The 9 Best Benefits of Employee Resource Groups (ERGs)

Cultural compatibility with a company is increasingly important for job seekers, and many current employees want their companies to speak out on social issues. But recognizing employee concerns and meeting business objectives can be a tricky balancing act.

That’s where employee resource groups (ERGs) can help. ERGs are voluntary, employee-led affinity groups that help employees connect and thrive, giving them a safe space where they feel both supported and empowered to work on positive change at your company.

ERGs improve employee engagement and company loyalty, help attract and retain diverse talent, and build inclusivity in the workplace. Ultimately, ERGs and other DEI initiatives benefit both your employees and your bottom line.

In this article, you’ll learn:

• The purpose of ERGs
• How ERGs benefit employees and businesses
• Ways to support employees who want to form an ERG

Why Are Employee Resource Groups Important?

ERGs are all about creating a supportive community, fostering personal and professional development, and providing people with the resources that best fit their needs. Members typically share a common belief, identity, or affinity with the group, and ERGs may or may not include allies.

Examples of common ERGs include:

• Ethnicity, culture, or race
• Gender
• Sexual orientation
• Military veteran, reserve, or active duty status
• Responsibilities such as caregiving to others

One key function of ERGs is to support underrepresented employees whose interests or concerns may not be reflected in the general company policy. Whether formed by employees or rolled out by the company, carefully selected ERGs with good leadership and clear goals are most effective.

9 Benefits of Employee Resource Groups

Effective ERGs have benefits for employees and employers alike. By improving employees’ sense of belonging and increasing employee buy-in to company culture, and facilitating professional development opportunities, mentorship, and an inclusive work environment, ERGs ultimately benefit the workplace overall.

Boost Employee Engagement

In the US, low or no engagement cost an estimated $1.9 trillion in lost productivity in 2023 alone. Engagement also impacts company culture: disengaged employees feel less connected to the mission or purpose of the company.

Provide Professional Development

Professional development is an important strategy to improve employee retention and promote a thriving culture of learning at your company.

Done right, ERGs can give employees the opportunity to develop professional skills and leadership abilities by providing formal and informal mentorship opportunities, facilitating collaboration across teams and job functions, and more.

Support Recruitment, Onboarding, and Retention

ERGs, and the inclusive environment they create, help attract diverse talent. But hiring good employees doesn’t guarantee they’ll stay—that’s why 90% of companies with ERGs use them as part of their onboarding process to help new hires feel included from day one.

Inclusivity, mentorship, and a purposeful focus on inclusivity and diversity (I&D) can improve diversity in leadership, which in turn also improves retention. In fact, leadership that prioritizes diversity can reduce attrition risk by 50%.

Promote Innovation, Collaboration, and Creativity

ERGs bring people together from various teams, with different areas of expertise, and across different levels of leadership to meet a perceived need. This often means bringing together people who can recognize the need for change and those with the power to make that change happen.

Reveal Challenges and Pain Points

Employees are often in a better position to see what’s going well (or not), so ERGs help you identify challenges and pain points at your company. By having leadership and HR work closely with ERGs, you can improve communication and transparency between execs and employees, solve problems more quickly, and better meet employee needs.

Offer Resources and Assistance

The purpose of an employee resource group is to do just that: provide employees with resources and support to help them thrive.

Examples of these resources include:

• Wudu sinks for Muslim employees
• Support developing flexible work arrangement requests for employees returning from parental leave
• Help navigating existing resources, such as the Medicare Medicaid Assistance Program (MMAP) for employees who are also adult caregivers

Foster an Inclusive Work Environment

ERGs provide repeated exposure to inclusive practices and show your company’s commitment to caring for its employees, which helps your company build a culture of inclusivity and engagement.

Build Community

Building community is what ERGs do best—employees ranked it as the top outcome (66%) in a McKinsey survey. ERGs can also support your company’s commitment to corporate social responsibility by inspiring positive social impact in the broader community.

Improve Products and Services

ERGs can help create better products and services, expand the customer base, and increase customer loyalty. A diverse workforce can better anticipate consumer needs.

How to Support Employee Resource Groups

Provide Executive Sponsorship

According to McKinsey, ERGs with executive sponsorship are more successful than those without. Having senior leadership participate in ERGs can bridge the gap between the ERG and the company. To secure this kind of support, make sure the goals of the ERG have a clear and measurable impact on business outcomes.

Make Sure People Know About Your ERGs

To get the best participation, people need to know about it, so you need to tell your employees about this benefit through all your normal internal communication channels. You’ll also help build your employer brand and draw in more people who are committed to your values by advertising externally.

Here are a few examples of how you can advertise ERG events and meetings:

• Internally: Regular updates, emails, announcements at all-hands meetings, company newsletters
• Externally: Company social media accounts, PR campaigns, job ads, recruiting events

If you’re worried about skeptics or low participation, make sure you spotlight achievements and highlight personal stories to show the positive effect this is having on those involved.

Budget Appropriately

ERGs take extra time and effort. According to Great Place to Work, ERG budgets often fail to reflect a company’s stated values and are often overlooked in favor of publicly-visible donations to outside organizations.

Recognize ERG Leaders

44% of ERG leaders feel that their work goes unnoticed, so it’s critical to recognize their contribution and commitment. If you have the budget, consider paying your ERG leaders for their service, as compensating ERG leads improves group outcomes.

Even if you don’t have room in your budget, recognition is key to reinforcing DEI initiatives like ERGs.

Provide Assets and Resources

Not all helpful resources require an extensive budget. In fact, curating resources that already exist at your company to fit the needs of an ERG can be a cost-effective place to start. Consider capitalizing on your employees’ talents and strengths before looking to outside speakers, panels, or organizations.

Ensuring your employees know what’s already available to them will help them develop more compelling proposals for their ERG’s needs when they arise.

Curate Personal and Career Development Courses

Anita Grantham, Head of HR at BambooHR, notes that a professional development strategy boosts recruitment and retention. These personal and career development courses are a great way to invest company resources that already exist and help your ERGs thrive.

Invest Time and Energy for Successful ERGs

Not making the most of them, or worse yet, dissolving existing ERGs can be detrimental to your company culture and harm your reputation—which is exactly what happened at X (formerly Twitter) in 2022.

Whether in the form of thoughtful development plans or an ERG-led conference or panel, investing time into ERGs is just as essential as designating the appropriate budget. ERGs can inspire company loyalty and belonging, but only if your organization makes them a priority. ‌