Ric Llewellyn

Wednesday, May 21 2014 02:00 PM

RIC LLEWELLYN: Corporations shouldn't exploit special consideration

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    Californian contributing columnist Ric Llewellyn.

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By Ric Llewellyn

Social responsibility has become a significant component in corporate branding. Sounds like a good idea. Don't pollute. Don't waste resources. Treat your employees with dignity. We could make a pretty long list.

One area that is quite competitive among large corporations is "supplier diversity." Supplier diversity is the strategy of specifically steering company purchases to women-owned and minority-owned businesses.

Kudos are coveted from organizations that rate companies' supplier diversity efforts, and awards and high rankings received are heralded far and wide. Companies even celebrate their achievements internally as business functions strive to attain supplier diversity goals.

You might be thinking of a minority-owned machine shop or woman--owned service business right here in Bakersfield that could be really successful if it only had a contract with one of the big companies in town. That's how we think of supplier diversity. But it doesn't always work like that.

You probably won't be surprised to hear I'm not a fan of affirmative action and that's what supplier diversity is. But I really don't like it when the ideal is abused or exploited.

I was recently reading about a company's supplier diversity achievements. The article mentioned Earvin "Magic" Johnson's company, SodexoMAGIC (51 percent owned by Johnson), as one of the diverse suppliers for the company.

I guess Johnson is a minority. We could call him a "one percenter." His personal net worth is $500 million. He's a co-owner of the Los Angeles Dodgers and the Los Angeles Sparks (WNBA), and he's on the list of potential new owners for the Los Angeles Clippers.

Magic Johnson Enterprises (MJE) is a very successful blend of real estate, finance, media and entertainment, facilities management and food service enterprises valued at about $700 million.

MJE owns more than 100 Starbucks and a dozen 24-hour Fitness franchises and MJE operates first-run multi-screen theaters in six cities from Los Angeles to New York City.

The other 49 percent owner of SodexoMAGIC is Sodexo Group. Sodexo is a French company operating on every continent of the globe except Antarctica. Sodexo's 428,000 employees serve 75 million consumers per day with annual revenues of about $24 billion!

So why is it that successful millionaire Magic Johnson and a multi-billion dollar worldwide French company need special treatment when it comes to business opportunities? It's outrageous!

It's even more disturbing that the special consideration given this type of arrangement is lauded as the pinnacle of corporate social responsibility.

I don't begrudge Magic Johnson his success. His company has a positive impact on thousands of families through job opportunities and charitable activities. And if one could invest in Sodexo, it might be a great place to realize significant financial returns.

I'm also sure there are competent, local women- and minority-owned businesses scattered across the country that are being afforded opportunities directly through supplier diversity initiatives.

But if corporations are going to embrace social responsibility, it should be done carefully with the most principled and conscientious application of supplier diversity ideals. And companies that don't need special consideration shouldn't exploit it.

Email contributing columnist Ric Llewellyn at llewellyn.californian@ gmail.com. His work appears here every third Thursday; the views expressed are his own.

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