Making the Most of Employee Resource Groups (ERGs)

How Workplace Communities Can Drive Business Success

Making the Most of Employee Resource Groups (ERGs) - How Workplace Communities Can Drive Business Su

Bringing "all of yourself" to work can boost productivity and engagement.

Do you have a fresh perspective or outlook that could help your organization to achieve its goals or improve its working practices? Are you looking for a network of people with whom you can be fully yourself, with a shared identity or life experience?

If you can answer "yes" to both questions, and you know co-workers who feel the same way, setting up an Employee Resource Group (ERG) could provide a positive influence within your company, and boost your own job satisfaction.

Employee Resource Groups, sometimes known as affinity or business resource groups, provide a forum for people with shared interests or experiences to meet, discuss and act on the issues that are important to them.

They are a popular way to promote diversity and inclusion in larger companies, and they can offer tangible business benefits. Household names such as Ford, Walmart and Microsoft (and even the CIA!) have ERGs.

But they can also present risks for employees and employers. In this article, we explore the pros and cons of ERGs, to help you to decide whether they'd be beneficial or appropriate for you and your organization.

Note:

We will refer to Employee Resource Groups throughout this article as ERGs. The term should not be confused with Alderfer's ERG Theory.

What Are Employee Resource Groups?

ERGs are voluntary, employee-led groups that participate in a range of business activities, such as:

  • Supporting workplace diversity and inclusion.
  • Helping with staff acquisition, retention and development.
  • Providing insights for marketing, product development and brand engagement.

They are not just social groups, or places to "let off steam." They are defined by the mutual interests of their members, or a shared demographic. For example, common factors can include race, ethnicity, gender, sexuality, age, ability, religion, military service, parenthood, and remote working.

ERGs can also be organized around a particular function within a company – sales or engineering, for example – or a shared concern, such as health or the environment.

ERGs are usually found in large organizations with a high number of employees (90 percent of Fortune 500 companies have ERGs). In 2011, a Mercer report found that 8.5 percent of employees in the U.S. belonged to one or more ERGs.

The Benefits of ERGs

People often join ERGs to grow in self-confidence and to gain a sense of community. ERGs are a powerful tool for delivering The GIVE Model, which includes encouraging employees to integrate their various identities, and to give and receive mutual esteem. ("GIVE" stands for Growing, Integrated, Virtuous, Esteemed.) This helps people to be themselves at work, resulting in improved loyalty, trust and performance.

A positive and active (as opposed to "activist") ERG can offer numerous benefits to organizations, too. For example:

  • Better employee engagement. Research by Theresa M. Welbourne and Lacey Leone McLaughlin, of the Center for Effective Organizations at the University of Southern California, found that "ERG membership provides employees with a more engaging and fulfilling work experience."
  • Improved performance and talent attraction/retention. Studies show that organizations with a diverse workforce perform better than their less diverse competitors, because the best people are attracted to companies that celebrate diversity.

    Some employers highlight their support for ERGs in job descriptions, to help them to recruit the best talent. This leads to improved performance. As leadership expert Glenn Llopis says, "Cultural competence is a business imperative that can no longer be ignored." Our article, Managing Mutual Acceptance in Your Team, explores this further.

  • Better workplace relationships. ERGs offer opportunities for networking and for your team members to make high-quality connections with colleagues from different parts of the organization.
  • Greater Innovation. ERGs can act as think tanks to develop fresh ideas inspired by their members' shared experiences. For example, the car giant Ford benefits from design and development insights from one of its numerous ERGs, Ford Employees Dealing with disAbilities (FEDA).
  • Better reputation. Your ERG can forge connections outside the organization, to promote awareness of and support for important issues. This can benefit your organization's reputation, and demonstrate its corporate social responsibility. For example, in 2016, Walmart PRIDE, the retailer's LGBT group, secured a grant to the Northwest Arkansas Center for Equality, to support HIV/AIDS prevention and education for homeless people.

Warning:

However you organize your ERG, you need to ensure that it will have a positive effect on your organization. If it becomes an "activist" group, or a "thorn in the side" of senior managers, you can expect it to be shut down quite quickly. What's more, in some companies, participation in such a group may be harmful to your career, so take care.

ERGs and the Law

Before you set up ERGs in your company, be aware of the legal considerations, particularly those around discrimination and labor laws.

Discrimination

It's important that people in your company don't feel discriminated against because they are not a member of an ERG. According to the Illinois State Bar Association, "Employee resource groups have the potential to serve as evidence of discrimination against non-member employees, and therefore might serve as proof of a Title VII violation."

In the U.S., Title VII forbids discrimination "because of an individual's race, color, religion, sex, or national origin." This means that, if your company allows an ERG to be formed in one class that is protected under Title VII (race, color, religion, sex, or national origin), it must extend the same rights to everyone else in the same class. For example, if a company allows an Hispanic ERG, it cannot stop its Chinese employees from forming one.

