Employee Resource Groups (ERGs) have evolved beyond their original purpose of providing a safe space and community for underrepresented groups – they are now embedded in core business outcomes. ERGs have come a long way from being supportive social networks, to think tanks that can actually guide business strategy in concrete ways.
Today, 90% of Fortune 500 companies have ERGs and about 8.5% of employees in US-based companies belong to ERGs (this number drops to 4.3% in organizations headquartered outside the US). Despite forecasts that ERGs would decrease in popularity as the American workforce became more diverse, engagement with ERGs continues to grow, especially among millennial employees.
Companies typically allocate, on average, 1.4 full-time employees to manage an ERG. There isn’t really a typical amount of budget that companies spend on ERGs – it can be anywhere from $150 to $37,000 per 100 members. The average annual budget is $7,203 per 100 members, with multiple sources of funding including D&I offices and HR. The takeaway here is that there isn’t necessarily a right “formula” for structuring ERGs – it really takes a deeper understanding of one’s own capabilities, objectives, and vision, as well as some trial and error, to get it right.
While it may seem tough to get started, especially with companies at the early stage and with fewer numbers, the benefits to establishing a solid ERG structure are significant:
- Ensure employees have an opportunity to be heard, valued and engaged. This may seem like a basic principle, but ERGs really have the capacity to elevate the voices of employees who may often be overlooked. By providing this platform to connect and advance initiatives, leadership can have a better understanding of employees’ needs and wants.
- Gain a better understanding of who their customers are. More than 70 percent of the companies in a SHRM study relied on their ERGs to build a workforce that reflected the demographics of their customer base. By empowering ERGs to recruit a wider demographic base, companies can better connect to an increasingly more diverse market.
- Get insight on business performance. ERGs can be a great avenue to solving some key challenges in the workforce, such as recruiting practices and leadership development. By engaging employees in these initiatives, companies can better gage areas of opportunity in operations.
- Provide employees the opportunity to problem-solve, innovate, and develop, regardless of seniority or status. By offering channels by which to engage in company issues, ranging from product development to marketing, ERGs allow members to advance their skill-sets in engaging problems beyond their day jobs.
The list of key advantages not only to a diversity and inclusion strategy, but also business goals, goes on and on. So how do companies approach the project? Here are some best practices when doing thinking about your ERGs:
- Start with executive sponsorship. Have senior executives lead and participate in the planning of the ERG in order to more effectively recruit members and ensure longevity into new generations. Also think beyond executive support to stakeholder support, ensuring a broad array of people in the company buy into the vision.
- Define the value proposition and performance metrics. From the get-go, it’s important to structure ERGs for success with internal goals such as increasing diverse leadership and external goals like promoting the company in diverse markets. These goals help not only in allocating resources to necessary objectives, but also moving the ERGs to becoming capable of impacting business in a tangible way.
- Become thought leaders. Listen to members of ERGs in order to fuel business intelligence, innovation, and growth.
- Promote cross-collaboration. Ensure that all of the ERGs collaborate across the organization and do not stay within silos. This will facilitate best practice sharing and help strengthen the evolution of ERGs.
- Encourage D&I champions. Recognize that ERGs and senior leaders are not the only ones responsible for promoting D&I—advocates have to be spread throughout the organization in order to integrate initiatives. Not only will champions be an essential part in the direction of the ERG, but they are vital in carrying out the extensive operations that go into coordinating events, workshops, and more.
- Invest in resources. To help ensure that ERGs are prepared to partner effectively for achieving business goals, resources must be allocated to grow the skill-sets, competencies, and networks of these groups.
- Incentivize participation. Make sure that strong ERG performers are regularly included in talent reviews, as well as intentionally developed. One option is to explore including ‘‘diversity and inclusion” competencies in performance review criteria. This type of corporate citizenship metric would encourage further participation and engagement within ERGs to advance business objectives and reward employees.
There’s also some things to keep in mind when initiating planning around ERGs.
- There’s a sensitive nature to ERGs. It’s often difficult to start the conversation around building resource groups.Approach the conversation with a business context in mind and why this is a need to ensure a quality employee experience.
- Does the workplace culture work for ERGs? Is the organizational culture one that encourages the full contributions of all kinds of talent, specifically the kind of talent that participates and leads ERGs? Make sure your company is ready to take on the task of structuring ERGs with a culture that facilitates it.
- Don’t limit participation. ERGs that limit their membership and participation to individuals representing a single, specific dimension of diversity are simply preaching to the choir, and largely fail to be inclusive.
- Consider intersectionality. Some individuals find that their identity cannot be defined within the ERG approach and are calling for intersectionality as a better way to understand inclusion. Millennials are more and more rejecting the idea of becoming defined by one dimension, so companies will need to take ERGs to the next step and address the plurality of identities that can define us.
Employee Resource Groups have come a long way and are continuously evolving. Given that millennials will comprise over 50% of the workforce in the next 4 years, and are more actively participating in ERGs, companies will need to constantly modernize how their resource groups are structured.
It’s this dynamic nature of how ERGs evolve that makes them so effective and important in how companies carry out their diversity & inclusion strategy, what should be an integral part of their overall strategy today. Because of this, it’s important to have a responsive strategy to developing ERGs, iterating and improving along the way.
Looking to leverage tech to better manage your ERGs? Schedule a demo with Five to Nine, a platform that makes it easy to track and measure your resource groups.