Rise of ERGs as an Employee Engagement Initiative.

ERGJoseph Wilson is an unlikely name to be associated with Employee Engagement. Yet the founder of the Xerox Corporation is often credited with having founded the first Employee Resource Group (of sorts).

Back in 1968, when violent race riots were tearing apart parts of America, Wilson wrote a letter to his managers, calling for an increased hiring of African-Americans. This move, which led to the establishment of BABE (Bay Area Black Employees), was a ground breaking approach towards addressing the issue of discrimination and achieving equality in the workforce. You can imagine how inspired people would have been to work at Xerox after this!

While ERGs were an excellent tool to help employees find a voice in large organizations, they were often seen as threatening by managers. Over time with changing demographics and the evolution of technology used in the workplace, ERGs (also known as affinity groups or employee networks) seem to be undergoing a resurrection of sorts.

So what’s with the renewed interest in ERGs?

ERGs require commitment of both time and money of the workforce to be successful, in addition to being aligned with the overall company goals. A study by Mercer in 2011, states that companies are spending well into six figures every year, not including the cost of the technology that enables collaboration between employees across the organization, including those in remote locations.

Research, surveys and studies attribute the renewed interest in ERGs to a combination of factors.

  • The investment in technology and communication (and the rise of social networking): Considerable investment in the technology and platforms to enable collaboration between the members of ERGs and the increased acceptance of social networks in the enterprise has improved communication and reach of ERGs. Coupled with dedicated efforts of HR team to make new recruits and teams aware of ERGs over the years , the workforce is now more aware of ERGs and this has contributed to increased memberships.
  • Changing Demographics in the Global Workforce: With Gen-Y now becoming a substantial component of the workforce distribution; their work choices and preferences are contributing to the success of ERGs. Unlike the generations that preceded them, Gen-Y is digitally native and are comfortable working collaboratively and using social media tools – both of which are critical to the success of employee networks.
  • Evolution in the focus and activities of ERGs: Over the years, ERGs have evolved from just being groups focussing on mutual support for members to those making substantial contribution to the bottom line of the organization. ERG’s are now providing insights into the market place, teaching employees located in the remote locations nuances of doing business, acting as brand ambassadors for the organization and improving the company’s reputation through community contribution.

 

The 3P’s of ERGs

People: ERGs provide organizations with access to talent that is relevant and more engaged. For talent acquisition, evolved organizations put their ERGs to good use by consulting with them to recruit new hires. When ERG members connect with their alma-maters, provide testimonials and use their network, talk about the culture and prospects at the company, it helps to attract high quality talent. ERGs thus can be used for extremely targeted recruitment to hire like minded and high quality candidates who will be a good fit for the organization. In a survey conducted by Software Advice in the US, among the respondents, almost 70 percent of 18- to 24-year-olds noted that ERGs would positively impact their decision to apply, while over half (52 percent) of 25- to 34-year-olds said the same. The substantial difference between this age group and the others is an indication of the shifting winds in priorities of the future managers and leaders.

Likelihood to Apply at a Company With an ERG Program by Age
Likelihood to Apply at a Company With an ERG Program by Age

From talent retention stand-point, affinity networks provide a powerful medium to help employees stay connected, and overcome gaps by providing mentorship and guidance – lack of which is a key reason why employees leave organizations.

Likelihood to Stay at a Company With an ERG Program by Age
Likelihood to Stay at a Company With an ERG Program by Age

In the same survey, the data showed that well over half of respondents under the age of 44 noted they would be more likely to stay at a company offering ERGs.

Productivity: ERGs are an excellent way to keep employees engaged. By connecting people who share the same concerns, passions, and interests, ERGs help form employee networks that span the silos usually get created with the departmental hierarchy.

ERG Program’s Impact on Employee Engagement Levels
ERG Program’s Impact on Employee Engagement Levels

ERGs formed around topics/domains, help provide training and provide access to mentors to their members – an invaluable means of engaging and motivating employees who might otherwise find navigating the complex fabric of organizational hierarchy for information and advice, a daunting task. ERGs can also act as great tools for HR to help spot the ‘right’ talent required for various positions. For example, Air Products and Chemicals’ Asian American group developed the Building Bridges program to help Asian colleagues expatriated to the US make the transition and become more productive.