Companies in the U.S. can, however, prohibit all groups in a particular class from forming ERGs, provided that the ban applies equally to all groups within that class. For example, it would not be discriminatory to prohibit a Christian employee network, if the company policy also applied to all other religious groups.

Note:

In the U.K., anti-discrimination law is covered by the Equality Act 2010, which says it is unlawful to discriminate, directly or indirectly, against people on account of their age, disability, gender reassignment, marriage or civil partnership, pregnancy and maternity, race, religion or belief, sex, and sexual orientation.

Labor Law

It's also vital that companies maintain the distinction between Employee Resource Groups and labor organizations, such as unions or work councils.

Unions and work councils deal with an organization's management on issues ranging from individual grievances and disciplinary matters to collective bargaining on pay and conditions.

If an ERG deals with management on any of these issues, it may fall foul of labor legislation. This is because, in the U.S., the National Labor Relations Act deems it an unfair practice for an employer to "dominate or interfere with the formation or administration of any labor organization or contribute financial or other support to it."

Warning:

Labor, or employment, and discrimination law is complex and varies between different territories. If you are in any doubt about the legal status of a group within your company, or are involved in a dispute, seek professional legal advice.

Best Practices For ERGs

To make sure that ERGs do not create tensions within your company – conflict between groups with opposing interests, for example – or become a distraction from the business at hand, consider the following guidelines.

Have Clear Policies

Before allowing ERGs to form, your company should have clear, documented policies that govern their behavior. These should include:

  • What types of group will and will not be permitted.
  • The process by which an ERG will be recognized, and whether this will be reviewed periodically.
  • Reasons why a group may lose recognition.
  • How the company will support the ERG, and whether this will include financial support.
  • Whether employees can spend time on ERGs during working hours and, if so, how much time.

Establish a Clear Business Objective

ERGs are not pressure groups – they must be aligned with the company's business goals, values and objectives. Groups should provide a written statement of intent that reflects this alignment, and clearly states their purpose. For example, their aims can include providing assistance with training, or helping with community outreach or marketing. They should also document their own procedures, and how they will be structured and organized.

Your company's policy on ERGs may also require them to have an executive sponsor, who can help to ensure that its activities follow the company's guidelines.

Make ERGs Open to All

In addition to the legal considerations outlined above, there is a risk that ERGs could leave your company open to accusations of favoritism or preferential treatment from those who feel excluded. To prevent this, make it clear that all ERGs in your company are open to everyone.

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U.S.-based employment law specialist Campbell Litigation points out in a company blog: "Requiring affinity groups to be open to all interested employees should not alter the group's objectives. For example, men may dominate the membership in the Women's Affinity Group, but the group's objective – to recruit and retain business women – will not change just because there are more men attending the group meetings."

Be Transparent

ERGs should benefit your whole organization, and should not be run, or appear to be run, as "secret societies."

Groups should make their mission statements and agendas available to everyone. Their goals should be measurable, their progress noted, and their activities and achievements publicized on the company's notice boards and social media. The group's meetings and social activities should be open to all.

How to Set Up an ERG

If you think that an ERG would benefit your organization, here are some ideas on how to set one up.

  1. First, identify the issues that you want to address, and the positive impact that your group could make on your organization. Make sure that your group has a valid and achievable business objective. Our article, How to Write a Business Case, can help you to express this to the rest of the company.
  2. Ask your HR department whether your company already has a policy on ERGs. If it does, follow those rules to establish your new group. If there is no existing policy, seek advice about creating one.
  3. Write a mission statement for your ERG. What group and business activity will it promote? The Microsoft ERG HOLA defines its vision as, "To educate and connect Microsoft to the Latino/Hispanic communities and enable the company's mission within the global Latino/Hispanic communities to realize their full potential."
  4. Look for an executive sponsor or advocate within your company, who can offer support and act as a bridge between your group and senior managers. Your sponsor should be someone who's sympathetic to your goals but not necessarily a member of your group.
  5. Decide how your group will work in practice: who will run it, where and how often you will meet, and so on. This may be dictated by your company's ERG policy, if it has one.
  6. Create a budget. You will likely need funding to achieve your objectives. Some companies will allocate resources for ERGs, but be prepared to negotiate.

Key Points

Employee Resource Groups (ERGs) are voluntary organizations based on employees' shared identities, interests and experiences. They are not pressure groups or labor unions; their goals are aligned with those of their parent companies.

Their aim should be to support people in their growth, performance and sense of community, and to help an organization to achieve its goals.

ERGs can foster diversity and inclusion in the workplace, assist with recruitment and retention, and encourage innovation. But they risk being shut down if they are not run well, or don't have a positive impact on the organization.

Be sure you have the right policies in place and are aware of the legal considerations, particularly with regard to discrimination, before allowing or setting up an ERG. Then you can avoid conflict, mitigate risks, and enable people to flourish, to the mutual benefit of them and the business.