Who can predict the twists and turns of the ongoing pandemic? What new demands will the public make of the business world on social issues? What will the labor market look like six months from now?

In order for companies to appropriately respond to external changes that used to take decades to occur, employees need to be empowered to implement change, and leaders need to respect them enough to give them that power. It’s no longer acceptable for an employee to identify a challenge and then have to wait for their next meeting with a senior manager and a lengthy approval process to act on it.

Agility, defined as a company’s capacity and willingness to change, has been a strategy buzzword for many years now. Today it’s entering the forefront with new meaning.

Recent research from McKinsey ties agile organizations to improved customer-centricity, operational performance, and employee engagement. Agility should be central to any corporate strategy, especially as COVID-19 rages on.

To become more agile, companies need to show more trust in their people. They can start by giving them space to experiment and permission to fail. They can also try de-emphasizing hierarchies and emphasizing goal-oriented planning over task-oriented planning. 

Empowering employees in this way can help with retention and drive innovation while also improving relationships across the organization.

Debbie Lovich, managing director and senior partner at BCG who leads the firm’s people strategy work, has said that most work structures are based on norms from the Industrial Revolution, a paradigm that was already outdated before the pandemic.

“You had a fixed job because we wanted repetitive task efficiency,” she explained in an interview with Fortune. “Today things are changing so fast, we don’t want repetitive task efficiency. We need people who are thinkers, who can move and re-allocate.”

The old model of the bureaucratic, top-down strategy with job specialization and functional departments isn’t good enough. Companies will want to strongly consider restructuring or at least re-thinking how they plan and approve changes to organizational strategy or operating procedures.

“We need to push decision making down to the front line, so it can happen quicker as opposed to the command-and-control, travel up and travel down,” Lovich said.

Like agility, the benefits of employee empowerment are not a new discovery, just potentially more relevant today. Daniel Pink’s book Drive came out in 2011 and highlighted a new set of employee motivations in the modern workplace, finding autonomy, mastery, and purpose to be more important than company reputation or even compensation.

As human beings, our natural fear of failure is one of the reasons we don’t try new things. At work, this fear is ultimately contributing to stale strategies, disengaged employees, and missed opportunities to learn and iterate in the interest of innovation.

“We’re so risk averse that we think not doing anything is a risk averse path,” Lovich said. “I think not doing anything is the riskiest path, and we’ve actually got to get comfortable being uncomfortable.”

Speaking of empowering your employees, what better way than an unprecedented learning & development opportunity for aspiring leaders? Network with like-minded peers and find your purpose at work by signing up for Fortune Connect, our membership program that connects the next generation of business leaders with the resources and community they need. This offering is led by my incredible colleague Ellen McGirt. Learn more about Fortune Connect and how you can sign up.

Aman Kidwai
aman.kidwai@fortune.com

HEADLINES

Facebook falls 36 spots on Glassdoor’s Best Places to Work list

A big blow for the social media and aspiring metaverse giant. After falling out of the top-10 a couple of years ago, Facebook’s parent company is ranked 47th on Glassdoor’s annual ranking of top employers. They’re sandwiched between Merck and the Houston Methodist hospital system on the rankings, well behind their usual competition for talent. This drop has likely occurred due to the public scandals and ongoing federal cases the company is involved in.

Business regulation is coming from the state level

While the federal government may be slow to place new regulations on tech companies, states are moving rather quickly, Ben Brody of Protocol reports. This useful article highlights changes afoot in state legislatures across New York, California, Florida, and many others.

Big Tech's labor battle continues 

After the NLRB determined that Amazon interfered in its first union drive, the Bessemer location’s union election will start on February 4th. The redo will be carried out through the mail and supervised by the NLRB, according to The Verge, which also reported on the latest in the organizing efforts at Google. An NLRB judge recently ruled that Google cannot cloak documents relating to its union response efforts. “Dubbed Project Vivian,” Kim Lyons writes, “a Google attorney described the ongoing effort between 2018 and 2020 as a way to ‘engage employees more positively and convince them that unions suck,’ according to one of the documents.

