Should we start an ERG?

In many ways, Employee Resource Groups (ERGs) have become a go-to solution for advancing diversity, equity, and inclusion (DEI) in the workplace. Over 90% of Fortune 500 firms have ERGs (according to a 2022 report by 麦肯锡 ), but we’ve seen a sharp rise in employee groups at smaller organizations, as well – though the data is not as well-documented.

Over the past year, I’ve had two major questions relating to ERGs from a wide range of organizations. The first question, among those that don’t have ERGs, is should we start one? And the second, from those with existing ERGs, is how do we make them more effective?

In this article, I’ll address the first question and provide some guidance -- and interesting data points (!) -- to help you asess whether ERGs may be right for your organization and ensure that they're set up for success and impact.

The ABCs of ERG

An ERG, sometimes referred to as an affinity group or employee network, is a collective of employees who share common identities or experiences, such as women, Black professionals, or Hispanic networking groups.

While ERGs can vary widely in structure—from informal meetings to large, formal organizations with leadership boards, dedicated budgets, and planned events—their ultimate goal is the same: to offer a safe space for underrepresented groups to connect, share experiences, and advocate for change; and to foster a sense of belonging and inclusion within the workplace.

3 Fun (and important) facts

Though widespread data on ERGs is scant, there are three key facts we know about ERGs:

1. They’re one of the earliest forms of organized DEI initiatives seen in corporate America. The very first ERG every formed is believed to be the National Black Employee Caucus founded at Xerox in 1970. For a little history on this, check out this reseach from Boston College
2. They remain one of the most popular forms of DEI strategies, especially among larger companies. The 2022 McKinsey Report cited above found that 90% of Fortune 500 companies have ERGs, and research by Pew Research Center found that around 30% of employees across organizations of all sizes and types reported that their employers offered ERGs.
3. Well-organized ERGs are shown to have hugely positive impact on organizations; but poorly-structured ERGs can actually cause harm. In fact, the McKinsey study found that employees not in ERGs rated their companies as more inclusive than those who were in ineffective ERGs (see chart below).

This last fact is really important and tells us that ERGs are not a cure-all, or a one-size-fits-all solution to DEI at every organization. It also tells us that ERGs need to be formed and cultivated thoughtfully and strategically if an organization is to reap any benefits to its people and business.

3 Essential questions to pose before launching an ERG

To assess whether or not an ERG may be right for your organization right now, pose these 3 questions and discuss them with your teams:

1. Do Your Employees Actually Want an ERG?

Before rushing into creating an ERG, it's critical to ask your employees if they actually want one. Don’t assume that what worked at another company will work for yours.

Leaders should conduct surveys or host focus groups to understand whether employees see value in having an ERG. An SHRM study found that when organizations based their ERG efforts on employee input, participation and impact were significantly higher. If employees express interest, ask for specifics about what they would want from the group—such as networking opportunities, professional development, or mentorship. This can guide you in building something that truly meets their needs.

2. Are You Willing to Allocate Budget?

While ERGs are often volunteer-driven, they require a budget to function effectively. This can range from small costs, such as providing catering for quarterly meetings, to larger investments like sponsoring an industry event or hiring a DEI consultant to run a workshop.

If your ERG is underfunded or treated as a "box-ticking" initiative, frustration will grow, and participants will feel unheard. To avoid this, be clear about the resources you’re committing and communicate them to the ERG upfront.

Research published in Harvard Business Review showed that ERGs with consistent financial support—whether through event sponsorship or training budgets—have far greater employee satisfaction and organizational impact than those that are unfunded.

3. Are You Ready to Listen and Act?

An ERG can be a powerful force for inclusion—if leadership is ready to listen to and act on its recommendations. ERGs often provide valuable insights into the experiences and challenges faced by underrepresented groups within your organization. However, nothing is more demoralizing to an ERG than being ignored. Leaders should invite ERG members to share their ideas in leadership meetings or join ERG events as allies.

Organizations that fail to act on ERG insights risk creating a culture of disengagement and distrust. ERG members want to know that their concerns are being heard and that leadership values their contributions.

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Alternatives to Starting an ERG

If you find that your employees aren’t interested in starting an ERG, or if your organization lacks the budget or leadership commitment to support one fully, there are many alternative strategies and initiatives that can have just as much—if not more—impact on your inclusivity.

Below are three popular alternatives to consider:

1. Sponsorship of External Groups

For smaller companies that may not have enough employees to sustain an internal ERG, sponsoring or subsidizing participation in external professional organizations can be a great option. Many industries have established associations for underrepresented groups—such as women’s networking groups or Black professional associations—that hold regular events and provide mentorship.

By paying for your employees’ memberships or sponsoring their attendance at conferences, you can still offer valuable networking and development opportunities.

2. Mentorship and Sponsorship Programs

Mentorship and sponsorship can have a profound impact on underrepresented employees, particularly women and people of color. Studies show that individuals with mentors or sponsors are more likely to receive promotions, stay longer with their company, and feel included in the workplace.

Creating a structured mentorship or sponsorship program ensures that underrepresented employees have access to senior leaders who can offer guidance and advocacy, helping them navigate their career paths more successfully.

3. Directly Ask Employees What They Need

Sometimes, the most effective way to support inclusion is simply by asking. Poll your employees to find out what specific development opportunities or resources would be most meaningful to them. You might discover that some employees would prefer leadership training or skill-building workshops over the formation of an ERG.

Offering personalized professional development is a low-cost, high-impact way to demonstrate that you’re invested in the success and well-being of your employees.

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Getting your ERGs right

If, after posing and discussing these questions and considering alternatives, one or more ERGs feel right for your organization, it’s really important you take the time to build a firm and inclusive foundation for your ERGs.

There are a range of resources available to help you do this unique to your firm and in a way that ensures great impact to your org and your people. Please feel free to reach out to me if you’d like to explore those or have any questions.

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Final Thoughts

ERGs can be a powerful driver of inclusion, but they aren’t a one-size-fits-all panacea. By asking the right questions, allocating resources, and fostering open communication between leadership and employees, you can create a workplace where everyone feels heard and supported—whether that’s through an ERG or an alternative approach.

Remember, the goal of any DEI effort is to create environments where everyone can thrive. Whether you’re ready to start an ERG or explore other initiatives, the key is listening to your people and acting on their needs.

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Melina Cordero is the Founder & President of P20 Workplace , a firm that delivers digital leadership development and DEI solutions built for the post-2020 workplace. Read the story of how she leapt from commercial real estate executive to DEI innovator, explore her services , and connect with her on?LinkedIn, where she shares the latest data, research, and ideas on the evolving world of work.

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