Most of us are familiar with the idea of “networking,” but not all networks function the same way. Some are informal, built through casual interactions, shared interests, and social circles. Others are formal and structured to provide connection and support in a more intentional way. The difference between these two can define the trajectory of a person’s career—and historically, the informal networks have favored one group far more than others.
The Power of Informal Networks
Imagine a high-potential employee is doing great work, but they aren’t part of the after-hours golf games, the impromptu coffee chats, or the casual lunches where upcoming projects and promotions are discussed. Instead, decisions are made in rooms they’re not in, and by the time they find out about an opportunity, someone else has already been tapped for it. This is how informal networks work, and they’re incredibly powerful.
Informal networks are built on familiarity and shared experiences. They thrive on trust, often unspoken, and they’ve historically favored those who already hold influence—most often, those already in leadership. These networks aren’t inherently malicious; they’re simply self-reinforcing. People tend to recommend and elevate those they relate to, those they see as a natural “fit,” and those they trust based on shared backgrounds.
For decades, this dynamic has meant that many employees—especially those outside of existing power structures—have had to work twice as hard to gain the same level of visibility, advocacy, and advancement as their peers who benefit from strong informal networks.
Formal Networks: A Necessary Counterbalance
This is where Employee Resource Groups (ERGs) come in. ERGs are formalized networks designed to create access where it’s historically been limited. They provide a structured way for employees to connect, support each other, and gain visibility within an organization. More than that, they serve as a critical bridge between leadership and workers that might otherwise go unnoticed.
When well-supported, ERGs offer community and cultivate leaders. They provide professional development, mentorship, and sponsorship opportunities that help members navigate corporate spaces that weren’t originally built with them in mind.
The History and Evolution of ERGs
ERGs have been around for decades, initially emerging as a response to the lack of representation and fairness in the workplace. One of the earliest known corporate ERGs was established at Xerox in the 1970s. Black employees at Xerox formed the National Black Employees Caucus. Their goal was to create a space where Black professionals could support one another, advocate for workplace fairness, and push for career advancement opportunities that were often inaccessible due to informal networks and systemic barriers.
Following Xerox’s example, many other companies began to recognize the value of ERGs in promoting inclusion and improving workplace culture. Over time, ERGs expanded beyond race and ethnicity to support women, LGBTQ+ employees, veterans, employees with disabilities, and other groups. They’ve played a crucial role in helping employees navigate corporate environments, advocating for equitable policies, and shaping company cultures that recognize and embrace diversity.
As the workplace evolved, so did the role of ERGs. What began as grassroots employee-led initiatives gradually became formalized, with many organizations investing in dedicated budgets, executive sponsorship, and strategic alignment with business goals. Today, ERGs not only provide community and advocacy but also serve as a valuable resource for companies aiming to attract, retain, and develop talent.
Do ERGs Favor Certain Groups?
A common criticism of ERGs is that they offer special privileges to certain groups. Another misconception is that they create exclusive spaces that leave others out. The reality is that ERGs exist to open doors that were historically closed, not to shut them for others. Corporate America has historically already favored particular groups through informal networks, legacy hiring, and unspoken advantages in leadership pathways. ERGs exist to counteract these long-standing imbalances, not to create new ones.
Examples of corporate favoritism include:
- Legacy hiring & referral bias: Many companies have historically prioritized candidates from specific schools or social circles, benefiting those already in power. You can learn more about this by reading “The Role of Referrals in Immobility, Inequality, and Inefficiency in Labor Markets” and this Forbes article on nepotism and legacy hires.
- Networking & sponsorship opportunity gaps: Professionals who already have leadership connections are more likely to receive mentorship and sponsorship opportunities. You can learn more about this in the Forbes article on why our networks look like us and the power of sponsorship.
How ERGs Create More Opportunities Without Excluding Anyone
ERGs don’t prevent employees from other backgrounds from forming their own networks or participating in professional development. Instead, they provide structured opportunities for employees who may have previously been overlooked or lacked access to informal career-boosting networks. Many ERGs welcome allies, encouraging participation and collaboration across different employee groups to support a more inclusive and welcoming workplace.
Additionally, ERGs improve company culture and performance by broadening perspectives, making workplaces more innovative and engaged. Research consistently shows that companies with inclusive cultures outperform those without them. Employees in inclusive workplaces are more likely to feel valued, contribute new ideas, and remain engaged in their roles.
The Future of Networks at Work
So the next time you hear someone question the value of ERGs, ask them this: Would they be where they are today without the networks that helped them? And if the answer is no, then why wouldn’t we want to make those same opportunities available to everyone?