Employee Resource Groups Drive Business Results

Though some observers predicted that company support for employee resource groups (ERGs)—also known as employee networks, affinity groups and business groups—would decline as the economy declined, two studies released in January 2011 suggest that the opposite is true: ERGs are growing in popularity and contributing in positive ways to business success.

“Multidisciplinary, global, diverse yet inclusive ERGs are models for organizations of the future, according to Employee Resource Groups that Drive Business, a study published by Jennifer Brown Consulting (JBC). “They are cross-functional by nature, and they have intuitive knowledge about emerging markets due to their cultural awareness, as well as contacts and credibility with these populations.”

JBC gathered data and case studies for its report by surveying and interviewing 22 well-known, and in many cases global, companies such as Best Buy, Ford, Johnson & Johnson and Macy’s.

ERGs typically include employees who share a purpose, interest or background. But such groups have evolved, the JBC report notes, “from being event-driven, internally-focused groups to serving as critical strategic partners for various business units throughout an organization.”

For example, members of the Ford Employees Dealing with disAbilities network provide design and development engineers in Ford’s mobility motoring division with valuable insights about the needs of people with disabilities, JBC found. And Cisco’s Asian Affinity Network played a key role in cultivating a relationship between Cisco and Shui On Group, the largest publicly traded real estate company in China, by proposing that Cisco hold a business development event during a Silicon Valley visit by Shui On Group’s founder and chairman.

Similarly, ERGs Come of Age: The Evolution of Employee Resource Groups, a report released Jan. 26, 2011, by Mercer’s Global Equality, Diversity and Inclusion practice, found that many companies are experiencing a resurgence of enthusiasm for ERGs.

Mercer analyzed employee networks in 64 mostly global, for-profit companies ranging from 1,600 to 380,000 employees. Some of the companies surveyed by JBC—Cisco, Intuit, Prudential and Wells Fargo—were included in Mercer’s research as well.

Types of ERGs

JBC and Mercer found that groups focused on women, race/ethnicity, and lesbian, gay, bisexual and transgender-related employees are by far the most common in organizations surveyed, with more than 80 percent of respondents from each study indicating that they have such groups.

About half of Mercer’s respondents said they had groups focused on disability (52 percent) and generational issues (48 percent). Other groups reportedly focused on multicultural issues (43 percent), working parents (35 percent), military service (34 percent), a single religion (16 percent), adoptive parents (13 percent), elder care responsibilities (11 percent) and interfaith issues (9 percent).

Groups based on common interests, such as community service, cancer support, job responsibilities and wellness, are “beginning to pop up,” the Mercer report added.

JBC found that some organizations have groups for new employees, virtual workers and employee alumni.

Mercer noted a couple of country-specific findings as well. Companies headquartered in the U.S.—76 percent of the 64 companies studied—were more likely to have groups focused on generations/age, disability, adoptive parents and the military, while Europe-headquartered companies—21 percent of respondents—were more than twice as likely as those based in the U.S. to have interfaith (15 percent vs. 7 percent) or single religion (31 percent vs. 12 percent) groups.

Business Relevance

A key factor in the growth and popularity of ERGs, particularly with young employees, is the extent to which the group’s mission and activities are aligned with business objectives. “Those ERGs that are helping the business succeed get recognition and support from business executives, which, in turn, leads to more developmental opportunities and visibility for the members,” the Mercer report noted.

Mercer found that ERGs are involved in three broad categories of business activities:

• Those with direct impact on business operations, such as marketing, product development and enhancement of the brand.
• Talent acquisition and development.
• Workforce diversity and inclusion.

Three quarters of Mercer’s respondents (78 percent) said that community service—an activity that can enhance the corporate brand—is the most common business-related activity among group members. More than half (56 percent) of respondents said their ERGs provide cultural insight to the business, and nearly one in five (19 percent) provide input in product development.

Professional development of members is the most notable contribution ERGs make to talent management efforts, Mercer found, followed by recruiting (70 percent), onboarding assistance (52 percent) and identifying high-potential employees (24 percent).

However, identification of high-potential employees is not a formal activity for ERGs in most companies, the report noted. Instead, it comes about because “business leaders and HR are involved in the network and talk to network officers about the membership or see firsthand the people who are demonstrating leadership capabilities through their work with the networks.”

Lastly, raising cultural awareness, an activity with which such groups are often associated, tops the list of efforts ERGs make in impacting diversity and inclusion, according to 91 percent of respondents. The majority of ERGs enhance this contribution by liaising with external organizations (71 percent) and by communicating with executives (51 percent) on diversity and inclusion matters, activities exemplified by Sodexo’s use of the phrase “mini chief diversity officers” in describing its ERG members.

Company Investment

The sources, size and nature of funding for ERGs vary, according to Mercer, “depending on each company’s structure, the rationale behind the groups’ existence and their maturity.” The average annual budget for ERGs surveyed by Mercer was $7,203 for every 100 group members (not counting the cost of technology, facilities and staff support).

And staff support can be significant. On average, Mercer respondents said they have 1.4 full-time equivalent employees dedicated to the management, coaching and coordination of their ERGs, not to mention the time spent during the workday by ERG members, executive sponsors, and others who coach and train ERG officers, meet with the groups and participate in events.

“Three trends appear to account for the rebirth of the ERG movement in large firms,” said Michal Fineman, a consultant at Mercer and the study’s chief author, in a statement. “First is the emergence of the ‘millennial generation,’ whose members are comfortable using social media to work collaboratively. Second is the globalization of ERGs, which are drawing interest from a new potential membership base in Europe, Latin America and Asia. Most importantly, ERGs have an increasingly business-oriented focus in their missions and activities, which earns them more respect and involvement from business leaders and gives members greater visibility in the organization.”

In other words, as the Mercer report summarized, “the more the groups get involved in solving real-time business problems, the more visible they become in the organization, the more excited employees become about participating and the more they benefit from their involvement.”

Rebecca R. Hastings, SPHR, is an online writer/editor for SHRM.

Related Articles:

Employee Resource Groups Can Create Labor Issues, SHRM Online Diversity Discipline, June 2009

Inclusion Means Equal Treatment for Employee Groups, SHRM Online Diversity Discipline, March 2009

Measure Employee Resource Groups to Yield Business Results, SHRM Online Diversity Discipline, October 2007

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