Employee Resource Groups: Making Diversity Work?

What exactly is an Employee Resource Group (ERG)? It seems almost obvious, but the answer is much more complex than the name suggests. In actuality, an ERG provides networking and career advancement opportunities for under-represented minority groups and it might help in recruiting and keeping top talent from diverse backgrounds. And the next time you take a bite of your favorite Lime Flavored Doritos during the big game, you can toast an ERG with your Corona for making it a possibility. But how do ERGs really work?

That was the exact question posed at the 2nd Annual Asian MBA Leadership Conference & Career Expo in New York City on August 27, 2010. Calvin Chung, director of construction and the Asian Business Council executive chair at Target, attempted to find the answers when he moderated a seminar titled "Employee Resource Group Leaders Summit: The Business Case for ERGs: Benefits for Human Resources and the Bottom Line." Joining him were panelists Howie Schaffer, vice-president of Cook Ross, Inc.; Fu'ad Butt, corporate vice-president of New York Life Insurance Company; and Lynn Wong, manager of import operations at The Home Depot.

"There are some people who say, 'I would have quit this company if it wasn't for ERG. This is where I get heard. This is where I feel seen. This is where I get recognized,'" said Mr. Schaffer, a respected speaker, trainer, and facilitator on cutting-edge topics in diversity, inclusion and cultural competency. He feels that in many ways ERGs are the glue of an organization and in fact "are critically important to productivity and to profits."

And in a bad economy with so many diversity programs getting cut, ERGs are by nature a grassroots effort that allows a company to continue its commitment to diversity. "Diversity is good for business. ERGs are one of the anchor points for diversity," added Mr. Butt. [See Vault's Annual Diversity Survey for more on ERGs and details on which companies are championing them.]

Ms. Wong, who founded the Pan-American ERG known as the Pan Asian Waves, takes that notion one step further noting how a more diversity-friendly workforce translates to a better understanding of a company's consumer base. "ERGs reflect the needs of our customers and allow companies to better serve and better understand our consumers," she said.

Agreeing with his fellow panelist, Mr. Schaeffer added that the aforementioned Lime-Flavored Doritos were the result of a Latino ERG. "They create business development opportunities and develop new area of income for a company."

In addition to helping the company, ERGs also help advance the careers of the members involved. According to Mr. Butt, a good ERG provides a safe area for networking and puts people into situations they might not find themselves in on a normal day-to-day basis—including exposure to senior management.

"You might end up working with them on a project," he said. "Maybe you are on the planning committee of an ERG with a senior exec, allowing you to work with that person in a safe environment. This is valuable face-time."

Leveraging ERG Leadership is one of the keys to a successful ERG, according to Mr. Schaeffer. "They provide opportunities for emerging leaders to show their stuff, and it gives them an opportunity to fail," he said. "If you can handle an important task in an ERG, you can handle more responsibility within the larger company."

His other keys to a successful ERG include setting the direction of the group (create a strategic plan); build a strong foundation (create bylaws, corporate charters or a leadership mandate); know your purpose (is it a social group or one that drives talent, performance and profit); connect to the bottom line (focus on business goals and outcomes); everyone can play (allow non-Asians to join an Asian ERG); Connect with other ERGs (collaborate on common goals); secure funding (it limits growth if you are fighting for scraps without corporate funding); choose your battles (don't get too political too soon); and be accountable (invite scrutiny and oversight from corporate sponsors).

And don't be worried about making some mistakes along the way. ERGs, like all things, are a process. Ms. Wong notes that the ERG she founded in 2007 picked up financial support from the company in 2008 – what she called huge validation from The Home Depot – but that the Pan Asian Waves ERG is still growing and evolving. "We're figuring out what we can do and what we cannot do," she said. "We are on a growth journey and learning from experience."

--By Jon Minners, Communications Manager, Vault.com