Why ERGs Help Leading Companies Succeed
Learn how ERGs (Employee Resource Groups) can be a long-term win-win for employers and employees, boosting business growth.
Many companies now leverage Employee Resource Groups to foster a thriving workplace. David Satterwhite, CEO of Chronus, emphasizes the interconnection between financial success, product innovation, and employee engagement. He highlights the importance of employees feeling fulfilled and connected to the organization to drive productivity and motivation.
In the old ways of business, it was often thought profit success and employee engagement had little to do with each other. We’ve found that these things couldn’t be more tangled together. To succeed financially and produce product innovations, the people of a company have to feel they are meeting their full potential—something that inevitably helps employees be more productive, motivated and connected with an organization. More and more companies are turning to Employee Resource Groups (ERGs) to build a thriving workplace.
Employee Resource Groups in the Modern Workforce
You might have heard of ERGs as Business Resource Groups (BRGs), affinity groups, people groups, or by some other similar name. But whatever terminology resonates with you, ERGs were traditionally used for employees of similar backgrounds and interests to socialize and bond. Today, ERGs function as opportunities to network, learn, promote inclusion with other employees, and build a community of engagement.
This is important since, as Gallup reported in June 2023, less than one-fourth of employees are engaged in the workplace today. Surprisingly, though, the solution isn’t bigger incentive packages or management restructuring but rather an increased focus on the connection and development of employees themselves.
Why the Rise in ERG Popularity?
ERGs have been on the rise for decades, but let’s start with a brief history lesson on how they came into existence.
The Xerox National Black Employees Caucus, established in 1970, marked the beginning of ERGs in the United States. Xerox established this ERG to offer a supportive environment for Black employees encountering discrimination and racial tension. The group also served as a formal platform for allies to engage and support their Black colleagues.
Since then, ERGs have surged in popularity, offering a safe haven for individuals of diverse backgrounds and experiences at the workplace. They’ve expanded to include groups focused on gender, ethnicity, nationality, sexuality, neurodiversity, employees with disabilities, general hobbies and interests, and beyond.
As a result, ERGs have expanded nationwide, bridging connections and building rapport among employees with common interests and identities. According to a December 2022 McKinsey report, 90% of Fortune 500 companies have established ERGs within their organization.
What is the Purpose of ERG?
ERGs champion inclusion, drive skill development, create mentorship opportunities, and ensure employee voices are heard. As I have mentioned countless times previously, organizations only reach their greatest potential when their people do. ERGs play a pivotal role in this endeavor.
In contrast, ERGs offer senior executives a dedicated community forum for listening and learning, a crucial aspect for large organizations. They allow senior leadership the chance to gain insights into the needs and wants of specific groups and communities within their organizations, insights that can be applied company-wide to enhance many bottom-line efforts.
5 Key Benefits of ERGs
As a sports enthusiast, let me tackle the benefits of ERGs for employers and employees from this perspective. Establishing ERGs isn’t about creating a winner-takes-all game. Just like in any sport, it’s crucial for players to feel motivated to play for their coach and team, or in this case, their managers and company.
We’ve repeatedly learned in sports that compensation alone doesn’t guarantee success. Top-performing, well-paid players can struggle if they never fit into the culture or buy into the leadership. In fact, it’s often the best-coached team with the best culture that wins. Like everyone else, these professional athletes seek connection and engagement with their teammates and coaches.
Through ERGs, companies build employee connections in the workplace, ultimately enhancing the organization’s success, fostering growth, and solidifying buy-in to the company culture. Here are five key ways ERGs create a winning culture for both employers and employees.
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Increases employee engagement and job satisfaction
The same December 2022 McKinsey report states that an impressive 66% of employees affirm that their ERG effectively nurtures a sense of community, which increases employee engagement and job satisfaction. By establishing a sense of belonging in the workplace, ERGs enable employees to build better rapport with colleagues and improve their motivation to actively contribute to the company’s goals and objectives. Amazon has 13 affinity groups focused on “building internal networks for creating a community, advising Amazon business units, leading in service projects, and reaching out to communities where Amazonians live and work.”
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Propels innovation
ERGs empower employees to voice perspectives on aspects of the business they might not have previously. For instance, ERG members can directly engage with senior leaders to create an innovative environment without fear of backlash when discussing outdated or challenging company policies that no longer resonate or include certain employee groups.
