Hey @DanT327!
Well, I hesitate to suggest the CORRECT strategy. We can’t really know that without future knowledge of how your stock will perform. But since we don’t know that, yes owning a lot of a single stock adds to the volatility and risk of your portfolio without adding to the expected returns. To mitigate that, you can do exactly what you suggest. Sell the vested RSUs when allowed and put that money into index funds.
That said, I think it’s ok to have more “skin in the game” for the company you work for. You might also have some additional knowledge of the company and even an opportunity to help impact the returns of the stock yourself (along with your coworkers). In the past, I’ve certainly held a lot of stock of the company I worked for and it worked well for me. So you could always make a plan. Something like “Sell 80% of the RSUs, hold 20% of them for at least 10 years”. That way you get most into index funds, the engine of your wealth building but you still have your “lotto ticket” so to speak, if your company stock does super well. It will also help eliminate FOMO if all your coworkers are cashing in on stock and you sold all yours!