Reason #2: We’ve Confused Cost Centers with Revenue Streams

A cost center is a part of a business that doesn’t directly generate revenue but is still essential to the company’s operations, culture, or stability. The term comes from accounting, where cost centers are tracked separately from revenue-generating functions like sales or product. The idea is that while these teams may not bring in money, their value shows up in risk reduction, internal support, or long-term growth. And guess what? Every major company understands this. 

Functions like IT, Legal, Compliance, and Finance are all standard cost centers. No one questions their existence. Then you’ve got the people-centered ones: HR (which often includes L&D, Workplace Culture, and sometimes CSR), along with Facilities and Internal Comms. These are the teams responsible for the systems, spaces, and support that keep everything running. And yes, they’re cost centers too.

ERGs aren’t some outlier. They’re part of this same infrastructure. Cost centers are not the threat here. It’s okay to be a cost center…just be a good one.

The real issue is that we haven’t consistently taught leaders how to value ERGs yet. We’ve confused them…and honestly, that’s our own doing.

When someone casually floated the idea of ERGs generating revenue, we could’ve treated it like what it was: an interesting thought experiment. We could’ve said, “Great idea in theory, but this program exists to serve the internal population,” and shut it down right then and there. But we didn’t.

And to be fair, I understand why. For a while, we were being told that “commerce” was one of the four pillars every ERG should focus on. That became law for a lot of folks. So when people started building strategy around it, they weren’t being reckless—they were just following the guidance they were given.

But still… it’s frustrating to watch how far off-track that guidance took us.

The good news? It’s not a hard route to come back from. You can pivot your program at any point. And even if you’re worried it’ll be embarrassing to walk it back, trust me—it’s not nearly as embarrassing as having your entire program shut down for reasons we’ll get into later.

And not to get ahead of myself here, but your leads? They’ll thank you for making the shift. (Well—most of them. There’s always one or two who were married to the concept without knowing the risks.)

In last week’s Program Manager Meetup (recording coming soon), Pablo and Mac III (former Global Chairs of Amazon’s BEN + Finance and Strategy extraordinaires) brought up a concept that doesn’t get nearly enough airtime in ERG spaces: cost avoidance. It’s one of those things that doesn’t sound flashy, but is actually a major lever for business profitability. If you’re saving money that creates a bigger gap between revenue earned and money spent. That margin matters. Retaining employees, reducing ramp-up time, minimizing risk, and increasing internal trust all contribute to cost avoidance. And that might just be the secret sauce you’ve been looking for to explain the business impact of ERGs. It’s a real business lever—we’ve just been using the wrong language to talk about it.

ERG = internal infrastructure. Revenue = external-facing function. They are built to serve your internal market (employee population)… not external markets.

You don’t fund the HVAC in your building because it “sells products.” You fund it because without it, employees are likely less comfortable. That’s how we should be thinking about employee communities. But instead of owning that truth, people tried to rebrand ERGs into “Business Resource Groups” and said things like: “We’re aligning more closely with the business.” Or worse: “ERGs are contributing to revenue now.” And yes, technically you can force those outcomes. But just because something is possible doesn’t mean it’s the best options. You took a culture tool and tried to turn it into a mini commerce engine (any probably not a great one if we’re being honest) .

What it really showed was a lack of clarity about the role ERGs are supposed to play. And let’s be real- If your program’s core function is misunderstood, the strategy will always be weak.

This is the core confusion. Somewhere along the way, “business value” became synonymous with “revenue.” But those two things are not the same. Let me remind you what business value actually looks like in an ERG program: better employee retention, higher performance from connected teams, lower burnout rates, more efficient onboarding through cultural peer learning, stronger internal mobility pipelines, and stability during periods of change. None of those outcomes require a dollar amount on a campaign. But all of them are directly valuable to the business.

So when you force ERGs to produce revenue, here’s what you’re really doing: undermining their real value, setting unrealistic and inappropriate expectations, and creating reputational risk—especially in this current DEI backlash era. This isn’t just a bad idea. It’s a misstep that could cost you the program (I’m getting ahead of myself again).

There’s a popular saying: “When you confuse, you lose.” And honestly, that’s exactly what’s happened in a lot of ERG programs. We’ve confused our executives about what ERGs are actually designed to do. We say one thing in strategy decks, but then anchor all our metrics on engagement because that’s all we can reliably measure. Meanwhile, we’re forcing our leads to do things outside their scope, burning them out in the process, and still not sure if what we’re doing is working. We’ve lost the plot. And if we don’t course-correct, that confusion is going to cost us — in credibility, in funding, and in long-term sustainability. Simplicity is okay. It’s okay for an ERG to serve one clear purpose, and to serve it well.