As part of the survey that launched the 2012-2016 NMSDC Strategic Plan, a recommendation was made to restructure the current network model of 36 Affiliate Regional Councils to provide better service to NMSDC corporate members and certified minority business enterprises. At its January 2013 Quarterly meeting, the Council Presidents collaborated to create a new Council map with fewer councils. These changes were presented to the Executive Committee of the NMSDC Board of Directors in March and approved. Below is a list of Frequently Asked Questions that provide insight into the strategic restructuring.
Frequently Asked Questions – NMSDC Network Strategic Restructuring
1 – Why restructure the network?
A strategic restructuring was among the recommendations made by one of the strategic planning teams as part of the strategic planning process. Our corporate members and certified minority business enterprises (MBEs) stated that the current network structure impeded effective delivery of programs and services. The restructuring will create an affiliate model that is “Glocal,” meaning that the network will be global in scale and scope while also being able to address local issues. The new network will be more efficient and effective in serving NMSDC’s constituents.
2 – What is driving the strategic restructuring?
Several sources of data, including historical data from triennial studies conducted by an independent consulting firm dating back to 2005, regularly collected business performance data submitted by Regional Councils and U.S. government macro-economic data, suggested challenges with the current affiliate structure, primarily in the areas of MBE certification and corporate member recruitment –areas critical to the success of the organization. The solution is to create a new network that ADDRESSES the current and future economic and market conditions while delivering on NMSDC’s mission.
3 – What is the goal of the restructuring?
The goal of the strategic restructuring is to create an affiliate model that improves the efficiency and cost effectiveness of the network as it relates to delivering on the mission—advancing business opportunities for certified Asian, Black, Hispanic and Native American businesses and connecting them to corporate members. The restructured affiliate model will offer improved, standardized service to corporate members and MBEs; create equalized, empowered and better-resourced Councils; and result in a stronger national network and a network that is resourced to focus on growth.
4 – How many affiliates will comprise the network after the restructuring is completed?
The number of councils was determined at a meeting of network leaders in January 2013. At that meeting, board chairs and affiliate council presidents, working with market and demographic data, created a new national affiliate map. This new map has 24 councils, but the number of councils is not as important as creating council areas that are able to deliver on stakeholder expectations and the NMSDC mission. Macro-economic data, including the number of minority employers; geographic disbursement of MBEs and corporations; percentage of growth in the U.S. Gross Domestic Product (GDP); percentage of the area’s contribution to the U.S. GDP; and market penetration were all evaluated to determine the best areas of the country to maximize corporate and MBE participation in the NMSDC Network.
5 – What major changes will the strategic restructuring yield?
As part of the structure, the national office is also looking at a new "go to market" strategy. Under this strategy, NMSDC-certified MBEs will no longer be required to have reciprocal certifications. In addition, service points will be eliminated. Under the restructuring, an MBE must still be certified by the council located nearest its headquarters, but its certification will be recognized nationally. The elimination of service points will help strengthen relationships between corporate members and councils and improve levels of service provision on a national basis.
6 – When will the restructuring be completed?
The restructure will be completed and operational starting in January 2014. Councils affected by the new map will develop individual restructuring plans, NMSDC will analyze and define new fee structure guidelines to be applied consistently across the network, and a new performance evaluation model will be defined to ensure the new network structure operates at optimum capacity to serve NMSDC corporate members and NMSDC-certified MBEs.
7 – How will the restructuring affect employment across the network?
The restructuring is designed to spread our collective talent across the new network structure. An enterprise model that ensures that each resulting Council is staffed in key functional areas will be implemented. It is expected that all staff – administrative assistants, certification specialists, and affiliate presidents – will recast themselves in new roles that allow them to continue to contribute their values, knowledge and skills to the betterment of the entire NMSDC network.
8 – How will Councils be serviced by Councils that represent core industry sectors that are not properly aligned?
The strategic restructuring is not based on core industry sector alignment, although that alignment is one of the factors taken into consideration. It is based on geography and the need to create service areas that were “equivalent,” or “equal, but not the same.” That means a more balanced approach to creating opportunities for members, across industry sectors, to use certified MBEs and a focus on growth in contract volume for MBEs in their respective industries. The restructuring will add value for every member because the affiliate council will be better staffed and resourced to provide services.
9 – How will the current Council leadership be utilized during the consolidation process?
Each current affiliate board chairperson and president was provided with a four-piece toolkit to guide them through the strategic restructuring. Part I of the toolkit is designed to help affiliate leadership begin the assessment and readiness process. Part II will help begin the merger negotiations process, in which the combined board will make determinations on what structure is best for executing agreed-upon plans for providing continual service to corporate members and certified MBEs. Decision-making regarding how the Council leadership will move the process forward begins with the board of directors, and the affiliate presidents are encouraged to participate in the process.
10 – What is the expectation of companies to support events outside of their state and outside of their core industries? Additionally, will corporations with no industry sectors in a given state be willing to fund development activities for which they have no stake, in terms of core sectors?
There is no expectation of companies to support any activity that does not meet the objectives of their minority supplier development process or supplier diversity initiatives. Today, there are affiliates with members who have local economic interests but fund activities through their membership that benefit all constituents. The Greater New England Minority Supplier Development Council is one example.
