By Brian Vaughn

McCalla RaymerLeibert Pierce, LLC*

USFN Member (AL, CA, CT, FL, GA, IL, KY, MS, NV, NJ, NY, OH, OR, TX WA)

Diversity, Equity, and Inclusion (DEI) is top of mind for most people these days.  We see and hear about the importance of DEI in the news, social media, and at conferences. Starting a meaningful conversation about DEI for many companies may seem daunting or the timing may seem like climbing a mountain during the greatest pandemic in our lifetimes. Honestly, the time is past due and the pandemic, in a way, has offered us an opportunity as many companies are having to rebuild their teams.

A tougher question may be: Are our current standards on Minority and Women Owned Business (MWOB) outdated?  Are we acknowledging those that have moved past the standard goal of what was originally intended with MWOB?  We push our companies to a broader image of what diversity is from an overall staffing level; should we be doing the same for our companies’ ownership? We could start by increasing each type of minority owner, rather than trying to achieve the goal of fitting into the small box by simply achieving a particular status of women-owned, or veteran-owned, or African American-owned business, for example, as set forth by the government. While there are certifications that seek to allow for an expanded definition of “minority-owned” to be more inclusive, rather than exclusive (for example, Chicago’s Minority and Women-Owned Business Certification Program, which certifies firms who have 51% ownership by a minority OR a woman), the federal classifications do require your firm to fit into one specific area to obtain certification.

DEI has evolved to expand inclusion and suggested staffing models that reflect our society.  We strive to create an encompassing group of people to bring in all visions and ideals to better our organizations.  We look to have a well-rounded team from a spectrum of all genders, races, ethnicities, ages, religions, disabilities, and sexual orientations; yet when it comes to our ownership, we only recognize those that are owned by at least 51% of one diverse group.  Is it time for our acknowledgement of ownership that surpasses the standard model to be our new goal?

Let’s review a couple of examples. An organization’s ownership is made up of 40% women, 15% minority, 25% LGBTQ and 20% other non-women or non-minority. This makeup is 75% diverse, yet according to our current standards, we do not acknowledge this organization for reaching what we hope our DEI goals aim to achieve.  Another organization’s ownership is split evenly by four owners into 25% portions.  The diversity makeup of the ownership is African American, Latinx, Women and LGBTQ, making this 100% diverse ownership.  For these suggested organizations to meet the 51% current standards, the ownership would have to reduce its diversity to only allow one diverse segment the majority ownership.  So, in effect, this dilutes their ownership’s diversity, moving us away from a true goal of any DEI ownership program.

While many still fall short of the basic 51% standard, is it time to expand our understanding of diversity in ownership to better match our overall DEI goals?   For decades, since its inception, the 51% rule has been the line in the sand for DEI ownership, but government and corporations are looking to suppliers that more closely match their overall diversity goals.

Expanding the standards to include organizations with ownership that meet a higher level of combined women and minority threshold is key to moving all DEI initiatives forward. This doesn’t mean removing the current standard of 51%, but rather adding expanded options for firms that meet a 70% or higher combined women and minority ownership.

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USFN August e-Update