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How to Craft Good Company Culture

How employee resource groups can empower workers and help organizations of all sizes meet their goals.

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Successful companies perform all the basics well. Management demonstrates leadership, the workforce is presented with room for growth and opportunity to innovate, and employee innovation is implemented within the organization. That is the environment in which Caitlin Taylor and her Women at IBM colleagues have made an impact.  

Taylor joined the New York offices of IBM—the legacy Fortune 500 company widely considered among the best working environments for women—shortly after graduating college. Soon after her onboarding, she joined an email Listserv focused on opportunities and advancement for women headed by Marianne Cooper, now a company vice president. The email list led to quarterly events and then more frequent meetings on the topics of gender diversity and inclusion, and finally culminated in a formalized organization: the company’s largest chapter of Women at IBM, which boasts more than 1,000 members in the New York City area.

Women at IBM is an example of an employee or business resource group, a collective of company employees affiliated with a particular affinity group that advocates for the needs of that community within the organization. It was Women at IBM that pointed out to company management that not every bathroom at the company’s 131 offices, spread across 97 countries, reliably provided basic feminine hygiene products, forcing women to either bring their own tampons or waste time during work hours rushing out to find some in a hurry. Now, thanks to Taylor and Women at IBM, the global computing powerhouse offers tampons in all of its restrooms worldwide. 

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“Men might not have to think about that, but women do, monthly,” Taylor said.

Knowing the work restroom has exactly what you need to carry on throughout the day may seem like a quotidian concern, but small victories like these carry immense psychological benefits. Employees feel empowered, management feels benevolent and the collective feeling of goodwill helps the organization pursue its larger goals. At IBM, this victory may not have happened without an employee resource group (ERG) dedicated to women. And if a company is willing to listen, such groups can impact hiring practices or warn when products or brand identity are inadequate—for people of color, for trans people or for other populations whose perspectives and needs can be directly presented to management by an employee resource group.

First known as “workplace affinity groups,” business resource groups trace their origins in the United States to the racial strife of the Civil Rights movement in the mid-1960s. Executives at Xerox, alarmed by race riots in Rochester, New York, where the company was then headquartered, launched a progressive hiring program. However, new Black hires still encountered discrimination at work, so the company created a workplace group called the National Black Employees Caucus—the country’s first recognized ERG.

ERGs have been standard office practice for American companies since at least the early 2000s. Though an increasing number of legacy companies, as well as startups and nonprofits, now have C-suite or senior management positions dedicated to diversity, equity and inclusion, or DEI—and many more companies seek advice from outside consultants, including university-level researchers—ERGs “are where the rubber meets the road” when a company sets and meets its DEI goals, Taylor said. “It’s where the actual work that needs to be done to create a truly inclusive organization gets done.”

“They play an even more significant role than ever because of the times we’re going through right now,” agreed Joseph B. Hill, a veteran chief diversity officer and managing partner of JB5C, a DEI-focused consultancy in Atlanta.

There are many incentives for companies large and small, as well as nonprofits, to achieve basic DEI goals, including both an accommodating diverse workplace as well as a brand identity and product offering that’s acceptable to a broad range of people. Board members, as well as the public, pay attention to workforce metrics, and many companies have mandates from their workers and the public to diversify their employee base, their executive management and their boards.

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Gen-Zers and younger millennials have been known to decline a better-paying job offer in favor of a lower-compensated position at a company with a better DEI culture, including company-chartered ERGs. And consumers will quickly abandon a brand that presents a tone-deaf or culturally insensitive front or commits an avoidable PR blunder caused by a too-narrow perspective within the company.

Externally, ERGs identify new markets and product shortcomings, as well as serve as a check on brand consistency and identity. Health care companies need ERGs to inform equitable care; major brands like Nike need ERGs to inform products and marketing to remain relevant with the customer base.

Internally, ERGs go a long way to create employee satisfaction, giving members a voice and the feeling of being recognized and welcomed within the organization. That’s more important than ever during the post-pandemic Great Resignation. “People are leaving their roles if they’re not feeling supported or treated well,” said Hill, who echoed other experts in stressing the importance of employees feeling that they have a voice within the company—and that that voice is heard and acted upon.

“I always say every company could use an ERG,” he added. “It impacts the business, so it becomes a business imperative.”

However, an ERG needs to be more than just a group of like-minded individuals or people with the same gender, skin color or other orientation.

“We’re all longing to belong, and affinity groups are a way in an organization that people can come together and at least feel like they belong to the group—and the hope is they also belong in the company,” said James T. McKim, Jr., a managing partner at Organizational Ignition, a New Hampshire-based firm that offers DEI training and workshops.

“Affinity groups are sometimes part of what we see as DEI goals. The DEI goal is, ‘We need to form affinity groups, and once we’ve formed them, we’ve reached that goal,’” McKim added. “But that doesn’t help you achieve organization goals and objectives.”

The challenge, according to McKim, is “if you don’t set up an affinity group with a purpose that is to not only ‘provide a sense of belonging’ but also to contribute to the goals and objectives of the company, it’s just a club. And clubs are great for a sense of belonging, but they don’t help the organization along.”

A true and truly effective ERG, then, will have a charter from the board or a senior executive. They will have an executive sponsor. They will have the opportunity to present perspective and critiques to the board and management—and the board and management will have the responsibility to listen and heed what the ERG says, even if it’s inconvenient or uncomfortable.

“So if you’ve got a goal, say, to increase your revenue 10 percent next year, there are some things you can do from a DEI perspective that will help you achieve that: tracking innovation, tracking ideas, tracking who’s coming up with ideas,” McKim said. “Are you using the same people to come up with ideas and not getting a diverse perspective from a diverse employee base? Are you using your affinity groups to come up with ideas for products and services? The key here is using affinity groups to achieve business goals or mission goals and directives.”

A legitimate, empowered ERG will also be allowed to develop a long-term vision and a strategic plan to fulfill that vision. However, that plan “should always be aligned with the goals of the company,” McKim added. “An ERG that’s not aligned with the company’s goals and initiatives can become a sort of pseudo union. But that’s not the point.”

However, ERGs are not panaceas. “They don’t solve every problem,” said Alvin B. Tillery, Jr., a professor of political science at Northwestern University and director of the school’s Center for the Study of Diversity and Democracy, who noted that academic research on ERGs “is not super robust yet.”

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Employees who take on leadership or organizational roles at an ERG can soon discover they’ve taken on what can amount to a second job—without extra compensation. “They can be spaces that create a ton of burnout, especially when there’s not a professional support staff,” he said.

Organizations that give employees who work with an ERG extra pay or extra recognition “have really the best results,” Tillery noted. And in the age of social media, “they can’t be BS,” he added.

And ERGs can create friction within a company, particularly if an ERG driven by younger employees faces a generational divide when presenting their suggestions or demands to a board or executive team. “Let’s be real: baby boomers and older Gen-Xers have very different ideas about what work and the workplace are supposed to be than millennials and Gen-Zers,” Tillery added. If a board creates an ERG but then doesn’t adjust hiring practices, promote people of color within the company or heed demands to cut ties with problematic clients, the ERG might reveal deepening cracks within the organization that need to be addressed. “That tension is real, and it’s not going away anytime soon,” Tillery said.

It is clear that if a big company wants to attract talent, ERGs are a must. “And that wasn’t the case five years ago,” Tillery said. “I have young, affluent white students who would not work anywhere without ERGs for people of color and LGBT people. I have counseled students to take jobs and they’ve said no, because the culture didn’t feel right for them.” 

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