By Steve Moss and Luis Moreno
When many organizations talk about their commitment to Diversity, Equity and Inclusion (DEI), they talk with pride about the fact that they have Employee Resource Groups (ERGs) for the major ethnicities and groups. But although ERGs can be a sign of an organization’s commitment to DEI, they need to be looked at, as they may not always be working well for the employees or the organization.
A close look at ERGs
A review of ERGs in thousands of organizations shows that many are created as an initiative of the employees themselves and not as an initiative of the organization’s leadership. In many cases, they do not emerge out of the strategic vision of the organization. Frequently, they have little to no budget for the first few years of operation, until they can secure a few dollars, generally to pay for food and beverage for an event or two. ERGs are also often run on a volunteer basis by employees who need to do that work on top of the actual job that they were hired to do, which is not always good for them or the organization. Their small budgets frequently get even reduced through cuts over the years. In such cases, the impact of ERGs may not be as high, as they don’t have the resources to plan activities of significance. In some cases, ERGs can be seen more as a space for some employees to socialize, without much positive impact to their careers.
Professional development requires budgeting
Many organizations say that among the objectives of ERGs is professional development, yet with little or no budget, many ERG members find themselves having to be asking for favors. ERG members usually need to contact other employees to see if they can speak at events. When they contact professional trainers and speakers, in many cases they need to ask if they would speak or do training for free or at a reduced fee because they don’t have the funds needed to afford their professional services.
This lack of budgeting and funding limits the quality of the speakers and the training, which limits the quality of the employee learning and development and the experience. In such cases, the words don’t match the actions. For ERGs to be impactful, they need to be part of the organization’s vision, so that they are part of the annual planning and budgeting process. They need to have the funding to afford and acquire the high quality training needed for their members to be able to develop and grow personally and professionally. That way, ERG members don’t have to be asking for favors, which can be uncomfortable and discouraging and sends the wrong message to external partners about the commitment of the organization to DEI.
One way to help to set ERGs up for success is by looking for ways to better fund them. Historically, when ERGs have funding, it often comes from an allocation from a DEI or HR function in the organization. But there can be other sources, when other departments, businesses and executives become sponsors. There have been multiple roadmaps to identify opportunities for funding, which can come handy, when exploring options.
ERGs can help to bring employees together
But even when not having access to sufficient budgets, there are still ways in which ERGs can increase their impact. At a time when people are not all bought into mandatory time in the office, a critical component is to create a sense of community. People have to feel like they can get more out of their careers by being with colleagues. This is an opportunity for ERGs to help to bring people together in a fulfilling, relevant, fun and engaging way. If ERGs do this right, events can draw people from throughout the company, whether they are in the ERGs or not. Once together, it is about having content and activities that can help them develop so that they can leverage career opportunities in the organization.
Leadership sponsorship and involvement are key for ERGs’ success
Another important observation for ERGs is that their activities usually appeal mostly to employees at junior levels. Their events and activities are usually not as well attended by members of the leadership or executive team. But the interest, engagement and involvement by the leadership team are critical for the success of ERGs and other DEI initiatives. That’s an indication for whether the efforts are directly connected to the organization’s strategic vision.
If employees see the Chief Financial Officer (CFO), who is Indian, attending an ERG sponsored panel during the Diwali observance in the company, or if they see the Chief Executive Officer (CEO), who is African American, attending a speaker event during Black History Month, it sends a message of executive sponsorship and alignment that goes beyond a celebration of a cultural identity. It becomes a message to employees that the leadership and the executive team support and are committed to DEI in the organization and are willing to make the time to join at events and activities because they are important.
Strategic alignment and focus are key for ERGs
ERGs have many benefits for their members and the organizations, but, just like with everything, they need to be managed strategically and thoughtfully. They can also have their challenges and limitations, which are not always as obvious or intuitive. The CHRO at a major university recently mentioned her institution's experience with them. ERGs should be structured to provide support and to cascade corporate culture to employees who share underrepresented characteristics, enhancing retention and developing leaders. But if left unattended, they can run amok, taking on their own identities, creating silos and sometimes serving as venting forums, instead of unifying people. When that happens, the results are not as positive for the employees or the organizations.
Recently, there has been interest in revisiting and better understanding ERGs, so they can be either improved or replaced with alternative models. In the Diversity Journal, Stephen Young & Barbara Hockfield recently proposed a new model, replacing affinity teams with cultural equity teams. But before giving up on ERGs, many organizations are interested in learning about ways to increase the chances they succeed. What’s important is connecting ERGs with the strategic vision of the organization, establishing business objectives and success metrics, just like any division, unit or initiative.
With the right focus, ERGs will be beneficial for both employees and organizations
ERGs can be very beneficial to employees and organizations when managed strategically. They can provide a multiplier effect on companies’ DEI efforts, by fueling employee engagement, learning, and development. But this won’t happen on its own, and good intentions are not enough. For ERGs to be successful and to have a meaningful impact on the organization and employees, they must be adequately funded, sponsored by members of the leadership team and clearly linked to the organization’s strategy, objectives and metrics.
About the authors:
Steve Moss is the President of Executive Springboard. He served as a marketing executive in global organizations, as CEO in a green-tech start-up and as a consultant, marketing best practice trainer and brand strategist before founding Executive Springboard. He earned his BA degree from Georgetown University and his MBA from the Wharton School.
Luis Moreno has a passion for Personal and Professional Development and reads, studies, speaks, and writes on topics related to Human-Centered Leadership, Emotional Intelligence, Diversity and Inclusion and other related topics. He earned an MBA from the Carlson School at the University of Minnesota and is a Humphrey Public Policy Fellow. He is a member of the Young American Leaders Program (YALP) at Harvard Business School. The State of Minnesota gave Luis the Distinguished Service Award for his contributions in the areas of race relations, justice, community service, education, and civil and human rights.
Executive Springboard President Steve Moss shares learning from years as an executive and a mentor.