By Joseph Santana

Employee resource groups: A valuable, overlooked leadership development gem waiting to be mined.

The need for leaders at all levels in organizations continues to grow as the business ecosystem becomes more complex and competitive due in part to globalization, emerging technologies and an acceleration in the speed of disruption. On top of this, a growing number of baby boomer leaders are leaving their companies to pursue other noncorporate business or personal interests. So it’s not surprising that a 2014 Deloitte University Press survey of global organizations revealed that 86 percent of participating companies said having more effective leaders at all levels was their No. 1 business issue.

Unfortunately, according to the same study, despite investing about $14 billion in leadership development, only 8 percent of these companies felt they had a good leadership development process. This low percentage represents a huge gap in an area where organizations are spending so much money and focusing so much energy.

In my experience working within corporations, the missing ingredient needed to make these huge formal leadership-training investments pay off is opportunities for experiential learning. We all know there is a huge difference between learning how to do something via examples and explanations versus putting that skill to work against a real opportunity or challenge. This need for the experiential component is recognized by a growing number of firms, who search far and wide for the opportunity to develop leaders.

By Joseph Santana

Employee resource groups: A valuable, overlooked leadership development gem waiting to be mined.

The need for leaders at all levels in organizations continues to grow as the business ecosystem becomes more complex and competitive due in part to globalization, emerging technologies and an acceleration in the speed of disruption. On top of this, a growing number of baby boomer leaders are leaving their companies to pursue other noncorporate business or personal interests. So it’s not surprising that a 2014 Deloitte University Press survey of global organizations revealed that 86 percent of participating companies said having more effective leaders at all levels was their No. 1 business issue.

Unfortunately, according to the same study, despite investing about $14 billion in leadership development, only 8 percent of these companies felt they had a good leadership development process. This low percentage represents a huge gap in an area where organizations are spending so much money and focusing so much energy.

In my experience working within corporations, the missing ingredient needed to make these huge formal leadership-training investments pay off is opportunities for experiential learning. We all know there is a huge difference between learning how to do something via examples and explanations versus putting that skill to work against a real opportunity or challenge. This need for the experiential component is recognized by a growing number of firms, who search far and wide for the opportunity to develop leaders.

Searching for the Right Experience

According to a 2017 survey by Deloitte of more than 10,000 human resource professionals, the percentage of firms offering experiential programs to their developing leaders jumped from 47 percent in 2015 to 64 percent in 2017. Some of these programs are quite exotic.

For example, one of these leadership development support offerings uses in-water survival exercises to help build and enhance leadership skills and team dynamics. Participants go through practical exercises such as life raft evacuation, underwater egress, surface water survival, jumping from a height and rescue. The program is designed to help improve their stress awareness, build self-confidence, enable participants to assume leadership roles in simulated survival scenarios and enhance their emotional control.

Another program offers budding leaders the opportunity to explore their leadership capacity using horses. During the program, participants are able to familiarize themselves with the principle of shared leadership demonstrated by a herd of horses, as well as verbal and nonverbal communication styles. The program is designed to help leaders embrace uncertainty and shared leadership in complex systems.

Then there is a company that offers leaders an opportunity to develop their external perspectives through custom-designed, brokered learning exchanges with external thought leaders in leading global organizations and diverse industries — entrepreneurs, disruptors, NGOs, customers, future talent, government representatives, and so on. Leaders go through a series of structured meetings to discuss specific topics affecting their businesses and witness customers making purchases, watch surgeons at work in a hospital and host discussions with recent university graduates to better understand people from the millennial generation.

Still another organization offers a tech approach to leadership development and learning. Using 3D immersive gaming, developing leaders become part of a gaming story, where they receive a mission and are thrown straight into action. The immediate feedback they get on their performance is supposed to provide them with real-time learning in a virtual environment.

Finally, there are organizations that focus on developing participants’ mental resilience tools to increase their leadership agility. The goal of these interventions is to improve participants’ clarity, focus and ability to bounce back from high-pressure situations so they can show up in a powerful way in the moments that matter most. Participants in this type of program learn, for example, breathing techniques to help them switch into what is called a parasympathetic state. The parasympathetic system is made up of nerves that return us to a restful and calm state after we’ve responded to a stressful event. The idea is that by developing the capacity to activate the parasympathetic system intentionally, these leaders are evolving their ability to center themselves on demand so they can respond in a more flexible and agile way to challenging experiences.

ERGs do not replace other investments in training. Rather, they complement them.

While there is a wide range of pricing for these programs, none of them are inexpensive. For example, one in-water leadership development program charges $9,500 per participant with an opportunity to shave $4,500 off if the candidate qualifies for a scholarship. Needless to say, only a select few are sent by companies to these types of programs. Some high-performing companies, however, have found a less expensive and more practical solution for providing experiential opportunities to their developing leaders.

