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Understanding Dodd Frank Section 342: Diversifying Vendor Partnerships

Jun 11, 2016 by

Mention Dodd Frank 342 and you may get a blank stare, but it’s a regulation that needs some serious thought. The disproportionate impact of the economic downturn on diverse communities, minority- and women-owned businesses prompted legislators to seek stop gaps for future downturns. Congress passed Section 342 of the Dodd Frank Wall Street Reform and Consumer Protection Act creating the office of Minority and Women Inclusion (OMVI) in federal agencies that regulate the financial services industry. These agencies published The Joint Standards that provide five areas that a regulated firm may assess to improve its diversity policies and practices:

  • Organizational Commitment to Diversity and Inclusion
  • Workplace Profile and Employment Practices
  • Procurement and Business Practices
  • Practices to Promote Transparency and Organizational Diversity and Inclusion
  • Self-Assessment

Marketing and recruiting often are the first things companies try to affect with regard to their diversity efforts, often overlooking their vendor procurement policies and diversification of their vendor partners. The small representation of diverse vendors doesn’t match the demographic trends of women and minority owned businesses. For example, Latinas own 36 percent of U.S. businesses by minority women and one in every 10 women-owned businesses! However, becoming a preferred vendor is not as easy as applying for vendor status. Minimum net worth requirements or minimum number of years in business may make barriers of entry more cumbersome for minority or women owned firms to overcome.

Much like the benefits of a more diverse workforce or customer base, having diverse vendors can enhance your business’ bottom line and help avoid costly mistakes. Joe Nery, partner and co-founder of Nery and Richardson Law in Chicago, draws on his Hispanic heritage to help his clients. He once challenged an Illinois law that he argued posed a disparate impact on minority neighborhoods.

“I have a perspective that is unique and could be overlooked if it weren’t for my background,” Nery says. “As the demographics of our country change, more businesses will be owned by individuals of diverse backgrounds. The consumers they serve will also be diverse or located in multicultural communities. Thus, the vendors that supply these businesses must be familiar with local community customs and preferences.  By employing diverse vendors that are sensitive to these nuances, companies will increase the attractiveness and eventual success rate of their products or services.”

Sara Rodriguez, owner of EKKO, a women-owned title Company in Virginia, says business is booming but like other vendors she had to go through the rigorous vendor approval process.

“It can be very expensive,” Rodriguez says. “If you can afford it, you may want to consider hiring a company that can perform due diligence to make sure you can pass all federal, state and even individual lender requirements before you even apply for the lender approval.”

For her, the benefits have outweighed the obstacles.

“I can provide services in both English and Spanish and I understand where they are coming from,” says Rodriguez. “Lenders who use our services provide better customer service.”

The advantages of applying the Joint Standards, and the positive reaction from regulators to companies that do so, should be encouraging to the financial industry. Embracing these standards from marketing, recruiting, all the way to the diversification of vendors, can give companies a competitive edge in an ever more diverse world.

For more information on how you can strengthen your diversity and inclusion plans, contact NAHREP Consulting Services at info@nahrepconsulting.com.

This post was originally published on NAHREP Consulting Services’ blog.

RISMedia

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Understanding the Tax Advantages of Real Estate IRAs

Dec 20, 2015 by

Jason Craig, President, The Entrust Group, recently sat down with RISMedia for a Q&A to shed some light on the tax advantages of Real Estate IRAs. RISMedia: Are the expenses for a real estate IRA investment property a tax write-off? Jason Craig: What happens in an IRA stays in the IRA. A traditional IRA that […]
RISMedia

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Panel: Understanding Millennials and Thinking toward the Future Are Keys to Success in Real Estate

Nov 20, 2015 by

While moderating a panel about technology, green living, and more, NAR Chief Economist Lawrence Yun quoted one of the greats, Wayne Gretzky. Gretzky said: “A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be.” For real estate, that means always looking ahead at what’s […]
RISMedia

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Understanding the State of Hispanic Real Estate: An Interview with NAHREP President Teresa Palacios Smith

Apr 21, 2015 by

As the housing market continues to recover, more and more minority communities will enter the real estate scene. Recent studies have shown that the Hispanic community will soon represent a major segment of the homeownership market, and a newly released 2014 State of Hispanic Homeownership Report found that 320,000 new Hispanic households were formed last […]
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Article: Business Strategy: Understanding Tech for Agent Adoption

Nov 26, 2013 by

realtrends_understand-tech-agent-adoptionOver the past 12 years, I’ve looked behind the curtain of many brokerages and spearheaded countless tech innovations and developments. One thing remains constant: If your agents don’t see value in the technology and adopt it, your efforts and money are essentially wasted.

Training and effective roll-out strategies are crucial for adoption, but there’s a critical early step that is often overlooked. This step will determine whether your idea translates into a brilliant and useful tool or serves as just another bell and whistle that sounds great at conferences.

You must ask:

“Do your agents know they want or need this technology?”

The most successful technology ideas I’ve seen implemented haven’t come from industry blogs or innovative conference speakers. These ideas have come from within the organization, directly from the agents, and focus on helping them do MORE transactions in LESS time. Unfortunately, in many cases, the brokerage doesn’t consult its sales force.

You must engage your agents to evaluate their current needs, then use these findings to understand exactly what technology can help overcome these challenges. Doing[…]

Tagged: Broker Tech Products Business Planning Strategic Planning

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