Employee Resource Group Heads Demand Compensation for Extra Work

Employers are facing mounting calls to compensate and revisit the roles of their employee resource group leaders as they take on more leadership responsibilities while juggling their regular full-time job duties.

These groups for decades have created a space in the workplace for employees with shared identities like gender, ethnicity, and religious affiliation, as well as common interests, to gather and provide career or personal development support in alignment with broader organizational goals.

ERGs have become prominent at businesses across the country in recent years amid a growing interest in creating an inclusive corporate culture among workers and management, a recent report by global management consulting firm McKinsey & Co. found. This was accelerated in part by the 2020 murder of George Floyd in Minneapolis police custody and the ensuing widespread protests, though the pace of bold commitments to specifically address racial inequality in the workplace has slowed.

As a result of their highly visible roles and relationships with co-workers, ERG leaders are often the first to spot pitfalls and plan initiatives to address longstanding company-wide issues and foster a sense of belonging. But their passion for the cause and to perform these tasks in addition to their regular work prompt ERG leaders to stay on the job extra hours and experience burnout, diversity and inclusion practitioners said.

“In industries, especially where there’s a high demand for diverse talent, companies really need to be aware of their employee resource groups’ value proposition and how they’re able to differentiate themselves from other organizations,” said Rasha Thornton Bradley, a human resources consultant who has served as a program manager for ERGs.

ERGs—typically led by women and workers from racial minority groups—have been credited as a key vehicle for recruiting and boosting the retention rates of employees from historically underrepresented communities, Bradley said.

This means ERG leaders can point to the tangible outcomes of the added time they allocated for their volunteer work, which has spurred a “push for compensation,” she said.

Forms of Compensation

Autodesk Inc., LinkedIn Corp., and Justworks Inc. are among the companies that have recently started offering some form of monetary compensation to ERG leaders separate from their annual salary.

Autodesk offers an annual bonus of $10,000. LinkedIn similarly pays its ERG global co-chairs $10,000 annually for each year of their two-year term. Meanwhile, Justworks offers a rewards package that includes cash compensation and stock options, though the company doesn’t publicly disclose the amount.

A recent report by workplace diversity consulting firm The Rise Journey, which surveyed 187 companies, found that 46% are now compensating ERG leaders in some form. This is up from 26% in 2021 and just 6% in 2020, the report said.

The majority of businesses that compensate ERG leaders with cash pay it out in bonus form, it said.

However, companies are finding non-monetary alternatives to recognize ERG leaders for their contributions when funding remains an issue, according to Kamina Young, who leads Seramount’s ERG advisory services and provides advice to several Fortune 500 companies.

Some employers allocate a certain amount of volunteer hours for ERG leaders to perform their duties outside their day-to-day work, offer mentorship and professional development opportunities, and recognize them with gift cards, Young said.

“We have also seen instances where some full-time temporary roles are created where someone spends a year to focus completely on ERG leadership,” she said.

Pay Pitfalls

But Maceo Owens, founder of the human resource platform ERG Movement, isn’t sold on the idea that ERG leaders should receive monetary compensation. They must be recognized for their contribution to the company’s business and culture, but offering them cash risks creating internal conflicts over pay within ERG groups, Owens said.

ERG leaders don’t all invest the same amount of time to perform their responsibilities, so unless employers develop performance and accountability metrics to guide their compensation decisions, it would be a challenge to ensure ERG leaders are fairly compensated, Owens said.

“Typically, the burden of ERG leadership falls on a single person or a couple of people,” Owens said. “That one leader who’s doing all of the work would feel” the compensation offered to them “is not fair in comparison to” their colleagues, she said.

Employers also must be cognizant of potential liabilities that may arise, including wage and hour issues under the Fair Labor Standards Act.

A nonexempt worker covered by the FLSA could be owed overtime pay if their ERG participation is directly related to their regular job duties.

Certain ERG activities could also trigger pitfalls under the National Labor Relations Act, said Robert Baldwin III, founder and managing attorney at Virtue Law Group. ERGs aren’t unions and should be prohibited from “negotiating” or addressing the “terms and conditions” of workers’ day-to-day work, he said.

Though determining the right pay model for ERG leaders is complex, Young said management needs to at least offer guidance.

Employers should have ERG governance documents that “clearly state that participation of any nature, whether as a member or leader, is voluntary” and that the expectation is the regular day-to-day job will take priority over ERG work, she said.

“They should also have a documented explanation as to why, currently, they won’t be able to compensate,” Young said.