Author’s note: This article is adapted from my book, Network Beyond Bias.

4 Ways Employee Resource Groups (ERGs) Benefit Companies

1. Finding and attracting diverse talent

There is a significant talent shortage in many industries. Many companies have aggressive recruiting goals they are struggling to meet. These companies may be in a rut: recruiting from the same professional networks, schools, or geographic areas for decades.

By engaging current employees, companies can expand their reach to find and attract talent in areas they haven’t approached before. People tend to know others who are similar to them. So companies can find new pools of talent by leveraging the connections of employees from non-traditional backgrounds.

From a recruiting perspective, Employee Resource Groups offer an attractive selling point to job candidates. Many new employees want to believe they will feel welcome and accepted in a new company. The company with Employee Resource Groups can demonstrate cultural understanding and acceptance before the candidate has even applied for the job. Having an ERG tells the job candidate, “There are successful people in the company just like you. They want to help you be successful, too.”

2. Introducing new employees to the corporate culture

Once hired, new employees may need help understanding cultural norms of the company. Fellow ERG members may be helpful in this process, especially if the corporate culture does not readily translate to the subculture of the affinity group. For example, Asian-Americans may find it difficult to tout their own accomplishments due to values instilled in them since childhood. Women may have been taught to downplay their intelligence in group settings. In a large company, these professionals may need to find ways to adapt that are both advantageous in the workplace and culturally acceptable. Employee Resource Groups can help with provide integration strategies from a first-hand perspective.

3. Identifying and retaining top talent

Employee Resource Groups give a voice and sense of community to employees who may otherwise feel isolated or underrepresented, helping companies to retain talent in their organizations. When people feel isolated, they are not as engaged. Connected employees are more productive, more loyal, and better brand ambassadors. Connected employees stick around.

Rewards and recognition are also a key factor in employee retention. Research shows that managers are more likely to reward and promote employees who are like them. This is especially true when those managers don’t recognize their own biases. If a company has a high percentage of managers with similar demographics, it is likely that those demographics will not change much over time. Employee Resource Groups offer a different avenue for those managers to recognize talent they might otherwise overlook. They can also help mitigate against the default mode of hiring, recognizing, and promoting only within their existing inner circles.

4. Expanding into new markets and customer segments

Breaking into new markets can be tricky. Many companies have struggled to set the right tone in their advertising. Others may not even recognize that they have a potential niche customer base. In a recent interview, Howard J. Ross reminded us that it’s hard to sell to someone you’ve just insulted. It’s perhaps even harder to sell to someone you don’t know exists.

A diverse employee base can give an insider perspective on different markets and customer preferences. For example, a Latinx ERG might help a company translate both the language and the “feel” of commercials so they seem natural to the target community. An ERG for Lesbian, Gay, Bisexual, and Transgender (LGBT) employees may help a financial services company create new products or services tailored to the legal issues faced by this consumer group. By working with management and marketing teams, Employee Resource Groups can provide a competitive edge in under-performing market segments.