On this episode of Reimagining Company Culture, we sat down with Tom Bachant, Founder and CEO of Turnout. Tom built Turnout as an employee engagement platform for internal communities after watching the same pattern repeat across companies: ERGs and internal groups produced enormous value for the employees who participated, but the companies running them struggled to measure the impact or scale the model. Tom is a Forbes 30 Under 30 honoree with a track record of using community to drive social change.
Tom argued that internal communities are the most underused retention lever most companies have. The evidence is hiding in plain sight. ERG members report higher engagement, faster promotion, and stronger retention than their peers, but the companies running ERGs treat them as line items rather than as strategic infrastructure. He pushed back on the assumption that ERG value is mostly cultural. The cultural value is real, but the business case is also large enough to justify resourcing the work properly.
That conversation matters because the cost of turnover is the largest avoidable line item in most HR budgets, and ERGs are one of the few interventions with consistent evidence that they reduce it.
Why ERGs Underdeliver Even When They Are Active
The pattern is consistent. A company supports the launch of an ERG, gives it a small budget, and points to it in recruiting materials. The ERG runs events, builds community, and quietly drives retention for its members. The company never measures the retention impact, never connects the work to a business outcome, and resources the program based on optics rather than results.
The data on what ERGs actually deliver is consistent. Catalyst research on ERGs finds that members benefit from mentoring, advice, and career planning, and that leaders who step forward to lead ERGs are three times more likely to strategically impact the business and 1.5 times more likely to be included on challenging projects. BetterUp research on belonging shows that high-belonging employees take 75 percent fewer sick days and have a 50 percent lower turnover rate, with cost-of-exclusion estimates of roughly 10 million dollars per year for every 10,000 employees.
Companies that turn ERGs into strategic infrastructure do three things. They resource the groups with the same discipline as a recruiting program. They tie the work to specific business outcomes. And they instrument the impact so that ERG investment compounds the same way other people investments do.
The Cost of Turnover and How ERGs Reduce It
What does turnover actually cost a company?
Industry estimates put the cost of replacing an employee at one to two times their annual salary, including recruiting, onboarding, productivity loss, and institutional knowledge that walks out the door. For a company with 1,000 employees and a 15 percent turnover rate, that math runs into the tens of millions annually. Cutting turnover by even two percentage points pays for an enormous amount of ERG infrastructure.
How do ERGs actually reduce turnover?
By creating connection that survives the hard moments. Most resignations are triggered by a specific frustration that an employee with strong internal ties will discuss with their network before acting on. ERG members have those ties built in. Non-members who feel disconnected do not. The companies that have built strong ERG infrastructure see the retention difference clearly in their cohort data.
What Actually Works: A Framework for ERG Investment
Design principle one: fund and staff the work as infrastructure
Volunteer ERG leadership burns out within two years. The companies producing real outcomes pair volunteer leadership with paid staff time, even if it is partial. Budget for events, materials, and the leadership development of ERG leads themselves. The ERGs that retain talent the longest are also the ones that develop their leaders the most.
Design principle two: tie ERGs to specific business outcomes
Recruiting referrals. Customer insight panels. Product feedback sessions. Internal mentorship at scale. Each business outcome gives the ERG a defensible line item and gives the executive team a reason to keep funding it. ERGs that exist only to celebrate are vulnerable in budget cycles. ERGs that produce measurable value are not.
Design principle three: instrument the engagement and retention impact
Use employee surveys to track ERG-specific engagement and inclusion items. Pair survey data with pulse surveys to spot drift between annual cycles. Compare retention rates between ERG members and matched non-members. The cohort comparisons usually justify expanding the program.
Where Employee Relations Fits
Strong employee engagement programs use ERGs as one of multiple inputs into the larger picture of how employees are experiencing the company. ERG-related concerns also surface through ER channels, particularly when groups feel underfunded, when leadership transitions go badly, or when a manager outside the ERG creates friction for a member inside it.
How does ER infrastructure support ERG outcomes?
By giving ERG members a confidential channel to raise concerns that do not fit a clean policy frame. The pattern of ERG leaders being penalized for time spent on community work. The cluster of concerns about manager pushback on group participation. ER tooling turns those signals into program design improvements that protect employee engagement, drive better employee retention, and inform broader retention strategy. Companies like Bungie have built employee voice programs that show what this integration looks like at scale.
Frequently Asked Questions About Internal Communities
How many ERGs should a company have?
Fewer, better resourced. Most companies overproliferate ERGs and underfund each one. Three to seven well-resourced groups produce more outcome than 15 underfunded ones. Quality of programming matters more than the number of groups.
Should ERG leadership be paid?
Compensated, at minimum. The most sustainable models pay a stipend, allocate a percentage of work hours, or tie ERG leadership to formal leadership development tracks. Pure volunteer leadership produces burnout, regardless of how passionate the leaders are.
What is the relationship between ERGs and DEI strategy?
ERGs are infrastructure. DEI strategy is the operating model. Strong ERGs without a strategy produce community without systemic change. Strong strategies without ERGs produce policy without lived experience. The combination is what produces durable outcomes. For more on running ERGs as community infrastructure, see our piece on using ERGs to drive community and momentum.
How do you measure ERG impact?
Three categories. Member engagement and retention compared with matched non-members. Business outcomes the ERG contributes to, like recruiting referrals and customer insight. Career outcomes for ERG leaders. Together, those three views tell you whether the program is working.
What is the single biggest mistake companies make with ERGs?
Treating them as a budget line rather than as strategic infrastructure. The companies that take ERG investment seriously produce retention and engagement outcomes that justify the spend many times over. The companies that nickel-and-dime the work waste both the budget and the people who put discretionary effort into it.
The Bottom Line for HR Leaders
Tom's central point is one most HR leaders already suspect but few have built the case for: internal communities are one of the highest-return investments a people team can make, and most companies underfund them by an order of magnitude.
The companies that resource ERGs as strategic infrastructure produce engagement, retention, and recruiting outcomes that compound. The companies that keep ERGs as a recruiting talking point miss the actual value. The difference is not the existence of the program. The difference is the operating discipline behind it.
That discipline is what separates community theater from community infrastructure.
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