As the end of the year approaches, supplier diversity goals come into focus and companies can gauge whether they’ve hit their targets. Whether you’re looking for a way to bump up this year’s percentage before year-end or planning ahead to achieve your 2023 goal, incorporating a payroll partner into your supplier diversity program can help you reach those goals quickly.
Benefits of Supplier Diversity
Most diverse businesses in the United States are small businesses. Investment into these companies creates a huge impact on the communities they serve. As those communities grow, so does the nation’s economy.
Beyond the nationwide benefit, each corporation or contractor that supports diverse businesses receives its own benefits. Specifically, there is a direct correlation between the amount of diverse spend a company has and its market share.
“Supplier diversity programs are also a boon to a company’s employer brand, as most candidates appreciate the commitment to diversity,” says Amy Harkins, business development manager at Checks and Balances. “Today’s diversity and inclusion initiatives span many internal departments, including procurement and supplier diversity.”
How Payroll Programs Can Help Meet Supplier Diversity Goals
We’ve established that working with diverse businesses is good for the economy, for society, and for bottom lines. We’ve also noted that most companies have an annual percentage goal for their diverse spend. What happens if your company is falling short?
Fortunately for companies large and small, there’s a quick and easy way to maximize diverse spend percentages. Payrolling is the solution!
If a company has a contingent workforce, partnering with a diverse payroll company is already a good choice. An Employer of Record program manages the payroll, taxes, and all other employment tasks for a company’s referred or pre-identified contract workers. Most payroll partners also have an Agent of Record program that manages the payment of independent contractors (also called 1099s). Not only do these programs manage the company’s contingent workforce, they also mitigate the risk of worker misclassification.
Utilizing these solutions is a quick way to bridge the gap between current and goal percentage of diverse spend. This is because every wage dollar or contract dollar someone is paid through that payroll partner becomes counted toward the company’s diverse spend. Depending on the size of the contingent workforce, this spend adds up quickly!
What is Tier 2 Diverse Spend?
Some large companies encourage (or even require) their suppliers to track their own diversity spend with their subcontractors, compounding the impact.
When a diverse supplier tracks their own diverse spend and reports it to their clients, this is classified as Tier 2 spend for the clients. For example, if a corporation uses a woman-owned payroll partner, that is classified as Tier 1 spend. The payroll partner’s diverse suppliers – say, their veteran-owned accounting firm – then become Tier 2 spend for the corporation.
Fortunately, it’s not hard to convince diverse companies to do business with others. “The community of diverse businesses loves to support one another,” says Harkins. Most diverse suppliers have their own supplier diversity programs in place already.
Your Diverse Payroll Partner
When searching for a partner that can help your company maximize its diverse spend through payrolling, consider Checks and Balances, Inc. This woman-owned business, certified nationally through the Women’s Business Enterprise National Council (WBENC), has nearly 40 years of experience in workforce solutions.
Checks and Balances has a variety of solutions to help companies manage their contingent workforces, all of which can be part of a supplier diversity program. From Employer of Record and Agent of Record to Corp-to-Corp and vendor management, Checks and Balances has the programs you need to strengthen your workforce.