Impact Sourcing Is More Than a Procurement Strategy, It’s a Company Mindset Change

By Morag Lucey On Jan 7, 2020

If you Google the term “impact sourcing,” you’ll turn up search results about what it is and why it’s good. Missing are the stories of how companies are intentionally hiring and providing career development opportunities to people who otherwise have limited prospects for sustainable employment. Also missing are the interviews with business leaders who share why and how they’ve made lifting people out of poverty through employment a priority. For all the talk about purpose and inclusion, we’re still not connecting the dots.

According to a 2016 report by the Economic Innovation Group, more than 50 million Americans live in fragile communities. These areas of our country are ravaged by poverty, high unemployment, weakened school systems, mass incarceration, and cumulative health risks. They are also the same areas we drive our cars around instead of through – if we don’t see them, perhaps they don’t exist, right? The fact is they do exist and people are suffering in them. I believe that business and government are poised to solve this together though impact sourcing.

Full Disclosure

I’m the CEO of a company that provides meaningful work to incarcerated women in three US correctional facilities in Arizona and Indiana. We’re more than a second chance employer because the opportunity for our ladies starts while they’re in prison. Our women are empowered to rebuild their lives through business training and technology certification. This model has a ripple effect. A few highlights since our inception in 1994.

More than $8 billion in revenue has been generated for our clients on which taxes are paid, business is expanded, and the U.S. economy is strengthened.
Less than 5.5 percent recidivism. According to a Bureau of Justice Statistics study, the average national recidivism rate is 68 percent within three years, 77 percent within five years.
Ninety-four percent of our ladies secure jobs within one year of release (it’s just 54% nationally). After five years, their average salary is three times greater than those who have not been through our program.

Through intentional hiring, I’ve watched women who society has discarded reclaim their independence, rebuild their lives and reenter society as leaders, caregivers and business professionals. This has been incredibly rewarding and is an example of impact sourcing.

Business Needs to Carry the Torch

We must see the transformation of communities from fragile to resilient as both a humanitarian and business imperative. Whether you’re B2B or B2C, your company thrives on sales. For this reason alone, instability, poverty, and violence are all bad for your business because it prevents you from selling in certain communities and to different groups of people. From an optics standpoint, though, I think it’s worse. How do we, as a business community, continue to ignore what is right in front of us, especially when we’re attaching words to our companies like purpose-driven and diversity and inclusion champion. We must live the words we ascribe to our company in every action, interaction, reaction and transaction otherwise we’re frauds. And in the age of 24/7 information, you can’t hide dishonesty for long.

Consider this: Right now, Generation Z has tremendous buying power—an estimated $143 billion in the US alone. Seventy-five percent of Gen Z spends more than half of the money available to them each month. By 2020, Gen Z will make up 40% of all consumers. Here’s the thing: 90 percent of Gen Z’ers believe companies must act to help social and environmental issues. And they’re holding these organizations accountable. Ninety-three percent say if a company makes a commitment, it should have the appropriate programs and policies in place to back up that commitment. Three-quarters (75%) will do research to see if a company is being honest when it takes a stand on issues.

This is the future of business. If you’re not walking the talk, your business will suffer.

Beyond Procurement

Over the years, companies have learned that we don’t have to buy from or do business with the same people we always have. To this end, organizations now prioritize sourcing from diverse-owned businesses and companies that intentionally employ a diverse workforce. In fact, we’ve set up teams to focus specifically on this. The benefits have been great. We access suppliers with responsible hiring practices that compete on quality, service, and price. We achieve our supplier inclusion and diversity goals. We create a positive social impact for impact workers and their families and communities. All wins.

I’d like to see impact sourcing go even further: beyond our purchasing decisions. I’d like us to be more intentional in our hiring practices. We do this by recruiting, hiring and providing career development opportunities to people who would otherwise have limited employment prospects, such as the long-term unemployed, individuals with a criminal background, or those living under the national poverty line (i.e., impact workers).

We continue to overlook these individuals, largely because of the stigmas associated with their communities. What else could explain companies deliberately putting up barriers to employment, like the felon box, which automatically excludes formerly incarcerated individuals from employment?

Business as a Force for Good

I believe what’s keeping us from doing better is fear and lack of understanding about the populations that need our help. Here are some tips and resources to help you engage in ways that can lift people out of their unfortunate circumstances and deliver impact for your business and society.

Spend time on real conversations with people from disempowered communities to understand their experiences, their challenges, and the support they need to grow. We can’t determine which problems are holding people back without speaking with them. This simple act will eradicate social exclusion and ensure that everyone is brought into the diversity and inclusion conversation. Remember, understanding leads to empathy and empathy leads to action.
Partner with organizations and coalitions that are committed to solve social issues in the right ways. For example, the Global Impact Sourcing Coalition is a network of businesses that commit to providing meaningful career opportunities to people from disadvantaged or vulnerable backgrounds through impact sourcing. GISC has issued a challenge to its member companies to hire 100,000 impact workers by the end of 2020. It’s an ambitious goal, but one that I believe provides real economic benefits to both businesses and communities.
Download the Global Impact Sourcing Coalition’s Reducing Poverty Through Employment Toolkit, which provides guidance on how to ensure that people from impoverished and disempowered communities are a part of our global workforce strategies. The toolkit identifies a range of good practices, case examples (of which my company’s business model is featured) and resources to guide you on how to get started or how to enhance existing efforts to ensure that those from disadvantaged populations are given pathways to success.

There’s a real business benefit for changing our mindsets as it relates to impact sourcing. With the demand for workers rising in the US because of record-low unemployment rates and a global skills gap that’s expected to grow, we need to think beyond traditional talent pools. It requires proactiveness, courage, and a willingness to invest in people who we’ve never considered before. As Mary McLeod Bethune once said, “Invest in a human soul. Who knows? It might be a diamond in the rough.”