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How employee resource groups can help employees and your business

If you’re looking for new ways to better engage your team and improve camaraderie, employee resource groups can be a great option.

So, what are they?

They’re groups of employees who share some trait or life circumstance. Think of them as clubs within the workplace.

Common examples of employee resource groups include those focused on:

  • A specific race or ethnicity
  • A gender
  • Disabilities
  • LGBTQ status
  • Veterans

However, the growing popularity of employee resource groups – as well as the changing nature of the workplace – means that they’ve become more diverse in focus. These days, it’s not unusual to find groups centered on remote workers, caregivers (parents of minor children or those who care for elderly parents, for example) or even various interests.

Employee resource groups are open to:

  • Those who fit certain traits or circumstances
  • Those who share an interest in a topic and want to learn more
  • Those who want to serve as an ally and advocate for a specific group of people

In other words, anyone who wants to participate can join these groups.

Their purpose is to:

  • Give a voice and greater visibility to certain groups, especially those who are underrepresented in an industry.
  • Open opportunities for groups who have historically faced adversity in society or roadblocks in career advancement.
  • Create a positive dialogue and boost interaction among team members.
  • Help everyone feel included and valued.

Value for businesses

There are many compelling reasons why employee resource groups have become so prevalent within businesses of all sizes – to the extent that more than half of Fortune 500 companies offer them today.

It’s because employee resource groups are valuable for businesses:

  • They support diversity and inclusion initiatives, including recruitment and outreach.
  • They generate goodwill for businesses within the surrounding community, through charitable initiatives and volunteerism.
  • They can help businesses to better understand certain target audiences by allowing members to serve as an in-house focus group.
  • They can improve employee engagement and loyalty to companies, which are associated with longer tenure.
  • They’re a source of ongoing education and training for employees. For example, you could bring in speakers to lecture on a certain topic or host a lunch-and-learn meeting.

Value for employees

Employee resource groups are desirable for employees, too:

  • They help employees meet people and establish meaningful connections with like-minded co-workers.
  • They provide an opportunity to learn about people who are different from them or topics they’d like to explore in greater depth.
  • They facilitate mentorship and networking, both of which can lead to faster career advancement.
  • They enable employees to attain experience in a leadership role.
  • They give employees an outlet for volunteering in support of a cause and improving the community around them.

These benefits are especially important to younger generations: Millennials and Generation Z.

Younger workers – who will soon become the largest percentage of the workforce – are the most diverse and inclusive generations yet.

And they’re not just looking for a job to get paid and keep them busy between 9 to 5. The idea of being socially responsible and bettering the world can appeal strongly to them. Many Millennial and Gen Z job seekers look for opportunities to do this through their work.

The lesson: Companies should more heavily promote employee resource groups as part of a competitive perk package to attract talent.

Starting employee resource groups

The formation of individual employee resource groups are initiated by your employees.

But before they can do that, your company needs to first:

  • Establish its policy on employee resource groups
  • Obtain approval of the policy from executive leadership and agreement to sponsor individual groups 
  • Put a process in place – including application forms – to guide employees seeking approval for an employee resource group

Your policy sets the ground rules and parameters that employee resource groups will operate within.

These include:

  • Which types of employee resource groups you’ll allow
  • Who can join (spoiler alert: all employees)
  • Whether employees will be paid for this activity
  • Your budget for employee resource groups, along with an explanation for how those funds will be allocated among the various groups
  • How and where members of employee resource groups can advertise to other employees (and who will pay for it)
  • What can cause the disbandment of a group

Once executive leadership has approved, you’ll need to create the process by which employees can apply to start groups.

The application process could occur throughout the year, or open for a set period of time annually.

Appoint someone to accept applications, as well as the person or team who will make the ultimate decision. Make sure employees know where to submit applications and the deadlines.

Developing a template form for employees helps reduce barriers and make the process more efficient. It enables you to get the information you need and in the format you prefer, and it’s less work for employees.

On the application, require employees to provide certain information about their proposed employee resource group:

  • The purpose
  • The mission, vision and goals
  • How the group aligns with and supports the overall values and goals of the company
  • The organizational structure (Who will lead the group, and what will their titles and responsibilities be?)
  • The succession plan within the group (How long will people stay in leadership positions?)

If this information is known at the application phase, you can also ask employees about:

  • When and where they plan to meet
  • Which resources they’ll need, such as conference rooms or an off-site location rental for events

Once an employee resource group is official, you can help to promote it in various channels:

  • New-hire paperwork or during the orientation process
  • Employee handbook
  • Any content that discusses the company values and culture
    • Company video
    • Careers webpage and other recruiting materials
  • “Employee resource group fair” at your office
  • Employee intranet
  • Corporate responsibility report
  • Annual report

What to watch out for

It’s a good idea to consult with your legal team as you define your policy on employee resource groups and work with active groups. That’s because there are opportunities for your business to land into trouble if you’re not careful.

Issues to keep in mind:

1. Specify which types of employee resource groups you’ll allow and won’t permit.

These may include:

  • Groups promoting ideas that clash with your anti-harassment and discrimination policies – you don’t want anyone advocating for diminishing the rights of others at your company
  • Groups that can be polarizing and fail to serve a purpose in furthering your organizational mission

2. Employee resource groups must be inclusive. You can’t exclude anyone who wants to participate in a group from joining.

3. Membership in an employee resource group must be voluntary. No one can be compelled to join.

4. Be careful that you don’t violate employees’ rights.

 You could run the risk of violating the National Labor Relations Act (NLRA) by having what amounts to an employer-sponsored union.

Employee rights. Employee resource groups don’t represent groups of employees for the purposes of negotiating or bargaining with employers. They’re not a union, and you should state that in your policy and application.

You should also explain that your company won’t receive proposals or recommendations from any employee resource group regarding terms and conditions of employment or any similar proposal that would come from a labor union. A group violating this rule is grounds for disbandment or cutting off funds.

And, you can’t retaliate against individual employees. Under the NLRA, employees have the right to engage in “protected concerted activity.” If an employee is part of a group that violates your policy, this means you can’t personally punish that individual in the form of reduced pay or termination, for example.

Employer-sponsored unions. The NLRA doesn’t allow these. To avoid the appearance of having employer-sponsored unions:

  • Don’t let managers or executive sponsors directly control employee resource group meetings or events, or make decisions for the group.
  • Permit only non-managerial employees to hold leadership positions in these groups.

5. Consider the Fair Labor Standards Act (FLSA) in addressing payment terms for employees who participate in employee resource groups.

Will members be paid to attend meetings or perform work in the community?

Will members conduct activity outside work hours and off premises, or will members conduct activity during work hours and using office facilities?

Remember that voluntary activities don’t have to be paid. Non-voluntary activities, such as participating in a focus group for your company, must be paid.

6. Train your company’s leadership to understand employee resource groups and their purpose, as well as the company policy governing employee resource groups.

Managers need to be aware that their direct reports may be participating in a group, which could impact their timeliness and attendance at some point, or cause them to be away from their desks occasionally.

If managers aren’t in the loop, they may discipline an employee unnecessarily, which could result in a discrimination claim.

Summing it all up

From improving diversity to strengthening employees’ bonds to their workplace, employee resource groups hold a lot of appeal for employers and employees alike. These groups can even be an effective part of your recruiting toolbox when targeting younger workers.

Be sure to craft a careful, legally sound policy governing employee resource groups, and have a process and application form ready to go for employees who want to initiate a group.

For more information on creating a workplace that enhances employee satisfaction, download our free magazine: The Insperity guide to employee benefits.