ERG Program’s Impact on Employee Engagement by Age
ERG Program’s Impact on Employee Engagement by Age

By providing members an alternative to the formal hierarchical system, ERGs can help employees to understand business nuances, organizational culture, provide mentoring to perform better at current tasks and also help prepare members to move up the corporate ladder to other roles – a matter understandably of substantial interest to the Gen-Y constituent of the workforce.

All of these advantages go a long way to help address engagement challenges and increase motivation and productivity of the members.

Profitability: At many organizations, resource groups have an important role as focus groups and innovators in understanding the market-place dynamics and providing insights which help the company launch new and successful products. Mattel used their African-American ERG to conceptualize and advice their product and marketing teams to launch a line of dolls specifically designed for African-American girls. Pharma major Merck created global-constituency groups in 2008 to connect with their local markets. McDonalds’s women leadership network had a major influence on the introduction of healthy menus in their restaurants.

 

ERGs ahoy then, is it?

Not quite. While ERGs do clearly have the potential to engage and motivate your workforce, it isn’t for everybody. Companies that are working with or planning to recruit and engage a younger workforce will find ERGs useful, not so much organizations that are formal, hierarchical and have an overwhelmingly older work force.

Companies with the most dynamic and successful ERGs attribute their success aligning the mission of the ERGs with the interests of employees and the executives. In addition these organizations are sensitive to the need for new ERGs that address multigenerational, multicultural, and other constituencies and work hard to actively market the ERGs to their employees and new hires.

ERGs succeed when they are adequately funded and held responsible for those funds. The leaders of these groups need to receive training and other support to manage the groups in a professional manner.

Glenn Llopis (subject matter expert and chairman of the Glenn Lopis group) underlines the importance of supporting an ERG in the company by having a senior executive who is fully invested in its success of the mission, lead the group.

Llopis goes on to say that the success of the ERG depends on a clear articulation of the mission:

“Our objective is to help our organization to best understand and leverage the unique talent, gender and/or cultural insights we bring to increase recruitment efforts by [X] percent, talent retention by [Y] percent and our employee community’s overall workplace engagement by [Z] percent.”

If clear and measurable objectives aren’t defined, Llopis says, the ERG “just becomes a social gathering that doesn’t add real value and makes it difficult to sustain participation.”

And it also depends where in the world you are:

Mercer in its study found that there are differences in the practices of ERGs depending on the location of the company. Companies located in or having its headquarters in the US tend to have a higher probability of having ERGs, while it’s a very new/non-existent practice in Asian countries.

The proliferation of social networks and other collaborative platforms in the enterprise environment coupled with the increase in presence of Gen-Y in the workforce will no doubt change the way ERGs communicate and recruit new members.

The best ERGs are those that create a safe environment where employees can discuss challenges, voice concerns and work on self improvement, career progression and self-actualization through community contribution. ERG’s are now evolving to help attract, empower, motivate and engage a diverse and younger workforce from diverse backgrounds and cultures, which has a direct and quantifiable impact on the bottom line in the increasingly global arena where boundaries are blurred and geographical locations are starting to hold lesser and lesser significance.

As Lopis says, “It’s about embracing the special skills and characteristics that may be attributed to one’s culture or to one’s ethnicity or to one’s gender that a company could be much more mindful of [while utilizing the] special intelligence … that particular group can deliver to the company’s overall strategy or business model.”

Acknowledgements and References for this post:

Image courtesy of FreeDigitalPhotos.net, Graphs courtesy of HR & talent management technology resource Software Advice.

ERGs Come of Age:The Evolution of Employee Resource Groups, Mercer; Employee Resource Groups, Joseph C. Wilson, Wikipedia; Who Made America, Joseph Wilson, pbs.org, The business benefits of Resource Groups, Diversity Inc; Your Secret Weapon: Employee Resource Groups, Linkage Leadership Blog, Xerox diversity timeline, Xerox.com; Survey: Employee Resource Groups help engage Gen-Y Workers, (Erin Osterhaus), New Talent Times.