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Leon Kaye headshot

Why Racial Equality is Good for Business

By Leon Kaye

A consulting firm specializing in social impact, along with a social equity think tank, together recently completed what they described as a six-month research project gauging how the business community can benefit from racial equity. Their conclusion: Companies across the U.S. are missing out a huge growth opportunity by not doing more to generate business value by advancing racial equality.

FSG and PolicyLink arrived at their analysis by interviewing over 50 business leaders in various industries across the U.S. Much of news on this front in recent months has been filled with ugly stories of supposedly forward-thinking companies dragging their feet when it comes to boosting diversity within both their employee and management ranks. Nevertheless, the study's authors say that tackling structured racism goes beyond moral and ethical arguments - or what as this movement's detractors often dismiss as "political correctness." Embracing America's demographic changes, as well as the wide racial gap in this country, can provide business benefits. And companies that have benefited in this study include several that have a reputation for being "hard-nosed."

Despite the macroeconomic statistics that can inspire politicians to ask, "what the hell do you have to lose," in trying to win over the loyalty of racial and ethnic minorities, the fact is that business is what can really drive and inspire change. After all, there is money within these communities. FSG and PolicyLink cite sources suggesting that the buying power of black ($1.3 trillion) and Latino communities ($1.6 trillion) should not be ignored. Businesses can pad their bottom line - but only if they adopt an approach tailored to meet the needs of these demographics.

At a higher level, the inclusiveness and effective targeting of these communities involve three steps. First, reevaluate markets and products, as in either servicing these communities in the first place, or develop goods and services that can meet the needs of these racial and ethnic groups. in addition, companies can reduce costs and risks, while improving productivity across their operations and supply chain, but committing to racial equity. Finally, companies should take steps to develop a reliable base of human capital and suppliers, boost consumer demand and improve the regulatory framework by creating new opportunities within these communities. Examples include the efforts of companies from General Motors to Symantec, and projects like boosting education programs in fields such as STEM or inculcating a culture of acceptance within a company.

Creating markets and economic prospects for workers in these communities is not all that different from what business administration students learn in class. Take the example of Brown's Super Stores, which operates 10 ShopRite supermarkets across the greater Philadelphia region. The company realized that while supermarkets in wealthier neighborhoods emphasized the customer experience, stores in lower-income neighborhoods tended to have poorer quality products while keeping more expensive items under lock and key - hardly a way to treat customers with dignity.

But Brown's Super Stores realized a cookie-cutter approach to opening stores in these neighborhoods would not work, so it organized town halls where locals could talk about their wants and needs. These stores' layout were redesigned and products were added to suit local tastes. Then, the company realized that many residents patronizing their stores lacked easy access to health care, so Brown's Super Stores opened health clinics and trained staff members on how to enroll customers in programs such as Medicare and Medicaid. The first seven of these stores that opened generated $250 million in revenues from areas that were once considered "food deserts."

Gap Inc, PayPal and Signa were additional companies the report cited as finding new sources of profit while boosting opportunities for people of color.

The report did not offer the standard conclusion; instead, it exhorted companies with steps on "how to begin." The bottom line is that the old lessons of putting oneself in another person's shoes applies. Understanding racial inequity is only the start: Businesses need to sort out how to translate that into action, and a change in mindset needs to start with the CEO. "Business executives therefore must take a fresh look at every aspect of their business operations," concluded the report's authors, "including product design and distribution, marketing and advertising practices, and hiring and personnel policies - through the eyes and experience of a person of color."

Image Credit: ShopRite/Facebook


Leon Kaye headshot

Leon Kaye has written for 3p since 2010 and become executive editor in 2018. His previous work includes writing for the Guardian as well as other online and print publications. In addition, he's worked in sales executive roles within technology and financial research companies, as well as for a public relations firm, for which he consulted with one of the globe’s leading sustainability initiatives. Currently living in Central California, he’s traveled to 70-plus countries and has lived and worked in South Korea, the United Arab Emirates and Uruguay.

Leon’s an alum of Fresno State, the University of Maryland, Baltimore County and the University of Southern California's Marshall Business School. He enjoys traveling abroad as well as exploring California’s Central Coast and the Sierra Nevadas.

Read more stories by Leon Kaye