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ERG 2.0: Progress Toward Delivering Business Returns On Diversity

Forbes Human Resources Council

Dr. Nassim Abdi is the co-founder and CEO of StoryBolt, a corporate inclusion training company using storytelling and film to spark empathy.

In my experience developing immersive inclusion learning experiences, it’s clear that DEI leaders are struggling to integrate and add value to mainstream business results. In a recent Forbes article, Shaun Harper got it right when he observed that diversity initiatives are “lopsidedly HR-focused,” rather than aimed at generating business outcomes. However, a number of senior diversity leaders have recently realized that employee resource groups (ERGs) are a natural route to business relevance and that they offer a sustainable infrastructure for achieving business returns on diversity and inclusion.

What Are ERGs?

ERGs are identity-based communities within organizations. They are inherently integrated into the business because members come from all functions and operating units. Originally called affinity groups, then employee resource groups (ERGs) and more recently business resource groups (BRGs), they vary in purpose and impact. Sometimes they are networking clubs, but as DEI has become a corporate value, these groups now offer the opportunity to gain leadership experience and visibility in the organization. Often ERGs are managed by a chief diversity officer or chief human resources officer staff, so they are largely involved in providing a DEI lens for HR core values initiatives and career development.

The term BRG has recently become popular as it explicitly denotes a desire to connect with business success. I’ve found that the naming of these identity groups aligns more with the founders’ aspirations than with actual group maturity and systematic business contribution.

ERGs And Business Impact

I mapped out the ERG journey to business impact here to show the evolution of corporate identity group business alignment. There is certainly a gap between HR-related contributions and business growth initiatives, but there is progress being made through terrific examples of ERG-driven collaborations that deliver revenue growth, most frequently in B2C markets where customers make up these same identity groups.

There are three common success factors that stand out in the journey to business impact:

• Proactive outreach from the ERGs to business leaders

• Consistent and candid conversation between identity group members and other employees

• Tracking and visibility of business growth metrics for ERG-driven programs

The first factor is the most important. That outreach is what distinguishes HR-oriented ERGs from those that will ultimately deliver business results. My colleagues think of this evolution as "ERG/BRG 2.0."

Examples: ERGs In Action

Healthcare company Roche provides an example of these success factors in action, particularly proactive BRG business outreach, in Leadership in Equitable Organizations. One company-wide Roche program across BRGs is called "Younity Circles." This program is championed by a VP of sales from the Women’s BRG. Open Zoom sessions are actively promoted by the BRG, with a guest Roche business leader providing a storytelling element. The conversation flows from a discussion guide, and breakout sessions are co-led by the BRG leader and the business leader. Younity Circles are a natural extension of long-term leader engagement because each BRG already has a fully engaged executive sponsor.

I believe that over time, increasing outreach and integration into the business allows ERG/BRGs to become a recognized innovation resource, for instance, acting as focus groups for identity-specific innovations, or delegating members to sit on innovation project teams to represent the community’s point of view.

Seramount, a DEI research and consulting firm, recognizes ERGs in their annual ERG Impact Awards. Seramount research provides many exciting examples of proactive, ERG-driven innovations as well as identity-sensitive sales and service practices. For instance, the 2022 Business Impact award winner, Alianza, the Hispanic ERG at Merck, addressed the pandemic’s particular impact on the Hispanic community. Seramount gives this ERG credit for launching a "Hispanic Learning Series, which focused on health care gaps affecting Hispanics, social determinants of health, vaccine confidence, and the growing impact of Hispanics inside and outside Merck to drive business outcomes." This series ultimately led to collaboration with Merck's Vaccine Confidence Team on outreach to the Hispanic community.

The Importance Of Visibility

The third critical success factor, tracking and visibility of meaningful business growth metrics, is the most challenging, but it's a key step because it justifies increasing investment of time, resources, and management into the company’s ERG infrastructure. The accepted measure of an innovative company is the percent of revenues generated from products launched in the preceding three years. Boston Consulting Group and others have used this metric to find a positive correlation between innovation revenue and diversity in top company management. So one way to start would be to track ERG-driven new product revenue. But I wondered if there were other complementary metrics that might be equally meaningful if applied to identity-specific sales and service practices.

One candidate worth considering to measure customer approval of identity-specific product and service initiatives is the very popular Net Promoter Score (NPS). NPS is the percentage of customers who are very likely to recommend your product or service to someone minus the percentage of customers who are not likely to do so. Bain & Company explains: “Measuring your Net Promoter Score gives you a number you can regularly track for each business, product, store or customer service team.” Using NPS is meaningful to customer satisfaction and revenue growth and would pick up some identity-related issues, like dress code preferences among Muslim customers. Interestingly, some companies are also using NPS internally to track employee satisfaction as a retention metric.

Final Thoughts

It's exciting to see ERGs leading large organizations toward realizing the full business potential of diversity. From my conversations with diversity, HR and business leaders, I'm hopeful that we have found a path to achieving measurable business returns from diversity and inclusion. I'm convinced that ERGs are a path to drive diversity and inclusion into the DNA of our organizations to benefit employees, customers and the bottom line


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