The introduction and ongoing implementation of employee resource groups is vital for companies of all sizes and all backgrounds. Not only are employee resource groups important to the diversity, equity, and inclusion (DEI) efforts of a company, but there are legitimate business and legal reasons to ensure their success. This article addresses best practices for effectively introducing and sustaining employee resource groups.
Defining an ERG
An employee resource group (ERG)—also referred to as an affinity group, employee network, or business resource group—is a group of employees who come together in the workplace based on shared social identity, characteristics, or life experiences. Typically, ERGs consist of individuals from traditionally underrepresented groups, although these groups are open to all employees. Participation in an ERG is strictly voluntary, and the purpose of an ERG is to engage around a unified mission and goals that support the collective, foster personal connections and affiliation within the company, and improve business objectives or professional development of individuals from that specific group.
ERGs Are Good. Also for Business.
Aside from cultivating a supportive environment for employees who desire community, ERGs are good for business. It is becoming increasingly imperative for businesses to adopt ERGs for recruitment, retention, and the bottom line. Consumers are specific about the companies and products they support. Consumers and job applicants alike demand and expect that companies will focus on DEI and sustainability, and reflect the communities they serve. ERGs can bring meaningful, positive change in the workplace—so long as ERGs are born from thoughtful, focused planning and involve effective implementation and maintenance.
Five Key Challenges of ERGs
The two most critical components of establishing an effective ERG are the planning and implementation stages. The process of starting this type of program comes with the following five key challenges:
- Company buy-in
- Employee buy-in (including members and non-members of the ERG)
- Structure and legal risk
- Resources and visibility
- Monitoring and evaluation
1. Company Buy-In
The most successful DEI programs begin with investment from the top-down. The two obstacles surrounding company buy-in come from fear of the unknown (questions like “Are these just ‘wine and whine’ networking events?”, “How do we appropriately talk about diversity, equity, and inclusion in the workplace?”, and “What about legal risks?”) and a lack of understanding of how ERGs fit into the company’s overall business objectives. Possible ideas to educate leadership about the value of ERGs and set companies up for success include:
- Make the business case for ERGs. Employee resource groups can be used to attract, retain, support, and foster the exchange of ideas from employees of diverse backgrounds integral to the overall success of the company. A best practice is to provide examples of successful ERGs at companies of comparable size and in the same industry.
- Request top-down commitment. Time and resources are integral to the creation of a successful ERG, and both require commitment from leadership. ERGs require dedicated personnel who will oversee the program, a strong reporting structure, and the integration of ERGs into the company’s business strategy.
- Identify expectations. ERGs must become part of the fabric of company culture. This is accomplished by articulating expectations for the initiative and by promoting ERGs as an integral facet of the company’s culture.
2. Employee Buy-In
Support from both members and non-members of an ERG is crucial. While the initiative may be well-meaning, the introduction of an ERG must be approached with intentionality and inclusivity.
Members of an underrepresented group may fear backlash from participating in an ERG, question whether participation yields any real impact or benefit, or view it as another non-compensable obligation that detracts time and attention from those benchmarks a company actually measures to determine promotion and compensation. Potential remedies to help address these concerns include:
- Make DEI an integral part of the company culture. While ERGs can improve the bottom line, ERGs should not be about the bottom line. Instead, ERGs should simply reflect the company’s commitment to diversity and inclusion without a business justification.
- Create safe spaces. Participation in an ERG and attendance at meetings must be voluntary. ERGs are meant to create a forum for employees with shared identities or characteristics to gather in community. Further, extending an invitation to all—regardless of whether the employee self-identifies as a member of the particular group—promotes allyship and decreases legal risk of discrimination claims.
- Establish a clear mission, goals, and objectives. DEI is not the groups’ sole ERGs must have a clear purpose that aligns with the company’s goals and objectives in addition to DEI.
- Provide company support. A strong top-down commitment is necessary for the success of ERGs. Leadership must support the initiative by providing their time, resources, and recognizing ERGs and the significant contribution of time and talent of ERG leadership to the company’s goals and objectives.
For those who may not belong to a certain traditionally underrepresented group, the creation of an ERG targeting that group may be met with resistance or confusion regarding the group’s purpose or what guidelines are in place for participation. ERGs may be viewed as discriminatory or as creating a hostile work environment for non-members. Three ideas for overcoming these challenges include:
- Establish a clear written company ERG policy. The policy should include a purpose statement, disclaimers, the definition and description of ERGs, identification of the responsible department, a requirement that each ERG be open to all employees, and permissible and impermissible types of ERGs.
- Consistent application of policy. Once implemented, the ERG policy must be applied equally and consistently.
- Promote allyship. Companies should promote allyship as part of its ethos. All employees should be encouraged and expected to proactively participate in the creation of meaningful change in the workplace.
