Employee resource groups (ERGs) can be key to creating a more inclusive workplace culture, which brings benefits for both employees and employers. But these groups don’t run themselves. That’s why a growing number of companies are recognizing the value of ERG leaders’ contributions with additional pay and other types of compensation.
While large-scale reporting is scarce, there is evidence pointing to the increasing trend. According to the third annual State of the ERG, a 2022 report by The Rise Journey, 24% of 187 organizations now pay their ERG leads in cash, up from just 6% in 2020. An additional 22% compensate these employees in other ways. Research from Seramount’s 2023 Inclusion Index of 155 organizations puts the number of companies offering their ERG leaders cash or other incentives even higher — 53% versus 41% in 2022.
Jennifer Sabatini Fraone, director of corporate partnerships at the Boston College Center for Work & Family, attributes the increase to companies’ growing awareness of how important their ERGs and ERG leaders are to the business. “I think it’s part of the recognition of the real value that the ERGs are bringing to the organization,” she said. “I think there’s increased recognition that there’s a lot of work that goes into being an ERG leader and that people are doing this above and beyond their day job.”
Among organizations that don’t compensate their ERG leads, 45% are considering doing so in some way, according to The Rise Journey report. But whether cash payments are the best way to recognize these individuals’ efforts is up for debate.
The first ERGs were formed around workers with certain shared identities or backgrounds who felt underrepresented in the company, such as women, Black or LGBTQ+ employees. While the increased sense of belonging that these individuals often felt after joining the groups translated to business benefits such as higher levels of engagement, retention and job satisfaction, the primary focus was on providing support to group members.
Over time, however, many ERGs have evolved so that their purpose is now more directly tied to company goals. Today, for instance, many of them are involved in helping employers develop new products and new lines of business.
Perhaps the most famous example comes from Frito-Lay, said Theresa M. Welbourne, Ph.D., a senior research scientist with the University of Southern California’s Center for Effective Organizations whose work includes ERGs. In the early 2000s, Frito-Lay tapped into the expertise of its Hispanic/Latino ERG for advice in creating its guacamole chip. More recently, an ERG for Black workers at Amazon helped the retail giant create the Textures & Hues section of its site, which is focused on hair products for women of color, she added.
“All of a sudden, this idea of ‘Do I pay them?’ may be more relevant because what they’re doing is work for the company,” said Welbourne, who is also a professor of management at the University of Alabama.
Another way ERGs support company goals is by providing input on their employers’ well-being initiatives, according to Fraone, who cited fresh findings from a new Boston College Center for Work & Family executive briefing report on ERGs.
“As benefits and well-being professionals are developing their programs and supports for employees, they’re in direct consultation with the ERGs to find out what their needs are,” she said. “So, for instance, if the company has a caregiver or childcare ERG, the benefits team will go sit with them to better understand what they’re going through and determine what supports would be most impactful.”
A recent report from WTW also called out this development. It found that nearly half of 457 organizations employing 7.3 million employees (48%) have engaged or plan to engage with their employee resource groups to address population-specific mental health risks.
As the nature of ERGs has changed, so have ERG leaders’ responsibilities. In addition to recruiting members, hosting meetings and designing programming for their communities, Fraone said, ERG leaders may be asked to attend career fairs, serve on interview teams to ensure those teams are diverse, or mentor junior employees.
According to The Rise Journey report, most ERG leads (67%) spend up to three hours a week, on average, fulfilling ERG-related duties and responsibilities. Nearly one-fifth (17%) spend more than five hours a week on ERG work.
Given that ERGs can be instrumental in helping companies achieve a variety of business goals, many employers are looking for ways to nurture these groups. In fact, a 2021 WorldatWork survey, Trends in DEI Practices and Policies, found that 82% of respondents were taking steps to provide support, resources and education to their ERGs. The number of organizations showing “high activity” in this area was up 19 percentage points from the previous year.
Budget amounts for ERGs vary, based on organization size and total amount of funds allocated to DEIB initiatives. Boston College’s ERG report cites data from workplace fairness research firm Fair360 showing that the average ERG budget among their partner companies is between $7,000 and $15,000 per year. That amount can reach $75,000 to $100,000 a year for large employers.
For those companies whose ERG investments include cash payments to group leaders, most provide either a flat rate annually or a bonus, The Rise Journey report found. Far fewer pay an hourly rate. On average, group leads receive $2,136 annually for their efforts.
In June 2021, LinkedIn became one of the first big-name companies to announce that it would begin compensating its ERG leaders with cash. Media reports have pegged the level of pay for the two global co-chairs of each of its 10 ERGs $10,000 a year, with chairs serving two-year terms.
Other companies followed suit with their own programs shortly afterward.
Culture Amp rolled out a pay program for its ERG leaders as part of a new formal governance structure for the groups. The initiative was led by Thushy Muruges, who is now the employee experience platform company’s equity design and impact lead for people and experience. Under the program, each ERG leader — there are up to four per group — receives $3,000 annually, and ERG chairs get $6,000 each.
