National Magazine Highlights SDG&E's Diversity Success
Editor's Note: Our President, Scott Drury, recently sat down with Public Utilities Fortnightly for a conversation about SDG&E’s success in working with and hiring diverse contractors, and our efforts to grow the ranks of capable, small contractors who eventually become prime contractors. The article below was originally published in the May 2018 issue of Public Utilities Fortnightly (www.fortnightly.com). Permission to republish this article has been granted by the publisher.
Author Bio: Scott Drury is president of San Diego Gas & Electric (SDG&E), one of Sempra Energy’s regulated California utilities. Under Drury’s leadership, SDG&E is responsible for the safe and reliable delivery of clean natural gas and electricity to 3.6 million consumers in San Diego and southern Orange County. He has more than three decades of experience in the energy industry.
PUF's Steve Mitnick: Scott, you're the president of San Diego Gas & Electric. What do you do on a typical day?
Scott Drury: It's a great job. I have the privilege of leading an organization of a little over four thousand amazing people. My job, primarily, is to establish the priorities for the organization, and support and develop our team in achieving those priorities.
One of the things that we think is very important is aligning the priorities of our organization with the policy direction of the state, and the priorities of our regulators. And doing that in a way that allows us to make beneficial improvements in our communities, in a way that is good for all stakeholders.
PUF: In diversity spend, which is an important topic in California, what are some of the developments here at San Diego Gas & Electric in recent years?
Scott Drury: Diversity and inclusion are fundamental components of San Diego Gas & Electric's DNA, and our work in supplier diversity goes back decades. Our performance is among the strongest in the country, and I'll give you a little context for that. In 2017, our company spent seven hundred three million dollars with diverse suppliers, and that was more than forty-four percent of our total procurement.
PUF: That's a very large number.
Scott Drury: That's the highest level of spending with diverse suppliers in our company history, and it's the fifth consecutive year that we've been over forty percent.
PUF: That's a very high percentage, because some companies are trying to aim to get to twenty percent or somewhere in the teens. How did it get that high?
Scott Drury: It is more than double the aspirational goal of the California Public Utilities Commission. That level of business performance is developed by engaging the entire organization, all the people that are responsible for specifications, and projects, and vendor selection, helping them understand how important it is for diverse suppliers to participate in the economic activity that our company drives.
We found that, beyond being something that's consistent with our values from a diversity inclusion perspective, it's really business-savvy. So, we have developed a broader pool of more competitive suppliers that improve our service and help us manage our costs.
PUF: In effect, there are more competitors. Was it difficult to get to this point?
Scott Drury: What it requires is a conscious, focused, deliberate effort. Not only working to identify diverse prime contractors, but looking at smaller suppliers and smaller contractors, and thinking about what their future capacity is.
Thinking about what you as an organization can do to help support their development through subcontracting opportunities or targeted capacity-building programs that you might engage in with them, so that you can grow them.
We've got many great success stories where smaller contractors, that were working for us in a subcontracting capacity, have grown to be very significant, very capable, very high quality, cost-effective prime contractors.
PUF: One thing I've heard is that you don't want to just spend money, but you'd like to make it sustainable, make these kinds of companies grow, if they can.
Scott Drury: Absolutely. It must be good for their business and good for our business.
PUF: You mentioned the subcontractors. When you work with big companies, do you ask them, "How are you spending your subcontracting dollars?"
Scott Drury: Absolutely. We bring that into the overall procurement process. So, when we look at a major procurement effort, we look at many dimensions. One of them is the opportunity for qualified subcontractors to participate in that procurement.
PUF: I've heard that people are trying to make sure the diversity spend is not just, say, for janitorial service or securities service. It should be at different levels. How have you thought about that?
Scott Drury: We have strong representation of diverse suppliers across every aspect of our supply chain.
PUF: Is that difficult to pull off?
Scott Drury: There are certain areas where there may be higher concentrations of diverse suppliers available to engage, and other areas where it requires a little bit more work, but again, it requires a deliberate, focused effort to go out and to do that.
PUF: You achieved a good level of diversity spend. Are you resting on your laurels? Or where does this go in the future, three to five years out?
Scott Drury: We're absolutely not resting on our laurels. This issue of diversity and inclusion, economic opportunity and participation is integrated into the fabric of our company. And this will continue to grow and develop.
We're investing in new technical assistance programs that are targeted at meeting the needs of emerging suppliers in the spaces that you referenced. We have a broad diversity ambassadors' program where we have one hundred fifty folks or so inside the organization who are responsible for helping us identify and develop suppliers in the area in which they're functionally responsible.
It's important for us to continue to grow the opportunities for subcontracting, and to grow subcontractors into future prime contractors.
PUF: What would you say to other companies around the country? How has this helped you? What's the secret sauce of what you did?
Scott Drury: Our experience is that expanding the economic opportunity for more suppliers, including diverse suppliers, is good for business. It creates more choice, more selection, more competition. It's just a good business practice.
We've also found by creating the opportunity for more businesses to participate within the communities that we serve, that they are engaged stakeholders in the things that are important to our business.
And lastly, it is something that our employees recognize and appreciate as one of the cultural attributes of our company, this idea of inclusiveness.