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Best of Liz Benston

Gaming Guru

Liz Benston

Boyd: Diversity Numbers Good for Small Company

30 June 2005

LAS VEGAS -- Following a lead taken by industry giant MGM Mirage, Boyd Gaming Corp. has for the first time released statistics on minority hiring and purchasing and will unveil an online registry and a supplier system designed to give small companies a better shot at company contracts.

"This is about partnering with (vendors) to help them grow," Boyd Vice President of Strategic Sourcing Rick Darnold said. "We don't just want to throw money at this."

Boyd began the process of creating a formalized diversity program in 2003 but has only recently gathered data on minorities to allow executives to monitor the company's progress. Property managers and corporate executives will soon receive monthly reports that break down minority hiring and spending by property, state and companywide.

The company opened Atlantic City's first resort in more than 13 years and more than doubled its workforce last year when it acquired the local Coast Casinos chain. Boyd, with nearly 27,200 employees, is now the country's third largest casino company.

"There is more pressure when you're a bigger company" to create a formal diversity program, Boyd Vice Chairman Marianne Boyd Johnson said. "We felt it was time because we'd grown so much." The company hasn't received any criticism for its diversity efforts, said Johnson, the daughter of Chief Executive Bill Boyd and the chair of the company's corporate diversity council.

Boyd Gaming expects to release an annual diversity report to document the company's progress, similar to what competitor MGM Mirage has done for the past three years. Boyd's latest figures are for 2004.

Of all Boyd employees, 49 percent were minorities compared with 54 percent at MGM Mirage. Of the total, 19 percent were Hispanic, 17 percent were black and 14 percent were Asian. Of management-level employees, 24 percent were minorities. That compares with 31 percent at MGM Mirage, though the company recently said that number had declined to 29 percent with the Mandalay Resort Group acquisition. Including women in the management total, 54 percent of managers were minorities or women last year. MGM Mirage doesn't include women in its statistic on minority managers but said 44 percent of its managers were women.

"We're proud of our numbers," Johnson said. "We've done well for a small company."

Publishing the numbers is important because "if you don't tell the public they think you're hiding something," she said.

The program is designed to formalize a corporate philosophy that began with company founder Sam Boyd, she said.

Johnson said her grandfather, when he ran the former Mint casino downtown in the 1960s, was one of the first managers to hire women and blacks as dealers.

"We just want to hire the best person for the job," she said. Having a diverse workforce "makes people feel more comfortable and that trickles down to our customer."

Boyd is creating property-level diversity committees that will report to a corporate diversity council created in 2003 to advise executives. The company recently hired Economic Development Manager Dennis Daniel from MGM Mirage to network with suppliers and host events such as minority vendor fairs.

A key feature of the diversity program is a new procedure that will launch August 1 with an online registry for all of Boyd's 8,000 or so suppliers. The site will link from Boyd's home page and collect more detail on suppliers such as sales volume and products sold. The company also will require minority- or women-owned businesses to submit proof of certification, including uploaded images of certification documents.

"We're looking out for shell companies," said Darnold, a former finance manager who was appointed into his position a year and a half ago. "We're not going to fall into that trap."

Darnold said collecting more information on suppliers and centralizing the data will end up saving the company money in the long run because it will make the distribution chain more efficient.

The program also aims to match up national suppliers with small, local suppliers. National contracts typically yield lower prices than smaller, piecemeal contracts but local distributors are still needed to move products to the casinos and often provide better service than national chains, Darnold said.

The local distributors can get better product pricing from Boyd than they could on their own and sell product to Boyd at a markup, he said.

Bundling suppliers in the distribution chain is a fair system as opposed to seeking out minority vendors that are more expensive and accepting the difference as a cost of doing business, he said.

The system is aimed at helping small businesses grow rather than "buying the cheapest product," he added.

Nevada Minority Business Council President Dianne Fontes called the purchasing process "bundling" and said it's not unique in corporate America but is fairly new to the casino industry.

"They are coming out of the gate doing it the right way," Fontes said of Boyd's purchasing program. "I think it's extremely forward-thinking and will be a major practice down the road" as gaming companies grow from national to international giants, Fontes said.

The process allows smaller companies -- many of which are minority- or women-owned -- to get their foot in the door, she said.

"It's a better fit than just using one company in Las Vegas that just does business here and can't work in Louisiana or Mississippi because they're too small."

Diversity became a hot-button industry issue in 2000 when MGM Grand bought Mirage Resorts, then the biggest acquisition in the casino business. The National Association for the Advancement of Colored People criticized MGM Grand for having a less aggressive diversity program than Mirage and prompted greater scrutiny from regulators and community leaders.

MGM Mirage has since received accolades from the NAACP and became the first gaming company to formalize a diversity initiative. The company began compiling and releasing employment and purchasing statistics in 2002 and has also initiated programs to help minority companies obtain certifications and apply for contracts.