Boston Consulting Group’s AccessAbility (BCG) employee resource group provides resources and advocacy for people with disabilities while promoting education, awareness, and bias reduction throughout the firm. This ERG is working to break the stigma and build a more accessible workplace for everyone through the learnings and experiences of its members. By embracing more voices, executive leaders demonstrate a genuine interest in employee feedback that can impact change in the workplace or for the customers they serve.
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Builds diverse and inclusive workplaces
ERGs are the true champions of a workplace culture that celebrates each employee’s differences while providing a pathway for them to feel more included in the workplace. They support employees while leveraging each member’s unique voice for the team’s benefit.
Autodesk uses ERGs to fuel DEI efforts and foster greater inclusion and action within the company. With an executive sponsor for each ERG, the employee groups: “drive professional development, build partnerships with local communities, advance recruitment efforts, and support a culture of mentorship, coaching, and belonging.” When employees from all levels feel embraced by the organization’s ethos, a ripple effect occurs—a surge in product innovation, productivity, and substantial ROI.
See More: Revolutionizing DEI with Immersive Learning Technology
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Amplifies recruitment and retention
ERGs spur talents and drive skill sets to help employees contribute to the company’s success. In April 2023, a survey conducted by the US Chamber of Commerce discovered that 70% of Gen Z participants were inclined to apply for a job where the organization had ERGs. Additionally, across all age groups, more than half of the respondents expressed that an ERG would increase their likelihood of remaining in a job.
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Activates workplace culture
ERGs create a supportive environment where team spirit is at the center, turning the organization’s culture into a living, breathing entity shaped by the collective beliefs and values of its people. A December 2023 Fast Company report found 54% of organizations with ERGs noted a rise in feelings of belonging and community. When companies cultivate an inclusive environment for their employees, job satisfaction and a sense of belonging are elevated.
How Can HR Successfully Implement and Execute ERGs?
HR professionals are often on the frontlines of creating an organization’s employee experience and programming. To do this effectively, adhere to these best practices for employee resource groups.
- Establish clear objectives: ERGs should have clear goals aligning with the company’s mission and values. These objectives will help group participants understand the group’s leadership goals and how they can best make a difference.
- Build community: The main focus of an ERG is to create a sense of community among employees, promoting an environment with inclusivity and open communication. This cultivates stronger relationships between participants, ERG advocates, and the executive leadership team.
- Track and measure metrics: ERGs should have measurable goals demonstrating their impact and value to the company.
How to Utilize Technology to Fuel ERG Impact
Technology plays a pivotal role in amplifying the impact of ERGs within companies. Digital platforms facilitate seamless communication and collaboration among members, regardless of their geographical locations.
1. ERG software
Technology like ERG software centralizes ERG programs, making the management of numerous ERGs a breeze while providing a standardized experience across a company. Whether it’s providing a hub for ERG sign-ups or enhancing communication with messaging, meeting scheduling, and feedback surveys, ERG software assists in running and measuring the impact of ERGs in an organization.
2. Video conferencing
Video conferencing tools enable virtual meetings, fostering inclusivity for remote or dispersed teams. With the hybrid workplace all around us, ERGs no longer meet only in person. Video conferencing tools help to connect ERG members, ERG chapters and beyond with colleagues alike in experience but dispersed in location. Through video conferencing tools, ERG members can participate in discussions, share insights and engage in activities regardless of their physical location.
3. Data & Analytics
Data and analytics tools offer valuable insights into ERG engagement and effectiveness, guiding informed decision-making. These tools offer ERGs the ability to measure their impact and effectiveness. By tracking metrics such as participation rates, engagement levels, and meeting attendance, ERG program admins can better understand their members’ needs and interests. This data-driven approach allows ERGs to tailor their activities and programs to better serve their members and achieve their goals. Overall, data analytics and technology empower ERGs to make informed decisions, streamline operations, and enhance engagement.
The importance of ERGs today marks a significant shift in modern workplace dynamics, emphasizing the interconnectedness of employee engagement and organizational success. By providing networking, learning, and advocacy platforms, ERGs empower individuals to reach their full potential while contributing to the company’s goals.
As technology evolves, it becomes an indispensable tool in enhancing ERG effectiveness, enabling seamless communication, data-driven decision-making, and remote collaboration. In today’s competitive landscape, ERGs emerge not only as drivers of employee satisfaction but also as key enablers of business growth and innovation.
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