Building the Market for LGBT-Owned Business
BY PAUL SCHINDLER | As the National Gay and Lesbian Chamber of Commerce New York (NGLCCNY) gathers in Manhattan on October 25 for its third annual Shining Stars awards, leaders from LGBT-owned companies and executives from allied corporate partners will be doing some business as well.
While the evening will be devoted to a cocktail reception and gala awards ceremony, an afternoon session will focus on the opportunities gay-owned businesses can avail themselves of by obtaining certification as an LGBT Business Enterprise. Such certification, available through NGLCCNY’s Washington-based national parent organization, can make a big difference in forging business relationships with large corporate buyers of goods and services.
Corporations looking to broaden the range of vendors they deal with — many of them with formal supplier diversity programs — look to NGLCC in vetting potential LGBT Business Enterprises. The national group reviews all prospective certification candidates to confirm they are at least 51 percent LGBT-owned.
According to one such certified business, NGLCC’s certification process provides gay businesses with much more than simply proof of their ownership
“The program also provides training for how to run a small business, how to relate to large corporations, how to ask for business,” said Jack Osborn, the gay owner of a 17-attorney law firm in Manhattan. “The training really focuses leadership skills, planning skills, and marketing skills.”
Osborn began his career with positions in New York City government and as a corporate in-house counsel, but launched his own firm in 1992, specializing in construction, environmental, and real estate litigation and mediation. Asked whether the sorts of NGLCC training he described was useful for someone with the deep professional experience he has, Osborn was enthusiastic in answering in the affirmative.
“The biggest benefit,” he said, “is that it opens you up to an echelon of clients not previously available.”
Osborn explained that the Kaye Scholer law firm, which is a Visionary National Legal Partner in NGLCC, invited his firm to participate on a pitch to Toyota, which was accepted. The expertise that Osborn Law lends to the overall arrangement involves construction safety issues the car manufacturer faces.
“Toyota is a heck of a client to have,” he said. “To meet and to have an entre to clients like that makes all the difference.”
Osborn estimated that at least ten percent of his firm’s recent new business has come from its LGBT Business Enterprise certification, including work with a hotel chain and another half-dozen small to medium-sized firms.
“In a recession, with people scrambling for work, this has really made the difference,” he said.
Osborn Law is one of 22 legal firms that have been certified as LGBT Business Enterprises by NGLCC. According to Phil Giorgianni, the senior manager for supplier diversity and outreach in NGLCC’s Washington headquarters, a total of 419 businesses of all types now have such certification. Though NGLCCNY was founded only in 2008, 77 of those businesses, or nearly one in five, are located in the New York metropolitan area.
NGLCC began its supplier diversity program, the unit out of which the certification process is managed, in 2004. The initiative, Giorgianni explained, came from the corporate world — IBM, specifically. The computer giant was already engaged in doing outreach to minority, women, and LGBT-owned vendors, but hoped to get expertise from a qualified advocacy organization within the gay community.
Other corporations soon followed suit, and by 2006, NGLCC’s supplier diversity program was a major initiative of the group. Today, the organization works with more than 140 corporate partners that are looking to identify qualified gay-owned businesses. That figure does not account for other purchasers of goods and services from certified businesses that may have no formal relationship with the chamber, but looks to its vetting anyway.
One of those purchasers is the Marsh & McLennan Companies, a global leader in insurance and risk management.
Laks Natarajan, the company’s chief global procurement officer, described his responsibility in making $2 billion of purchases each year as “maximizing the value we get from suppliers.” Recognizing that the insurance industry was increasingly examining the benefits of diversifying its vendor base, Marsh & McLennan, in the past four years, embarked on a program aimed at identifying minority, women, and LGBT-owned suppliers.
Seeing the company’s different business units as “internal stakeholders,” Natarajan said he consistently faces the question of “How do we develop better vendor solutions, creative solutions that challenge our thinking and points of view in order to be more valuable to our internal businesses?”
