Group in 2004 showing the Baltimore region could add more than $5 billion in annual sales and create more than 32,000 jobs if the number of minority and women-owned businesses was in proportion to other regions of its size.

But the Baltimore region’s business community must confront several basic “misperceptions” among business executives and procurement managers that are at the root of sluggish progress in developing its minority business sector, says Jenkins.

Such “misperceptions” include notions that minority businesses offer less value, deliver inferior products, lack experience, or are unreliable, reports Jenkins, who notes that, surprisingly, even some successful minority businesses “themselves harbor the very same misperceptions.”

Such notions prompt a number of “negative attitudes and behaviors” by managers that include, discounting prospective minority businesses as viable partners, hesitating or refusing to seek out minority suppliers and partners, limiting procurement from minority-owned sources, and showing reluctance to incorporate minority business development goals in business plans and performance appraisals, Jenkins reports.

Other common attitudes among managers at majority firms include the tendency to “rationalize that hiring minority employees is an acceptable alternative” to pursuing minority suppliers, and to regard seeking minority suppliers and partners “as a social responsibility instead of a business opportunity,” says Jenkins.

Although many firms have created “supplier diversity” departments, they often “have small staffs of two or three employees responsible for managing thousands of M/WBE inquiries.” Such departments are often viewed by prospective suppliers as “having neither sufficient resources nor a sincere commitment to cultivating minority vendors,” he adds.

“Majority business leaders must overcome personal biases and focus on the positive economic impact M/WBEs can offer their organization, its customers and the community,” Jenkins concluded.

“This report identifies the elephant in the closet when it comes to minority business development in Baltimore,” GBC president Donald C. Fry said.

“To fully achieve our region’s minority business development potential, the private sector must actively cultivate strong working partnerships and business relationships, not rely predominantly on government mandates,” Fry said. “Frankly, we must achieve a culture change that is beyond the capabilities of government.”

The report recommends that the GBC, through its Bridging the Gap initiative, develop and aggressively promote a “best practices” model drawn from GBC member companies that are known for their success in developing minority suppliers and partners. The GBC could then track and recognize progress, the report suggests.

Such “best practices” could include:

  • Assessing the economic advantages of using minority suppliers, such as how they could contribute to the purchasing company’s short and long-term goals and help the company penetrate new markets.
  • Developing and promoting the use of an up-to-date M/WBE supplier list, highlighting listed suppliers in promotional publications and industry expos, and recommending them to others.
  • Making procurement from minority suppliers a measurable buyer-performance objective, awarding bonuses for achieving targets and imposing sanctions for falling short.
  • Developing a minority supplier outreach strategy and actively supporting supplier organizations.
  • Measuring actions and outcomes of minority business development efforts.

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