Best practices for establishing ESG oversight

Some useful guidance from JD Supra on collecting and verifying ESG data for managerial oversight and public disclosures. It also included a section on the role of the board.

“First, the board should understand and agree with management on the most important ESG risks and opportunities. Second, the board should consider assigning responsibility for some or all of its ESG matters to a board committee,” the attorneys from Fenwick & West LLP wrote. 

“The audit committee already carries a heavy workload (often including cybersecurity) and ESG may get insufficient attention there. The nomination and corporate governance committee may also be a potential candidate for this task given its responsibility for overseeing corporate governance issues such as board diversity and political lobbying, which are important ESG focus areas. For some companies, it may be appropriate to divide oversight among multiple board committees depending on the topic.”

Whitepaper reveals rampant instability for Kroger workers

A study from the Economic Roundtable surveyed over 10,000 workers from three regions of the popular grocery chain Kroger, finding that their living conditions have declined over the last 20 years: 14% of these workers are homeless or have been in the past year.

From the report:

“Nine out of ten Kroger workers report that their wages have not increased as much as basic expenses such as food and housing…Since 1990, wages for the most experienced Kroger food clerks have declined from 11 to 22 percent (adjusted for inflation) across the three regions surveyed. Across the entire grocery industry, 29 percent of the labor force is below or near the federal poverty threshold.

Nearly two-thirds of Kroger workers say they do not earn enough money to pay for basic expenses every month…Among workers 21 to 29, 53 percent are unable to pay for rent…More than two-fifths of Kroger workers report that in the past year, they had to borrow money from their family or friends to pay for basic expenses.”

As an industry, grocery needs to do better. And if Kroger wants to hold on to employees, the company’s leadership needs to take it upon itself to do better as well.

ONE GOOD IDEA—THE 4 DAY WORK WEEK

Multiple companies, and countries even, are experimenting with a 4-day work week. The most recent high-profile example is Bolt. The fintech startup announced that it would be switching to that model full-time after running a pilot. The company’s head of HR told Protocol that over 90% of employees and managers supported the permanent change.

“We’re turning Fridays into something more like Saturdays or Sundays — genuine time off, with no planned meetings or work. Our Board, Leadership Team, and People Ops team have been supportive, and we’re eager to see how the pilot goes,” CEO Ryan Breslow wrote in the company blog post.

“What’s the rationale? Work is changing and the biggest obstacle we have to face is burnout…The four day workweek speaks to a shift in people’s working styles — namely, that if you can get your work completed from Monday to Thursday, then there should be no latent expectation that Friday is time on. Instead, it can be time off — a period to rest, recover, engage with loved ones, think creatively and all the other things that enliven us.”

Panasonic in Japan and D’Youville College in Buffalo are two others that have recently made the change. 

If this makes you uncomfortable, please consider that the vast majority of office workers are not grinding on their computers for 40 hours a week anyway. Breslow agrees.

“Here’s what many of us know but can be tough to admit: Work will fill the space you give to it. My bet is that we’re going to become vastly more efficient from Monday to Thursday. We’ll trim those excess meetings; we won’t send unnecessary communications. Because we’ll have less time, we’ll get more concrete work done.”

For retail and other hourly workers, think about the benefits in hiring and retention you could get from lowering the hour threshold for full-time status. This is an idea that can work for any kind of workforce, really, but is particularly valid for creative and knowledge work.

NUMBERS THAT MATTER

10.4

According to a recent study from Revelio Labs in partnership with MIT, a toxic work culture is 10.4 times more likely to contribute to attrition than compensation. The other factors contributing significantly to attrition were job insecurity, innovation (or lack thereof), failure to recognize employee performance, and poor response to COVID-19.

All of these things matter more than compensation right now, according to the study. Think about this as you're working through employee engagement, retention, and culture conversations right now.