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Improving the social value of Indigenous procurement policies

RPS’ senior social advisory and research consultant, Dr George Denny-Smith recently completed his PhD thesis titled The social value of Indigenous procurement policies in the Australian construction industry. Here, George provides an overview of his research.

04 July 2023
George Denny-Smith

Asia Pacific

Australia

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Businesses and corporations have done a good job at embracing the terminology of inclusion, social responsibility and ESG (environmental, social and governance). You’ll rarely find a corporate website without such wording and references to the company’s commitment or policies covering these important ideals.

But how effective are their policies? What impact are they having and are they being measured?

Right now, businesses are increasingly talking about implementing procurement or purchasing policies to benefit First Nations communities – often called Indigenous procurement policies (IPPs).

This is a very positive step and a market-based approach to addressing inequities. But my research shows there’s room for improvement if we are to truly empower First Nations communities through procurement practices.

Planning and measurement key to policy success

For IPPs to translate to meaningful outcomes – there needs to be a clear plan from the beginning. What became apparent in my research with First Nations employees in the construction industry is that policy initiatives often don’t have the rigour or frameworks to support their implementation. This means the policies may not target the right outcomes – or include the right processes to have a meaningful impact.

Policies tend to be designed from the top, and evaluation viewed more as an afterthought.

Aerial view of a construction site

On both fronts this is a problem. Firstly, monitoring and evaluation of policies must underpin the program and policy design. And - as is well documented - top-down policies rarely see meaningful benefits for the recipients or key stakeholders – in this case the First Nations businesses, communities and workers involved in the procurement process.

Mechanisms for implementation must also be part of the planning process. Questions like: how will the policy be implemented, who will be responsible for its management, who will need training and how will the policy be communicated to employees? All important questions that need to be addressed up front.

First Nations engagement

As expected with top-down policies, my study found First Nations people were often excluded from the policy design process as well as the implementation and evaluation of the procurement programs and policies.

Without engagement, there cannot be meaningful social outcomes and long-term economic benefits. It needs to be an ongoing conversation – especially when establishing new practices and developing new partnerships.

This can be fixed by creating clear guidelines at the outset – guidelines that stipulate engagement across the policy lifecycle – creation, implementation, and evaluation.

First steps might include researching First Nations businesses that are suited or provide services that the hiring company needs. Other processes could include documenting how procurement and engagement might work across the business. If work is conducted in multiple locations, it’s good to consider how policies function and/or are practical in different settings. It’s also important to provide training and education where policies or procedures are changing and to communicate the benefits of IPPs and Indigenous employment to all employees.

Partnerships and collaboration are critical for this. Without partnerships businesses miss the opportunity to learn what works and what doesn’t. Partnerships are an enabling factor that reciprocate the benefits of Indigenous procurement. First Nations businesses can use them to achieve their own business goals while non-Indigenous businesses learn to improve their own processes and systems.

Two people shaking hands on a construction site. AdobeStock

Agreement on definitions

Another challenge to implementing IPPs is associated with how social value is conceptualised and defined, and how it may be realised.

It’s important to say, there isn’t one definition – in fact, it’s important that the definition is flexible so it can reflect individual policies and reflect feedback and input from First Nations businesses and employees.

My studies found that social value is likely to be created for First Nations construction workers when employers provide a mix of ‘work benefits’ like pay, training and career development pathways, alongside ‘culture benefits’ like culturally supportive workplaces.

Further improvements could also be found by having a broader definition of outcomes. Instead of narrow economic and contract-based targets, outcomes can include improved collaboration between contractors and procurement officers and address existing preconceptions about Indigenous businesses in the construction industry and government, among others.

In practice

To change behaviour and policies to improve economic and social outcomes, there must be meaningful, two-way engagement from employer and recipient. If this doesn’t happen, IPPs could continue to marginalise the Indigenous communities they are designed for.

At RPS, we’re applying my research by helping clients to develop, implement and monitor their own Indigenous or social procurement initiatives. We do this by working with clients to understand the needs and aspirations of local communities to develop place-based strategies that build sustainable social legacies and align Indigenous and social procurement requirements with companies’ objectives. We work to embed social value practices in the planning and pre-delivery to set projects up for success.

We’re also implementing IPPs within RPS’ business. We have internal systems in place to continue to develop and improve policies and engagement through our own Indigenous Engagement Advisor, First Nations People and Communities working group and partnerships with a range of Indigenous non-profit, community and business groups.

IPPs work extremely well to create social value when implemented effectively. Businesses need to ensure they have the internal readiness to develop and implement their own Indigenous procurement strategies. When they are ready, implementation needs to be collaborative to make sure there is no ‘mission drift’ and that evaluation informs continual learning and improvement.