Are Employee Resource Groups Worth the Effort?

Companies that fully utilize their employee affinity groups will emerge with a competitive advantage after the current economic downturn. Also known as employee resource groups or ERGs, such entities have become valuable assets in the face of rapidly shrinking but also increasingly multicultural markets.

Originally conceived as a way to reduce cultural isolation for diverse employees and women, ERGs in some companies have evolved into highly functional resources that support business goals. These goals can range from innovative product development and increased customer satisfaction, to consumer outreach and employee recruitment and retention.

Interested in expanding into the Latino market? Your Hispanic or Latino ERG can help you figure out which of your products or services are most likely to succeed among these consumers. They could point out, for example, that dishware sets need to include larger serving platters and more place settings because Latinos tend to have larger families. Likewise, your Asian ERG might tell you not to bother with typically small bags of rice if you want to sell this daily staple to their community.

Here are some other ways in which your organization can systematically tap into its ERGs to survive and thrive in the current business climate. But keep in mind that, to be effective, the groups must be formally recognized and supported (through time allotted to carry out activities and the appropriate budget to do so).

• Reach customers in otherwise saturated markets. The insurance and financial industries were early adopters of ERGs because they needed new markets for their products. Once mainstream America had bought most of the insurance products it was going to buy and everyone had some sort of bank account, the only way to grow was by seeking new opportunities. These were found among the more recent immigrant communities, which ERGs helped to identify and tap. Could there be a market for your products or services among those groups? Your ERGs are likely to know. And they also might help your marketing department develop the best approach to reach those markets.

• Tap into under-served but potentially lucrative markets. Those same immigrant communities may not understand the value that your product or service can yield, or there may be culturally-based barriers to buying or utilizing such offerings. Your ERG members might know how to raise awareness or overcome objections. But unless you ask them, you won’t know what those barriers are.

• Attract other diverse employees. With an increased multicultural customer base, you will probably want to have employees who speak different languages and understand the role of cultural values in making purchasing decisions. Your ERG members can help. They know what it’s like to work in your company and know others like themselves (Latinos, in particular, tend to have large networks of family and friends). An announcement or email distributed among the members can save your company advertising dollars, as well as sourcing and recruitment time.

• Early engagement. ERG members can become buddies to new employees during the onboarding process, a critical period of adjustment for diverse employees. Those who are the first in their families to work in corporate America (as many Latinos are) need the most guidance.

• Optimal talent utilization and retention. Employee research group activities are natural opportunities to help members develop the skills they need to help the organization meet its goals and succeed. But go beyond skills-based training and also provide career development workshops or seminars. Topics that are most helpful include successful networking as well as mentor and mentee relationships. The more your employees understand how to manage their own careers, the more effective they will be to the company. They also are more likely to stay when the competition comes knocking because of their unique set of skills.

• Leadership development. Many diverse employees—especially Latinos—are culturally averse to self-promotion and thus have difficulty attaining leadership positions. But ERGs provide an excellent vehicle to develop such capabilities, which can later transfer to other areas of the organization.

• Talent management. Succession planning and other important aspects of talent management can be eased greatly by regularly meeting and working with ERGs. This provides management with a chance to see diverse employees under completely different circumstances—and thus identify talent that otherwise might have gone untapped.

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