“Our ERG leaders are dedicating time to these communities above and beyond their full-time duties,” Muruges said of the company’s decision to pay them. “We did not want marginalized employees doing free labor to increase belonging or inclusion on behalf of the company.”
The payments are spread out across the employees’ paychecks over the course of the year, she noted. That way, the money isn’t considered a bonus, which would be taxed at a higher rate.
Software company Autodesk pays an annual “appreciation bonus” to each of the nine leads of its ERGs. Exempt employees receive $10,000 (or the local currency equivalent) and nonexempt employees receive 10% of their total compensation, according to Maxim Williams, vice president of culture, diversity and belonging. ERG leads serve for two years, with the option to run for a second term.
“Paying employee resource group leaders is a strategic investment that acknowledges their invaluable contributions to fostering a culture of equity, inclusion and belonging,” Williams said. “These leaders not only significantly enhance the workplace environment, but they also drive business success.”
Since it began paying its ERG leaders, he noted, Autodesk has added two new groups. Additionally, the company saw 47% growth in ERG membership last year.
While a number of companies have had success with paying their ERG leaders, some experts question whether this is the best way to value these employees’ contributions.
“The issue with paying them is that it’s really hard to do it in a way that’s fair,” Welbourne said. There’s also a concern that paying ERG leaders could change the nature of these groups and negatively affect the way they function.
“This is something people have done on a volunteer basis, so if we make it a paid gig, is that going to change their motivation?” Welbourne said. “And then is it going to change the way members relate to their leaders?”
There are also legal issues to consider. If employees perceive the payment system as being unfair, for example, it could give rise to claims of discrimination under Title VII, according to Paul Lancaster Adams, a labor and employment attorney with Ogletree Deakins.
Another law that could come into play, he said, is the National Labor Relations Act. If an ERG leader who is being paid asks for an increase in that compensation, the request could be considered a “term or condition of employment” that would need to be bargained, Adams explained, because the ERG could potentially be considered a labor organization under the act.
In addition, if an ERG leader is nonexempt and the work they do for the group takes place outside of their regular shift, that individual would be entitled to overtime pay under the federal Fair Labor Standards Act for any work performed over 40 hours in a week, Adams said. State wage and hour laws may also apply, he noted.
Adams encouraged companies that are considering paying ERG leaders to seek legal guidance. “I would never say, ‘Don’t do it,’ ” he said. “But I think the caveat is to make sure you have guidance so you can minimize risk.”
Culture Amp’s Muruges similarly advised anyone tasked with developing an ERG compensation plan to partner with their companies’ finance and legal teams to get clarity on tax and compliance requirements, as well as whether employment contracts for ERG leaders need to be updated.
Cash compensation isn’t the only way to acknowledge ERG leaders’ time and effort. Some companies use nonmonetary rewards.
“There’s still a minority of companies that are actually paying [ERG leaders] money,” Welbourne said, “but everybody is trying to reward them in some way.”
Source: The Rise Journey Report: State of the ERG, 2022.
Tenesha Craig-James, who took over management of the ERG program at Culture Amp from Muruges about a year ago, encouraged companies that aren’t comfortable paying ERG leads to be creative in finding other ways to recognize their contributions. “Things to explore could be granting additional equity to your ERG leads or providing additional paid time off for them,” she said.
Other options include:
It’s also possible to offer a mix of compensation types. Both Autodesk and Culture Amp, for example, supplement cash payments with professional development opportunities and access to members of the C-suite.
For some employees, the intangibles can be even more valuable than money. Before Craig-James moved into her current position as equitable design and impact lead of hiring and community, she was an ERG lead and later chair of Culture Amp’s BIPOC ERG. While the cash compensation was great, she said, the things she carries with her are the developmental opportunities she had.
“That’s helped to push me where I am in my career now,” she said, “and I still lean back on some of the experiences I had, whether that was through education, exposure or experience.”
While the earliest ERGs were typically formed around attributes like gender, race, ethnicity and sexual orientation, newer iterations tend to focus on other characteristics.
“We’ve seen more groups around mental health, neurodiversity and other kinds of dimensions of people’s identities, like their caregiver status or sometimes based on age group,” said Jennifer Sabatini Fraone, director of corporate partnerships at the Boston College Center for Work & Family.
Newer ERGs also include sustainability groups, cancer support groups and palliative care groups, according to Theresa M. Welbourne, a senior research scientist with the University of Southern California’s Center for Effective Organizations whose work includes ERGs.
Faith-based groups are also on the rise. Seramount’s 2023 Inclusion Index found that 30% of companies now have religious-based ERGs, versus 24% in 2022. AT&T introduced one in 2021, according to its website.
Because employees bring multiple dimensions of identity with them to work, Fraone said, they may be interested in joining more than one ERG. Additionally, ERGs today look for ways to interact with one another to help address some of those intersectional needs in the workforce, she noted. For example, an LGBTQ+ group and a group for employees with children might partner to provide programming on the specific challenges LGBTQ+ parents face.