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Tap employee affinity groups to build bottom-line results

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in Best-Practices Leadership,HR Management,Human Resources,Leaders & Managers,Leadership Skills

An old employee-relations idea has found new purpose in today’s tumultuous business environment: Employee resource groups (ERGs)—also known as affinity groups or employee networks—are on the rise in companies large and small, according to a new report by the Mercer HR consulting firm.

Often organized around obvious affinities such as race, gender or sexual orientation, ERGs are becoming important sources of market intelligence and even new-product development expertise. When Mercer researchers surveyed 64 national employers (read the full report at www.mercer.com/ERGreport), they found that many companies now cultivate ERGs in order to advance business strategy.

A trend to fit the times

At many companies, ERGs go far beyond brown-bag lunch get-togethers. These days, they’re just as likely to exist as virtual organizations, in which group members maintain a running online dialogue with one another.

Employers seem more than willing to foot the bill. Mercer found that, in companies with ERGs, the average annual budget was $7,203 per 100 participants.

Why are employee resource groups enjoying a renaissance? Mercer researchers attribute some renewed interest to the rise of Millennials in the workplace—employees born since 1980. They’re comfortable working collaboratively and using the social media that often fuels ERGs these days. Millennials already blog and they’re already on Facebook, platforms that allow employees across the country or around the world to bond and exchange ideas.

But Mercer concludes that the biggest reason for the ERG resurgence is a natural, evolutionary process. Most affinity groups begin to provide mutual support for employees and to represent members’ interests within the organization.

Now companies are finding that mature ERGs can serve important business goals and contribute to bottom-line success. Mercer found organizations tapping ERGs to:

  • Gain insight into new markets and customers
  • Act as brand ambassadors to the communities ERGs represent
  • Polish the company’s reputation through community service
  • Teach colleagues the nuances of doing global business.

Says Mercer’s report, “The more the groups get involved in solving real-time business problems, the more visible they become in the organization, the more excited employees become about participating and the more they benefit from their involvement.”

ERGs’ business impact

Here’s how some companies are leveraging their ERGs:

  • At Dell, members of the NextGen ERG are actively involved in real-world testing of the company’s new phone and tablet technologies, which aim to serve a market of young users.
  • McDonald’s Women’s Leadership Network has helped the chain develop new, healthier menu items, such as salads and smoothies.
  • Banking giant HSBC’s Asian-Pacific Islander group takes the lead in holding financial education sessions in cities with large Asian communities.
  • Boeing employees of Middle Eastern origin teach executives and sales people about the nuances of doing business in a crucial aerospace market. Another Boeing ERG spearheaded creation of a companywide database of employees with unique foreign-language fluency, to facilitate quick translations when needed.

Grow your own ERGs

If ERGs sound like a good fit for your organization, follow these four best practices outlined in the Mercer report:

1. Create forums that let group members and executives interact around business issues.

2. Provide executive coaching for ERG members. Pass along the leadership development resources your executives use, so they and ERG members are on the same page.

3. Encourage managers and leaders to engage with ERGs—to assess new markets, provide feedback on products or initiatives and communicate with employees at the grassroots level.

4. Use ERGs as succession-planning incubators. They’re a great way to nurture fresh talent.

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