3. Structure and Legal Risk
Employers must be cognizant of the potential liability that may arise from the implementation of ERGs. It is an open question as to whether an ERG is a “labor organization” as that term is defined in relation to the National Labor Relations Act. If employers are not cautious, they could be at risk of violating the NLRA if they have “dominated, interfered with, or unlawfully supported” a “labor organization.” In light of this, employers may consider the following points:
- Employees should determine the formulation and structure of an ERG.
- An employer can suggest that employees organize an ERG and provide general guidelines consistent with company policy.
- It is generally okay for an employer to pay employees for meeting time and give the ERG space to meet and the necessary supplies.
In addition to labor law concerns, employers should be careful not to engage in legally non-compliant policies, programming, or practices in relation to its ERGs. If not treated with care, ERGs can open employers up to potential legal issues, including:
- Discrimination or hostile work environment claims related to reverse discrimination or inconsistent application of the company’s ERG policy;
- Retaliation claims related to retaliation against an employee for their participation in an ERG or actions taken during their participation; or
- Wage and hour issues under the Fair Labor Standards Act (FLSA) for unpaid wages for nonexempt employee time spent in ERG meetings and activities.
To avoid these potential legal issues, each ERG should focus on creating communities which bring people together with internal and external partnerships that support the ERG and be open to all employees, employers should ensure an ERG’s implementation is consistent with the written company ERG policy, and determine that either employee participation time is not compensable under the FLSA or compensate employees for their time at each occasion (based upon the company’s individual assessment with advice from counsel).
4. Resources and Visibility
As noted previously, time and resources are required to create and implement an effective ERG. Ideas to overcome the challenges of lack of funding, lack of an organizational mechanism by which to facilitate the ERG particularly across various employer jobsites, or low visibility of the ERG within the organization include:
- Building into the company’s budget funds allocated to its ERGs
- Providing financial rewards to incentive effective ERG leadership
- Implementing company-wide recognition of ERG achievements
- Promoting company-wide ERG programming
- Encouragement of allyship
5. Monitoring and Evaluation
Following the implementation of an ERG, employers should ensure the ERG is regularly monitored and evaluated. To do this, the ERG should have SMART goals to measure its progress, perform analyses (workplace culture assessments, membership surveys, and voluntary surveys), make modifications as needed, and promote the outcomes of the evaluation.
With proper planning and implementation, employee resource groups can provide an enriching environment for individuals in a workplace to connect and build company culture, support business objectives, and foster personal and professional development. We have found that the top-performing ERGs boast the following traits:
- Effective ERG leadership with a focus on leadership succession
- A clear mission, goals, and objectives
- Foster the exchange of ideas from employees of diverse backgrounds
- Help find innovative ways to diversify the workforce
- Establish and support the company’s presence in the area of social justice
- Champion high-profile issues internally
- Incubate product and business ideas
- Show their value
- Build, educate, learn, inspire
As we look to the future, we anticipate that ERGs will become a staple at employers of all sizes in various industries, particularly as job applicants come to expect their employer to have them. We also anticipate that ERGs will continue to evolve and adapt to the needs of their membership, and go further in terms of who they foster, to account for the increasing intersectionality of a company’s workforce.
This article, adapted from a presentation by Jamila Brinson at the 2022 Gulf Coast Symposium on HR Issues, is not intended to provide legal advice, and no legal or business decision should be based on its contents. Please consult with your legal counsel for guidance. For assistance related to the legal implications impacting diversity and inclusion strategy and initiatives in the workplace, please contact Jamila Brinson at email@example.com or any member of the Diversity & Inclusion Counseling practice.
Jamila M. Brinson is board certified in Labor and Employment Law by the Texas Board of Legal Specialization. She advises employers and management on the gamut of employment laws and regulations that impact their workplaces, including in the context of a merger or acquisition, and effectively defends employers and management in employment litigation. Jamila completed a Certificate in Leading Diversity, Equity & Inclusion through Northwestern University’s Weinberg College of Arts & Sciences, and chairs Jackson Walker LLP’s Diversity & Inclusion Counseling practice counseling clients on diversity, equity and inclusion related issues, including the effective formation and implementation of employee resource groups.
Founded in 1887, Jackson Walker has played a vital role in the growth and development of Texas business. With more than 450 attorneys across seven Texas-based offices, the Firm represents Fortune 500 companies, multinational corporations, major financial institutions, insurance companies, and a wide range of public companies and private businesses around the globe. In 2021, Jackson Walker’s Labor & Employment attorneys established a Diversity & Inclusion Counseling sub practice focused on helping businesses achieve their D&I goals and objectives while adhering to workplace laws and regulations. Our goal at Jackson Walker is to see our clients succeed. With a robust D&I strategy and plan, companies can demonstrate to their employees and the general public their commitment to D&I, and better attract and retain talent with a diverse set of skills and expertise to the benefit of its business.
For insights on the key components of a successful D&I program, download our summary.