11 – If corporate members continue to support the new organization, how will funds be allocated?
A new funding model will be implemented that will make funding partially guaranteed and partially based on performance. A pricing analysis is underway to review revenue impact and to ensure that adequate funding is available to support the new network structure.
12 – What priority should corporate members and the minority business community in the revised region, and throughout the service area, expect from the new organization?
Corporate members should expect a high priority to be given to service delivery because there will be a greater emphasis on providing a national scope of service to members and MBEs, while also tailoring to local needs. Additionally, priority will be given to standardized and effective programs, services and pricing; expanded access for MBEs to corporate members, resulting in higher contract volume; a standardized, stronger brand and better working relations across the network and with the National Office; a reduced cost of operation; and a more financially stable organization driving local member procurement opportunities for MBEs.
13 – What are the concerns about the restructuring and how do we make sure local corporate members understand that they will not lose benefits with this new model?
Our local members are very tied to the programs and offerings that are available at their local council. Our goal in looking at programming, though, is to be able to drive more programs from the national level down to the local level where that’s appropriate. Part of that is looking at what services we offer today vs. what services we’re going to offer going forward. Is it appropriate for those to be offered at the local level and, if so, how will that be done? Our goal is to make sure that we truly embrace and engage our local corporate members because service offerings at the local level play a vital role in making sure that our local corporate members are fully engaged with their minority suppliers as well.
14 – Is the strategic plan only defining existing services or is there going to be a discussion around new services?
The strategic plan had an implementation team that looked at targeted services and expanded offerings. That team has been rolled into the program committee and the program department at the national office. That committee will continue to analyze program offerings. The committee will also identify new programs, new training partners with respect to content and new training partners with respect to delivery of content. This is an ongoing process that we will continue to engage because we want to make sure that we’re always bringing our corporate members and certified MBEs the best programming that is available.
15 – Will corporate membership dues will increase or decrease due to the restructuring?
Accenture – our consulting partner on the strategic plan – analyzed some data and presented a preliminary report. It is likely that membership will increase across the board, given that there has not been an increase in dues since 2002. The increase will be accompanied by increased marketing efforts and more outreach to local and national corporate. We don’t expect to see a significant reduction in the number of members as a result of the restructure. We actually expect to see a slight increase because of the alignment, the improved platform, more standardized delivery of services and new services that will begin coming online this summer.
16 – What plans or procedures are in place or are being considered for situations where a local council decides it is not in their best interest to participate in consolidation?
NMSDC is not ceding any of its council areas or service areas at this point. Those councils that make a decision not to support NMSDC’s mission will not be participating in the consolidation. However, NMSDC will have a presence in every area that is outlined in the restructured council map. The current entity may no longer be the council that is serving that particular area but NMSDC is not ceding any of its territory at this time. We think it’s important that all of our certified MBEs and all of our corporate members, whether they are national or local, have the opportunity to have access to truly certified MBES, and that those MBEs deserve opportunities in as broad a geographical swath as they’re able to handle.
17 – Will the new restructured organization result in one NMSDC certification as opposed to multiple regional certifications, and will onlin certifications be available for MBEs?
Yes and yes. NMSDC received significant feedback from MBEs that they are tired of paying reciprocal fees, so we have eliminated the need for MBEs to get reciprocal certification in other councils. To replace or offset some of the revenue lost from reciprocity, NMSDC is recommending that councils institute subscription services. So, for example, think of an organization like AAA (American Automobile Association) and selecting options for a bundle of services. You may select the big package that gives you everything or you might decide that on one car you want to have tow service in addition to lockout service. The MBEs as customer would have the flexibility to choose the councils and subscriptions that meet their needs. We’re going to ask that councils explore subscription services as a way to replace some of the revenue lost to reciprocal certification. In answer to the second part of the question, NMSDC is implementing on a portal project to enable online certification. There are a few councils that need to be fully integrated into the new affiliate portals, and we are working on that as well.
18 – What is the impact of the strategic restructuring on those councils that are not consolidating? Will there be a process to ensure alignment with the new network and to ensure that the current leadership staff has synergy with the new guidelines and direction?
The restructuring affects the entire network. It is a call to action and a call for the entire network to "step up its game". It doesn’t matter whether a council's geographic footprint changed. The new model, the new performance metrics and the new funding model are going to affect all of the councils, all of NMSDC's corporate members and MBESs. We are changing our culture, including how we operate, how we interact with our stakeholders and finally how we deliver on the organization's mission.
19 – What are the benefits of the strategic restructuring to corporate members and MBEs?
The goal of the restructuring is to create a stronger, more efficient and effective network. That means when the NMSDC program department receives a request, it can deliver across the network. If the technology team receives a request, it should be able to deliver a standardized, consistent product across and through the network. It is our goal to make sure that whether you’re an MBE or a corporate member, you have better programming, better delivery, better coverage, innovative products and services. So the whole purpose of this network restructuring was do things differently for the benefit of our stakeholders. That includes looking at things like partnering with academic institutions to offer content, or creating a resource list that says ‘okay, I want to grow from a $5 million business to a $20 million business.’ Well, here’s your pathway to success. We are trying to standardize those pathways for both our corporate members and our MBEs.