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Are Employee Resource Groups Good for Business?

Two experts debate the issue

August 25, 2016 | Shelton Goode, Ph.D., and Isaac Dixon, Ph.D., SHRM-SCP

The evidence is overwhelming that employee resource groups are good for business.

As we all know, the demographic profile of the United States is shifting rapidly, with minorities expected to reach majority status by 2044 due, in part, to the projected growth of Asian, Hispanic and multiracial populations, according to the Census Bureau.

As a result, more companies are leveraging their workforces to reach diverse customers and communities. One way they are doing this is through the innovative use of employee resource groups (ERGs)—voluntary, employee-led groups made up of individuals who join together based on common interests, backgrounds or demographic factors such as gender, race or ethnicity.

As a former chair of the diversity and inclusion leadership council for The Conference Board—a global, nonprofit business and research association—I worked with diversity leaders whose companies took full advantage of their ERGs to identify gaps in their business strategies.

That experience motivated me to conduct my own research. I discovered that more than half of the companies with fully developed diversity strategies use their ERGs to improve the business in three ways:

First, they make sure employees have an opportunity to be heard, valued and engaged.
Second, they gain a better understanding of who their customers are.
Last but not least, they get insight on business performance, because smart companies understand that if they don’t grow, they won’t be around very long.

More than 70 percent of the organizations I studied relied on their ERGs to build a workforce that reflected the demographics of their customer base; the thinking was that customers would be more loyal and would feel more comfortable if they did business with people who understand them. Almost 30 percent got assistance from their employee resource groups to increase the organization’s spend with diverse suppliers.

At 90 percent of the companies I examined, ERG members helped new employees to get comfortable during the onboarding process. Studies show that the first 60 to 90 days of employment are a critical time for any new hire, and they can be particularly challenging for members of traditionally underrepresented groups. That short window of time can mean the difference between whether an employee stays for the long run or leaves the organization before the year is out. ERGs can be leveraged to acclimate employees and engender a sense of loyalty and belonging to their new company.

These groups can also be great partners for identifying gaps in an organization’s talent development process. Sixty-three percent of the companies I surveyed have an employee resource group focused on young professionals. Given how fickle Millennial employees can be when it comes to staying at a job, giving them a forum to network and grow is a great way to reduce turnover rates.

Many companies also successfully use their ERGs to improve the organization’s leadership development process, to drive results, to forge relationships, and to ensure alignment between their business and diversity strategies.

The data clearly suggest that employee resource groups are not only good for business—they are essential!

Shelton Goode, Ph.D., is director of diversity and inclusion for Oshkosh Corp. and author of Diversity Managers: Angels of Mercy or Barbarians at the Gate (iUniverse, 2014).

Employee resource groups are not the way forward.

Over the past several years, I have witnessed the advent, maturation and demise of numerous employee resource groups (ERGs). Many were founded with the admirable intention of giving employees who represent a protected class under the law a "safe" place to air ideas, issues or concerns. Some had very prescriptive work baked into their charters, while others were less specific in their objectives.

Soon enough, however, objections cropped up. Resource groups for women and minorities were challenged by white men who felt excluded, for example. This type of dissention led employers to try to sharpen their groups’ missions or purposes.

The real problem, however, is that ERGs seem like relics of a bygone era. Organizations large and small, public and private, are reshaping these groups into diverse teams that are far more strategic and inclusive. One need only look at the proliferation of diversity, equity and inclusion committees to see how much of the work that ERGs used to do has broadened in both scope and depth.

In many companies and institutions, these bodies have support from executive leadership that was conspicuously absent from employee resource groups. I recall one organization that invested considerable time and resources into creating ERGs only to find that employee engagement in the groups was tepid at best. When these employees were asked about their lack of participation, several individuals cited the need for greater leadership direction and commitment.

One of the main reasons it is difficult to achieve real benefits from the diversity and inclusion efforts of ERGs is that employees of various ethnicities and genders have differing notions about what success looks like.

Moreover, the existence of these groups can create the false impression that all of a company’s diversity problems have been magically solved. For example, a study published in the Journal of Personality and Social Psychology found that white men perceived the mere presence of diversity councils, targeted mentoring and affinity groups as evidence that all employees were being treated fairly. This perception persisted even when the men were presented with anecdotal evidence of discrimination and information that challenged the effectiveness of diversity initiatives at their companies.

It is fortunate that, at some organizations, diversity, equity and inclusion committees are working together to foster an inclusive workplace rather than pursuing this goal in fragmented silos. When groups are focused on the same objectives, honest discussions about what is needed for organizations to create an inclusive culture can take place in a more holistic setting.

I give ERGs credit for being part of a growth phase that companies had to go through to make progress toward a more welcoming workplace. But given what we know about what has worked and what has not, these groups have run their course and need to be allowed to quietly expire.

Isaac Dixon, Ph.D., SHRM-SCP, is associate vice president of HR at Lewis & Clark College in Portland, Ore.