TAPPING THE POWER OF ERGS TO DEVELOP LEADERS

TIAA made a big change to its parental leave policy in 2018.  

The New York-based financial services firm now offers 16 weeks of paid leave to employees who are new parents—regardless of their gender, whether or not they gave birth to the child, or if the employee is the primary or secondary caregiver.  

TIAA anticipates that a given year will see between 350 and 400 of its 12,000 eligible employees taking advantage of this expanded, inclusive benefit, which was driven by input from TIAA’s LGBTQ employee resource group (ERG). 

“A member [of the ERG] shared some frustrations with the amount of time allotted to the mother and the comparatively minimal time allotted to the father,” says Cathy Ivey, director of diversity and inclusion at TIAA. “Our alliance leader national chair shared this with their executive sponsors, who took swift action.” 

That action came in the form of a discussion with TIAA’s chief HR officer, who sat down with the benefits team to work out the details of a new gender-neutral parental leave policy for all the organization’s employees. 

Ivey says that this example highlights two direct benefits of ERGs—the employee felt comfortable speaking up in the safe environment provided by the ERG, and in doing so, reflected living TIAA’s core values. And the HR leader was responsive to the concern raised, which resulted in a meaningful outcome. 

While the outdated perception on the part of some that ERGs are basically glorified social groups that bring together employees from similar backgrounds for “food, flags, and fun,” persists—it’s just that—outdated (and inaccurate).  

Make no mistake—connecting employees with shared experiences and interests is certainly part of what employee resource groups do. As the TIAA example illustrates, ERG involvement can drive inclusive policies, help employees cultivate leadership skills, and reveal those who have plenty of leadership potential who may have not yet been identified as high-potential employees.  

But perhaps because of the common off-base perception of ERGs as mostly social groups, they can be overlooked as the powerful and cost-effective leadership development platforms that they are.

In reality, employee resource groups are often-untapped goldmines that organizations should look to as a viable source for future leaders.  

Viewing ERGs as strategic initiatives

Many high-performance organizations—which i4cp defines as those that consistently outperform their competitors in the marketplace—already understand the role that ERGs can play in keeping talent flowing through the leadership pipeline.  

In fact, i4cp’s study The Untapped Power of Employee Resource Groups, based on a survey of 363 business professionals found that high-performance organizations view ERG participation to be more effective than formal development programs in terms of developing a variety of leadership skills.  

For example, 87% of survey respondents representing high-performance organizations said that ERGs are more effective than other leadership development practices at fostering collaborative skills. Comparable numbers said the same with respect to nurturing inclusive behaviors (82%) and the ability to work with diverse employee groups (81%).  

The research also found that ERGs play a bigger part in leadership development when the organization considers these groups to be strategic initiatives, rather than affinity-focused and networking-oriented collectives. When ERGs are viewed through this lens, ERG members are more engaged and feel more empowered. And, in turn, ERG members believe their voices are vital in creating a more inclusive culture.  

Overall, those in high-performance organizations have a much more positive perception of their ERGs and recognize the strategic business impact such groups can have.  

Indeed, respondents from high-performance organizations were 2.5 times more likely than those from lower-performing organizations to describe their ERGs as active, and three times more likely to consider their ERGs as business partners and/or drivers of business performance.  

Choice Hotels International certainly looks at its employee resource groups this way, says Corinne Abramson, national inclusion director at Choice. 

"Organizations that are seeking leaders who have global perspective and inclusive leadership competencies are certain to find value in the diverse talent pipeline that today’s employee resource group leaders serve up." 

Overall business impact is a prime focus for employee resource groups at Choice, according to Abramson.  

"At Choice, our resource group leaders aren’t interested in purely social/affinity type mixers. In fact, they don’t regard themselves as being fully optimized if their activities don’t impact either Choice’s talent, culture, or business." 

Sourcing ERGs for leaders

The attributes ERGs help foster in those leading these groups are, or should be, considered core competencies for leadership roles.  

High-performance organizations recognize as much, and actively source ERGs for leadership positions, with 40% of survey respondents saying that ERG leadership experience has a positive impact on selection and succession decisions. High-performance organizations are also twice as likely to weigh ERG involvement in making such decisions and five times more likely to require the executive sponsors of ERGs to observe and group members for leadership potential (see sidebar).  

All that said, most organizations (even high-performance ones) aren’t doing all they can to maximize the potential of their ERGs as a leadership development tool.  

While high-performance organizations are three times more likely to assess or review the effectiveness of ERGs as a leadership development vehicle—mostly by looking at promotions and career mobility among ERG leaders—just 14% of all respondents do so.  

Why don’t more companies devote time and resources to evaluating the efforts of their ERGs as a leadership development platform? Many might not fully grasp the potential of these groups as both an experiential development assignment and a source of the diverse future leaders most organizations are struggling to acquire. 

Eaton Corp. understands as much, however, and seeks out employees with leadership potential to lead the multinational power management company’s employee resource groups, says Amber McElhiney, inclusion ERG manager at Eaton.  

“This provides them with more leadership development and exposure to executives and senior leaders. It also allows them to work globally and on a project outside their day job, influencing and changing the culture at Eaton to be more inclusive,” says McElhiney, who is working with the Eaton HR team to develop a scorecard that tracks promotion rates among ERG leaders within the 96,000-employee organization.  

The type of exposure and experience afforded by ERG leadership participation is invaluable for any employee eager to get on a leadership track and is exactly what Eaton looks for when selecting individuals to head up ERGs, says McElhiney.            

“When we look for ERG leaders,” she says, “we’re always trying to find a balance—someone who’s high-potential talent and an active member of the community.”