ERGs: Leadership Development Vehicles

According to a joint study completed in 2018 by the Institute for Corporate Productivity and Elevate, a number of companies considered to be top performers in their respective industries believe their employee resource groups are the most effective tool they have for developing a variety of leadership skills important in today’s business environment.

For example, in addition to managing budgets, delivering presentations and other core skills, they use their ERGs to help developing leaders:

  • Get hands-on experience handling challenging real-world project management assignments.
  • Acquire skills working across cultures and within groups with diverse ways of thinking.
  • Develop a sense for the bigger picture across organizational silos by connecting with people from different departments.
  • Connect with coaches and mentors who will support and help guide their development.
  • Meet sponsors who can advocate for them.
  • Practice speaking on behalf of the organization.
  • Demonstrate what they can do and build a solid track record of accomplishments.

Involvement in these mini-organizations within an organization and its various challenges also enables budding and emerging leaders to generally broaden their experience working within team dynamics; their ability to work in environments where leadership is shared with others and where exercising influence is key; and their familiarity with a wide array of demographic, cultural and cognitive diversity. It can also increase the situational awareness of leaders, incorporation of performance feedback and mental resilience.

Some organizations even appoint senior leaders to serve as ERG sponsors.

In almost every organization there is a need for program sponsors, project sponsors, initiative sponsors and so on. Done well, a sponsor can play a huge role in the success of any of these efforts.

Unfortunately, nearly 50 percent of project and program teams rate the performance of their sponsors as poor to fair. A few of the key reasons given for executive sponsorship failure include:

The pool of executives simply lack the knowledge or skill to be effective sponsors. Many organizations assume a senior business leader will naturally have this sponsor knowledge and skill, but that’s simply not true. Many senior business leaders have never been exposed to an opportunity to gradually ease into this role, which can be quite different from formally running even a large business unit.

The organization has a multitude of projects, programs and initiatives that demand sponsors. This demand outpaces the few members in the pool who have proven skills and talent as sponsors.

Executives who may not be ready to take on the role of sponsor are “volun-told” into a high visibility role in a major effort. The company, finding itself in desperate need of a sponsor for the effort, may push someone who simply is not fully ready into the role.

The bottom line is companies need more well-trained senior executive sponsors than they currently have on the bench. Here again is an opportunity for ERGs to help organizations, in this case developing more senior leaders. One way to put this into practice, would be to first provide some basic training to the newly appointed ERG sponsor. Have a more seasoned executive sponsor available to coach them through the process of sponsoring the ERG. Then, based on the results they produce to demonstrate mastery of sponsorship skills, put them into the general available executive sponsorship pool.

This simple approach is a low-cost way to leverage ERGs to train upcoming sponsors while providing the company’s ERGs with a role they need.

Bottom line: Whether developing a new supervisor, manager or someone more senior for executive sponsorship roles, ERGs do not replace other investments in training. Rather, they complement those investments by providing the aforementioned abundance of experiential opportunities to develop leaders at any level.

As organized communities within the larger organization, ERGs provide developing leaders with safer and smaller environment where they can flex and develop new skills before applying them in the larger company. On top of this, the cost to the learning organization is very little or even zero.

An Omnipresent, Underutilized Corporate Resource

As far back as 2011, one study revealed that more than 90 percent of Fortune 500 companies had ERGs. Today, it’s a pretty safe bet that if you work for a company that has a few thousand people, you likely have ERGs. On average, companies already invest between $2,500 and $5,000 per year per ERG.

Unfortunately, in most organizations this potentially valuable existing resource is ignored and underutilized. This is especially true when it comes to employing ERGs to support leadership development. In fact, according to the previously mentioned joint study by i4cp and Elevate, of 363 corporate respondents, fewer than half make effective use of this resource. High-performance organizations are generally twice as likely to leverage their ERGs to develop leaders compared with lower-performing companies, but they still fall shy of 50 percent.

Firms offering experiential programs to their developing leaders jumped from 47 percent in 2015 to 64 percent in 2017.

This means there is room for improvement in leveraging ERGs as a leadership development resource.

Companies failing to leverage their ERGs to develop leaders while searching far and wide outside their company for solutions is reminiscent of a story in an 1890 book by Russell H. Conwell titled “Acres of Diamonds.” The story is about a man who sold his farm and home to unsuccessfully search for diamonds in a far-off land. What the man never realized was the land he once owned and sold was actually littered with a bounty of almost colorless, transparent stones that he did not realize were some of the most precious diamonds in their uncut, unpolished state.

While companies spend time and money hunting for ways to develop leaders at all levels, the ERGs that exist amid the vast majority of these organizations offer the tools they need. Perhaps it’s time for organizations to better mine and leverage what they already have.

Joseph Santana is chairman of the I4CP CDO Board and author of “Supercharge Your ERGs: 18 Tips to Power-Up Your ERG/BRG Strategy.”