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Employee Resource Groups (ERGs), or workplace affinity groups, are not new, and in fact they have been around in workplaces since the 1970s when they evolved in response to racial tensions in the US. For years, ERGs mainly hosted networking events and weren’t typically remarkably impactful on the business, but served as a safe space and support network for members. ERGs have come a long way since then, expanding and deepening their influence and impact.

Now, ERGs are typically employee-led, voluntary forums that provide employees with support, and career development, mentorship and networking opportunities. They are often created around shared characteristics or personal traits like ERGs for women employees, members of historically underrepresented racial/ethnic groups, LGBTQ+ employees, veteran employees and more. In recent years, ERGs have expanded to include interest-based groups like working parents and caregivers, the environmentally conscious and mental health advocates. Further, business leaders increasingly recognizing the value ERGs can bring as key strategic partners. In fact, about 35% of companies have added or expanded their support for ERGs since the start of 2020, according to a 2021 study by McKinsey & Co. and of 423 organizations employing 12 million people.

Why the shift?

This uptick in popularity of ERGs in the workplace is due in large part to the impact of COVID-19, which has amplified the prominence and importance of ERGs. After two years of pandemic-related isolation and a lot of social and political unrest, ERGs are playing an essential role in companies by fostering community, improving employee engagement and building company culture and brand. While it can be difficult to connect with employees feeling distanced by remote work, ERGs are an effective way to give employees a sense of belonging, shared purpose and support. For instance, during the pandemic, ERGs focused on women have shared tools for easing burdens for members suddenly facing new challenges of child-care demands while working from home. Likewise, they’ve given important feedback to help shape company policies and benefits.

With that said, ERGs have value beyond just serving as a connective device within an organization. They are a natural way to gain insights about your company, understand pain points and drive organizational change. They also can offer business input for entering and expanding markets, product development or targeting specific audiences.

One of the concerns around ERGs, however, is that they can devolve into venting sessions and become a hotbed of complaints. Further, it’s not unheard of for ERGs to go beyond stated objectives and goals and start taking on responsibilities better left to HR, like taking on their own investigations or using company diversity data in inappropriate ways. Appropriate guardrails can help curb these concerns and ensure your business is harnessing the power of ERGs for the best.

What are best practices & practical tips for HR leaders and employment counsel?

  • Keep ERGs open to all. Establish an ERG policy that includes a clear statement that membership in any group may not be limited based on an employee’s race, national origin, religion, sex, gender, sexual orientation, or other protected category, even if one of these protected categories is part of the common interest or purpose of the affinity group. Include permissible and impermissible types of groups, including:
    • Examples of legitimate business purposes (for example, promoting employee development, recruitment, retention, work and life balance, cultural awareness, or diversity); and
    • A description and examples of types of ERG the employer does not recognize (for example, groups that exclude certain employees, groups that do not promote employment-related purposes, such as groups based solely on sports or outside hobbies, or specific exclusions, like any group that advocates religious or political positions).
  • Require ERGs to have a clear purpose and defined expectations, with a charter and a mission statement. Having a defined structure will help members know what is expected of them and set the boundaries for the ERG.
  • Ideally, include management in some sort of leadership position in each ERG. A management representative may serve as a sponsor or liaison between group members and business leaders. The liaison can help steer discussions toward stated goals and business initiatives, but also represents organizational commitment and can be a source of senior leadership support and advocacy.
  • Consider offering financial rewards to ERG leaders to recognize the important role they play and the investment that comes along with it. Some technology companies have paid leaders as much as $10,000 for each year of a two-year terms. Such roles are often awarded at the culmination of rigorous vetting processes with interviews and required recommendations.
  • Offer formal training to ERG leaders. It is important to invest in the development of those who take on these roles and position them for success by providing them with the necessary tools to be an effective ERG leader. It is also important for ERG leaders to understand where matters are best directed to HR, especially when it comes to responding to and investigating employee complaints, as well as skills and behaviors of leading inclusively.
  • Consider leveraging group knowledge, insights and recommendations from ERGs on innovative ways to diversify the workforce. Rather than hiring outside consultants to tell the company how to retain diverse employees, recognize the value of the voices within.
  • Connect with ERGs to improve the recruitment and retention of diverse talent (e.g. reach out to group members for referrals or look to the groups to find identify top, under-represented talent).
  • Be sure the company has a diversity data usage policy in place. If the determination has been made to share some level of data with ERG leaders (as is often requested), be sure to educate leaders on permissible ways to use the data and show how mishandling or misusing the data can have unintended consequences.

ERGs have become an important vehicle to promote your organizational diversity, equity and inclusion goals.  For more information about the legal considerations when recognizing ERGs in the workplace (including how to craft policies, guard against discrimination and retaliation, etc.), please contact your Baker McKenzie employment lawyer.