Recent news outlets (Axios, Forbes, and more) have been reporting the latest decision by LinkedIn to pay their employee resource group (ERG) global co-chairs $10,000 per year. Most of the opinions published on this development are positive, noting that ERG work is voluntary, done outside of normal working hours, and often focuses on helping the organization achieve its business objectives.
The implications of paying ERG leaders, however, are not that simple.
The Business Case
As ERGs have evolved from “affinity groups” to “ERGs” to now being called “business resource groups,” there has been more of an emphasis on them having a direct impact on the business. In one example, Frito-Lay’s Latino ERGs created the guacamole chip. The result was increased sales among the Latino customer population.
Frito-Lay is not the only company tapping into their ERGs to help the business. Other companies are working with ERGs to provide focus-group data, asking ERG members to help acculturate new employees, recruit candidates, and focus on community involvement to help organizations with their non-financial goals.
I can see why companies may want to start paying ERG members for this effort. There are, however, plenty of reasons not to — and perhaps that list is even longer.
The Issue of Fairness
First, who do you pay?
LinkedIn decided to pay a select group, the global co-chairs. Whenever we talk about pay, fairness is a follow-up concern. So if you pay these leaders, what about other ERG members? What about those who are putting in a lot of hours?
Also, why is the rate $10,000 per year; is that a fair wage? Assuming 30% goes to taxes, that means each leader nets about $7,000, which is $583 per month. If the leaders spend 20 hours per month on their ERG roles, that amounts to $29.15 per hour. Depending on their job and their day pay, that may sound reasonable.
But how does it sound to members who are not getting any monetary rewards for their time? And what about people who net less than $29.15 per hour? My experience suggests that this payment plan will eventually result in perceptions of unfairness with other ERG members. How will LinkedIn and other organizations solve that problem?
Becoming Part of “Management”
Next, how will employers maintain engagement in ERGs if their work becomes simply another core job-related obligation?
My own research with ERGs finds that even though they are doing the work as volunteers, ERG leaders are more energized and engaged than many other peer employees. It is the fact that they are doing the work outside of their job that engages them.
As ERG leaders start to receive compensation, they may be considered part of “management,” and I’m not so sure this is going to motivate other members. Will members question what motivates the decision-making process of the newly paid ERG leaders?
An ERG starts out in most cases as a bottom-up initiative. Someone in the business suggests an ERG, makes the case for the ERG, and it gets approved via an established process. Most ERGs vote in their leaders, although some leaders are appointed from a high-potential list. And so as management infiltrates ERG leadership, that seems likely to change how these groups function, not necessarily for the better.
In studies of identity at work, ERG leaders differentiate their ERG identity from their job identity. And so as organizations start to make ERG work part of the core job, we may very well lose the inspirational and motivational benefits of creating, leading, and being part of an ERG.
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It’s Not All About Money
Lastly, ERG members join for reasons other than money. They join for the opportunity to be part of a group like themselves that can have a high impact on goals they care about deeply. They join because there are career benefits. Membership and leadership in ERGs create opportunities to obtain key leadership skills that they can leverage in their careers.
The ability to work with executive sponsors also is a key benefit for ERG members and leaders. This type of connection with a senior leader in the business is a significant benefit in and of itself.
If paying ERG leaders is an imperfect solution at best, what are some better options? Data from ERG members sourced from an annual leadership summit I have hosted since 2012 suggest a path forward.
Instead of Paying ERG Leaders…
First, put your money into ERG leader budgets. One clear indicator from the summit data is that members and leaders alike place very high value on the budgets they receive to manage their ERGs.
Next, make ERG work part of the official performance-review process and train managers. Rather than being conflicted with the need to fit their ERG work into employee schedules, train managers to help rather than impede their ERG assignments. If ERG work is viewed as positive during the performance appraisal and merit-pay allocation process, individuals will receive compensation for the totality of their work more fairly.
Third, provide ERGs with projects and support that will help members grow as individuals. Organizations can provide ERGs with high-impact projects that will allow participating members to learn and acquire new skills.
Finally, advertise ERG successes and share wins to help them recruit new members. By actively advertising ERGs, showing support, and helping ERGs acquire more members, this alleviates time pressures on the top leaders.
Ultimately, paying ERG leaders carries a host of risks. Organizations may be better off building up the value of ERG work and participation.