The economic rationale behind a supplier diversity effort comes from recognition of the fact that the market alone might not identify talented LGBT-owned enterprises that can offer unique products and services, Natarajan said
He acknowledged that a small business newly introduced to Marsh & McLennan faces a high hurdle in terms of winning a vendor slot.
“I have had suppliers reach out to me,” Natarajan said. “My advice to them is, ‘Be patient and tenacious. Learn how we operate.’”
Many of the company’s vendors, of course, are large corporations themselves, unlikely to be knocked out of place by a small company. As attorney Osborn noted, given the certification requirement of 51 percent LGBT ownership, most such businesses will be relatively small. Natarajan, however, said there are plenty of opportunities for small-scale vendors.
“Our relationships are for the long term,” he said that he tells prospective LGBT, minority, and women-owned vendors. “As we grow, the next time we have need for a big chunk of vendors, you will be there.”
John Villani, who heads up Marsh & McLennan’s supplier diversity program as a director in the global sourcing and procurement division, talked about a “matchmaking” event the company held with NGLCCNY in May. The gathering allowed 19 certified LGBT Business Enterprises to meet with senior company leadership in marketing, facilities, information technology, and human resources, making brief “elevator pitches” to explain the skills and expertise they could bring to the table.
“Several follow-up discussions and dialogues” have occurred since then between the company and potential LGBT vendors, Villani said.
Over the past couple of years, the annual Corporate Equality Index effort carried out by the Human Rights Campaign, which rates companies across five major criteria regarding LGBT employees, customers, and social responsibility, has added impetus to the movement for supplier diversity. In 2011, a company’s effort in this area became one of the factors scored in determining ratings.
Dan McGuire, an information technology senior project manager at Marsh & McLennan, noting that the company scores a perfect 100 rating, said that maintaining that recognition from HRC “is important” to it. He pointed out, however, that Marsh & McLennan’s 100 rating predated the scoring for supplier diversity outreach and that such outreach is only one of five indicators of “public commitment” on LGBT issues a company can show. Demonstrating an effort on three of the five is sufficient to receive full credit.
According to Osborn, supplier diversity initiatives make for learning on the part of both vendors and purchasers. While corporate America is becoming increasingly focused on the benefits of unearthing previously untapped sources of expertise, he said, in-house counsel at many corporations that are doing a good job on the diversity supplier front remain “insular,” unfamiliar with the advantages of seeking outside legal services from LGBT, minority, and women-owned businesses. In some cases, he said, gay attorneys working in-house can provide an entre, so that firms such as Osborn’s can begin discussions with in-house counsel offices about how they spend their external legal dollars.
The experience of being a certified LGBT Business Enterprise, Osborn said, has also introduced him to valued legal peers with whom he can fruitfully network. While his firm’s specialty is in construction and real estate, other attorneys he’s met through NGLCCNY have very different expertise. The most recent attorney to join the New York chapter specializes in immigration issues, for example.
As Osborn and other attorneys partner with larger law firms and other companies to pitch business and begin establishing ties to major corporate purchasers, they are able to pass along word of specific opportunities to each other.
“It’s like having one large extended law firm,” Osborn said in explaining how the overall NGLCCNY push for new business is greater than the sum of its parts.
The National Gay and Lesbian Chamber of Commerce New York’s Shining Stars event takes place on October 25 at the Box, 189 Chrystie Street, near Rivington Street, on the Lower East Side. A 1 p.m. keynote address is followed by an afternoon connection event highlighting certified LGBT Business Enterprises. After a cocktail reception at 6 p.m., the awards ceremony begins at 7 p.m. Honorees are Marsh & McLennan’s Dan McGuire and Osborn Law’s Jack Osborn. Cabaret performer Gregory Nalbone provides entertainment during the awards ceremony. Proceeds from a raffle will benefit the American Cancer Society. For complete information on Shining Starts, visit nglccny.org.