Employee Resource Groups: How to establish, maintain or refresh this business asset

By Bernard Bartilad, SVP, Commercial Banking

Tips for making the most of your Employee Resource Groups

Employee Resource Groups (ERGs) – sometimes referred to as Business Resource Groups – have been a staple of high-performing companies since the late 1960s. In their early years these “affinity groups” or “social networks,” as they were often called, gathered employees according to their identity, with an aim toward diversity, inclusion and equality. In its latest form the concept has expanded to include “think-tank type groups that directly impact business,” according to Forbes contributor Glenn Llopis. Today, 90% of Fortune 500 companies include ERGs as a benefit for their workforce and their businesses.

The business case for ERGs
Whether established, start-up or recently merged, companies in virtually every industry acknowledge the benefits derived from creating an environment that supports and encourages all employees – from management team to shop floor, from headquarters to on-the-road salesforce. Forming ERGs addresses that goal. As researchers at Cornell University found when they studied the increasingly diverse U.S. workforce, “These groups (ERGs) offer employees an opportunity to network, address common issues and concerns…and receive support from those who share similar backgrounds, experiences or interests.”

While membership in ERGs is voluntary – and often initiated by employees – long-term success requires support from senior management – from day one. That support could return significant value; it offers the members of the C-suite an opportunity to stay in close touch with all levels of the workforce and has the added benefit of potential alignment of the ERG’s mission with specific business goals.  

Making connections outside the company is high on the benefits list for many. “These ERGs are able to provide valuable information, ear to the ground information that is necessary for the organization to be successful in the communities we serve,” says a vice president of Talent Acquisition and Inclusion at a New England financial services firm. “Members of the employee network groups engage our communities externally and represent our employees internally—their voice and contributions are invaluable.”

As ERGs evolve, many companies are depending on them to be sources of fresh thinking and contributions to new product development. A good example comes from a company with a product line specially designed to serve the disabilities community. This U.S. car maker leverages one of its ERGs, whose members represent the disability community, as a built-in focus group. They provide input while the company develops and tests new products and advertising for customers with disabilities.

Recruiting and retaining Millennials
In an increasingly tight job market, particularly among some skill sets, many ERG members are being deployed on teams representing their company at job fairs or on recruiting trips. This role may be particularly effective when the hiring market includes Millennials.

A Pew Research Center report on Millennials says, “They are the most ethnically and racially diverse cohort of youth in the nation’s history.” According to a post by the New Talent Times, this could provide the answer to why 18- to 34-year-olds are more inclined to be interested in ERGs: their own diverse composition.

Interest in joining an ERG by age
Chart of interest in ERGs by age range

Source: New Talent Times

What about employees who work remotely?
There is no doubt that building a business with a remote workforce is an established practice across the nation and across industries. The benefits to the business are clear: reduced real estate costs and overhead, along with enhanced efficiency and productivity. But with the growing numbers of the nation’s workforce working remotely – now accounting for 43% of U.S. workers – fostering an inclusive company culture can be a challenge. Matt Krumrie, an employment industry reporter and writer, frames it this way: “Remote workers can have feelings of isolation – feeling different or even excluded, or considered less committed to the organization by virtue of not being physically present in an office.”

The solution for many companies with a remote workforce is an ERG designed specifically for that segment of their team. Research by Catalyst, a workplace consulting organization, shows that “Remote worker ERGs can help erase stereotypes and assumptions about remote workers – especially when both remote and non-remote employees participate. And, when remote workers feel included, they are more likely to feel a sense of team citizenship, which can lead them to generate new product ideas for their organizations, which ultimately fosters innovation.”

8 Tips for making ERGs an effective business asset
Like any business initiative, ERGs should deliver value across their lifespan. By leveraging these tips and turning ERGs into a continuous learning opportunity, this business asset can be optimized.

  1. Success starts at the top. Each ERG should have an executive sponsor who is active, informed and engaged.  
  2. Include mentors on the sponsorship team to encourage member participation and allow for the talents and potential of ERG members to be discovered, their voices heard and their career paths enhanced.
  3. Recognize and reward ERG members and leaders who make visible differences in the company culture or who contribute business-enhancing ideas.
  4. Each ERG should define its value proposition and establish performance metrics. As business management pioneer Peter Drucker is famous for advising, “What gets measured gets improved.”
  5. ERG members should be encouraged to become thought leaders whose voices and ideas are leveraged to build and support an inclusive environment.
  6. ERG membership should be voluntary and, while focused on groups defined by identities such as culture and abilities, opening membership of an ERG to employees outside the core group allows members to educate one another and foster cultural competency and diversity across the organization.
  7. Advertise and promote each ERG, both inside and outside the company. This not only helps attract employee members, but may also bring new talent to the company. 
  8. Utilize ERG members as company and brand ambassadors – to recruit new hires, establish and strengthen relationships with strategic partners, and be the company presence in their communities outside the workplace.

Whether your company is considering ERGs as a start-up for your employees or you are taking a fresh look at the contributions of established ERGs, it pays to get advice and hear from outside experts. Options include independent consulting firms, organizations such as The Society for Human Resource Management or The Association of ERGs & Councils that offer opportunities to hear from other corporate leaders and seminars, training and research to further your company’s ERG value-add.

The information in this article has been obtained from sources deemed reliable; however, we do not guarantee its accuracy. This information is not intended to be legal, investment or tax advice and should not be relied upon. MB Financial Bank, N.A. and its affiliates do not provide legal or tax advice. You should review your particular circumstances with your legal and tax advisors. Member FDIC.