Employee resource groups, or ERGs, are important to successful worker engagement. While they’re certainly not new their popularity has grown tremendously as companies try to improve recruitment and retain top talent in an increasingly complex business environment. In actuality, ERGs have been around since the 1960s in the U.S., originating when African American workers banded together for social networking, professional development, and other career-focused initiatives. It all began at Xerox with the formation of the Black Employee Caucus, under the sponsorship of CEO Joe Wilson. The initial program was such a success, that they went on to form similar groups specifically for women with the first being the Black Women’s Leadership Caucus.
Competitors also began to notice and by the 1970s Hewlitt Packard had created the first ERG specifically for Gay, Lesbian, and Bisexual people—you’ll probably note that we were still at a point when many transexual people were not fully included in these types of programs. We have to consider that this was quite daring for the era as there were no real state or federal laws to protect LGBTQ+ workers—a problem that still exists in many regions and countries worldwide.
What we now see is the widespread adoption of ERGs to improve the employee experience and keep workers engaged and satisfied with their employers. Today over 90% of F500 companies rely on ERGs, and even mid-sized and smaller businesses have caught on to the trend. And it looks like ERGs are here to stay.
The Business Case for ERGs
Why do so many companies rely on ERGs? The easy answer is that it’s just smart business with relatively low cost to create and manage while delivering a demonstrable and significant return on investment. For example, consider employee turnover and the associated costs for onboarding and training a new hire. Obviously, the goal is to develop a succession plan internally, and those next-gen leaders represent a major investment by any organizations—keeping them in the ranks and away from potential competitors just makes sense. Similarly, we know that a happy employee is generally a productive employee—so that represents yet another strong case for ERGs since employees who participate in them generally feel they have a greater stake in the company. There are reams of decades-long research to support the business case, but that’s not really necessary to illustrate the point since more workers are familiar with these affinity and business networks—and leaders are all onboard.
How ERGS Impact DEI and Change Management
Since the advent of Covid, we’ve seen another spike in the popularity of ERGs, one study in 2022 by Leanin.org and other groups, representing 423 organizations with more than 12 million employees s saw about a 35% increase in companies adding or expanding support for, and reliance on, ERGs. While the pandemic was a factor, it wasn’t the only one. Social justice movements in 2020 and 2021 in the U.S. and elsewhere helped spur the surge as well.
Employers couldn’t ignore the demand for greater diversity, equity, and inclusion by employees, and the smart ones took action in response. ERGs are very effective in helping drive organizational change and DEI, which leaders have embraced to support their change strategies and to build a more equitable and inclusive workplace culture. Also, these groups have the ability to help foster stronger leadership skills among workers in a more informal context than learning and development programs. DEI program directors have been keen to leverage insights from these affinity networks to help identify potential leaders, gain insights into the people ecosystem, and connect executive sponsors with employees.
In general, every ERG is sponsored by a top executive within an organization. This presents another win-win since leaders now have a new way to engage with employees to implement needed change. It also empowers employees so that can act as advocates, champions, and change agents for peer-to-peer behavior modification and positive social contagion. When done right, the influence of ERGs can be more influential than a top-down approach to change enablement.
Some ERGs in the early days were exclusive rather than inclusive. That is, they were designed for people with shared backgrounds, cultures, lifestyles, and interests. But if not inclusive, they can turn into a way for some groups to create exclusive memberships that can appear close to other people who may want to participate. For instance, can a hetero-normative person be allowed to join an LGBTQ+ ERG? Or could the spouse or partner of a military veteran join an ERG for military veterans? If the objective is to use ERGs to stoke inclusion, sponsors and leaders within ERGs should encourage people to participate in groups to learn, grow and make new connections. Men should be encouraged to align or join women’s groups and racial or ethnic groups may welcome members who are not actually of the same background; although they may restrict roles they can assume, such as leadership roles within the group.
The bottom line here is that ERGs are popular because they work on multiple levels. Does your organization have robust ERG programs? If so, which do you participate in, and what’s the experience been like? Let us know by leaving a comment below and joining the conversation.