Why aren't ERGs being compensated?

Employee Resource Groups have become essential since the pandemic, but C-suite doesn't understand their value

Why aren't ERGs being compensated?

Employee Resource Groups (ERGs) have played a pivotal role since the COVID-19 pandemic, providing support to workers when they’ve needed it most.

Traditionally, ERGs consist of employees who volunteer their time and effort to foster an inclusive workplace. They’ve become more commonplace since the racial protests throughout the United States in the summer of 2020. However, two years after companies have pledged to launch diversity, equity and inclusion (DEI) initiatives, their grandiose announcements and mission statements have rung hollow. After all, ERGs are a great way to boost morale and improve company culture, but there’s a major issue: an overwhelming majority aren’t being compensated.

Last year, only 28% of respondents indicated that their organization compensated their ERG leads, according to the 2021 State of the Employee Resource Group Report conducted by The Rise Journey, a New York City-based HR consultancy. While that’s a noteworthy increase from a mere 6% in 2020, it indicates that employers still don’t truly value ERGs’ contributions to an organization. 

“The biggest argument for not paying ERG leads is that it’s not their job – they were hired for a specific role and shouldn’t worry about anything else,” Jes Osrow, co-founder and COO of The Rise Journey, told HRD. “Frankly, that’s a shoddy argument because these are often historically underrepresented folks in the workplace, which means they’re historically underpaid with severe bias against them for raises and promotions.”

Due to their motivations, needs and the general nature of ERG work, employees who lead these groups are more likely to be Black, Indigenous and People of Color (BIPOC) and oftentimes women. ERGs are a way for underrepresented groups to band together to recruit more talent like them into their companies and make sure that talent feels supported and gets promoted. According to Osrow, some ERGs even identify new customer segments and products for neglected demographics, resulting in more revenue for their company.

Read more: How can HR leaders encourage discussions around DEI?

Nearly 90% of women aged 18-60 say being a part of a women’s or family ERG has made their lives better at work, according to a 2020 survey by Chairman Mom, a San Francisco-based subscription service providing resources to working mothers. Nearly half of women aged 18-44 say the existence and quality of an ERG at a company would impact where they work. That carries a lot of weight during the Great Resignation, in which companies across the U.S. are experiencing historic turnover. More than 50 million Americans have quit their jobs over the past year, according to the U.S. Bureau of Labor Statistics.

To combat the nationwide staffing shortage and compete for talent, employers are having to increase their compensation and benefits packages beyond the traditional healthcare, dental, vision and 401(k) offers. When budgeting for extra perks, perhaps companies should reallocate their funding toward investing in ERGs. For instance, only 69% of respondents said that their ERGs are given a budget to use during the year, down from 90% in 2020, according to the report. Continuing the downward trend, 32% of respondents indicated that their ERG budgets were within $1,500 to $10,000, a 5% decrease from 2020.

“I have worked with dozens of companies and I know how hard it is for ERGs to get a budget to pay their speakers, to get a budget, period,” Michelle Silverthorn, CEO of Inclusion Nation, told Fast Company. “These employees are working overtime to make companies fairer and more accessible for everyone, to create an environment centered on equity and inclusion. If you are truly looking at me and telling me DEI matters to your company, then I am telling you that there are hundreds of people doing the backbreaking work of equity for free, in addition to their full-time jobs.”

Here's the good news: 48% of respondents (double that of 2020) indicated that their organization is currently discussing ways to compensate their ERG leads. In 2020, most respondents indicated that when ERG leads were compensated, it was done with a mix of cash bonus and hourly compensation. In 2021, there’s been a rise in additional forms of non-monetary compensation, like professional development, mentorship, swag and covered travel expenses.

When compensation discussions take place, only ERG leads, HR leaders and ERG participants are “in the room,” according to the report. If executives want engaged employees, they need to introduce and advance the conversation of ERG compensation, not just wait to approve what’s already been agreed to. After all, ERG leads contribute time, energy and unpaid labor into these unofficial roles, further adding to their stress and burnout. The C-suite needs to acknowledge their efforts and compensate them accordingly. If not, there could be a ripple effect throughout the company.

“If a strong cultural leader within an ERG leaves, they’re going to bring other people with them,” Osrow says.

The Rise Journey’s 2022 ERG lead compensation survey is open for responses at www.therisejourney.com

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