Featured in today's briefing:
- The unseen hands behind some corporate exits from Russia.
- What’s really behind the record resignations.
- The dismaying frequency of working from the bathroom.
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The latest virus forecast: The US has had a 49% decrease from two weeks earlier, with about 35,000 new cases on Friday—which marked two years since the WHO declared Covid a global pandemic. Researchers say a new “Deltacron” variant is unlikely to be a significant threat. Masks are required on planes, buses, and public transit through at least April 18.
The business impact: Inflation hit 7.9% last month, a four-decade high, as prices are rising for gas, groceries, restaurant meals, transportation, and apparel. The Ukraine conflict, wage increases, and Covid-related supply-chain issues are all contributing to higher costs—and analysts expect continued price increases due to elevated costs for wheat, metals, and energy because of the war. Spending on apparel rose 38% in February from a year earlier and restaurant sales were up almost 40% as consumers ventured out of their homes and prepared to return to the office.
Focus on Workers’ Behind-the-Scenes Efforts to Get Employers to Quit Russia
Hundreds of US companies have ceased or significantly limited their dealings with Russia in the last two weeks, a mass departure that defies historical precedent. Helping drive that exodus: enormous pressure from workers who feel strongly that their employers should leave Russia.
That’s one observation by Jeffrey Sonnenfeld, who we reached out to this week to discuss what some are calling an “unprecedented” moment for businesses’ willingness to take actions on moral imperatives at the expense of their bottom lines. The senior associate dean of leadership programs at Yale School of Management and a longtime advocate for corporate social responsibility, Sonnenfeld is known these days for his “lists”: one identifies the major companies that have curtailed operations in Russia since its invasion of Ukraine while the other identifies companies that continue to have “significant exposure” there.
Since Sonnenfeld unveiled his lists on Feb. 28, hundreds of companies have announced suspensions; McDonald’s, Starbucks, and Coca-Cola unveiled changes the same day the Washington Post wrote about the list. Sonnenfeld, who has previously worked to pressure companies on areas like gun control, said he is now fielding calls from CEOs and other executives grappling with the issue. In other words, there are few other people with deeper insight right now into the forces swirling within companies and the dynamics behind their decisions.
While some of the departures were certainly based in pragmatism given the challenge of doing business in a Russia cut off from the global financial system, Sonnenfeld said this wave of boycotts is strikingly different from prior corporate movements in several ways:
- White-shoe professional service firms, like those in management consulting and law, decided to curtail their Russian business with surprising speed. “They aren’t always able to engage in conflict, especially in geopolitical matters, and here they were,” Sonnenfeld said.
- Driving these firms’ decisions aren’t investors (the consulting and legal companies aren’t public), nor consumers (who by and large aren’t aware of them). What is driving them is their own employees. “I buy into this pandemic/endemic/Great Resignation spirit or Gen Z mindset where social image is so important to where people shop, where they buy as consumers, where they invest,” Sonnenfeld said. “They have these workers saying they were ashamed to be part of a firm involved in supporting the devil. There was an internal revulsion that led to a quick retreat.”
- Employees at the small list of US companies still doing business with Russia are not happy, and they aren’t afraid to do something about it. Sonnenfeld said in the last two days he’s heard less from the CEOs and more from their employees, who are coming “in waves, multiple people from the same company, with great intensity.” “Initially we were going through public documents and SEC statements,” he added. “Now we’re being fed this huge tidal wave of Wikisources—insiders unhappy about what their bosses are doing. They are giving us information to work with.”
Companies including PepsiCo and some pharmaceutical firms are retaining at least part of their operations in Russia (Pepsi, for example, continues to sell baby formula). These firms argue that some products should continue to be sold for humanitarian reasons.
McDonald’s announced it was temporarily closing all of its locations and pausing its operations. “We understand the impact this will have on our Russian colleagues and partners, which is why we are prepared to support all three legs of the stool in Ukraine and Russia,” read a statement from McDonald’s CEO Chris Kempczinski. He then said the company will continue to pay its 62,000 employees there (About 6.5% of Russia’s workforce is employed by groups that are either foreign-owned or have joint Russian and foreign ownership.).
Sonnenfeld disagrees with such approaches. “We don’t care about making this a soft landing,” he said. “We intend hardship. That’s the idea, because we want to shut down this economy.” He argues that a full boycott is particularly important here because Vladimir Putin’s strength lies in his “aura of full control of all spheres.” When your local McDonald’s closes and your credit card stops working, it can lead you to question that aura of control, he argues.
Sonnenfeld doesn’t hesitate to compare what’s happening now to Nazi Germany. “People say that’s overblown, but I don’t think so,” he said. “When they’re blowing up children’s hospitals, gunning people down during a ceasefire, it’s not overblown to draw a parallel to Nazi Germany. It's horrendous.”
Companies will long be judged for what they decide to do now. And if there is a lesson already to be learned, it is that employees will have a say in this and other battles.
What Else You Need to Know
Disney’s CEO tried to sidestep taking a moral stand—only to reverse course after intense pushback by employees and critics. Bob Chapek had said he didn’t want to wade into politics by opposing Florida’s “Don’t Say Gay” legislation that would limit discussion of sexual orientation and gender identity in schools.
- But after internal pushback and public criticism—including at a Wednesday shareholder meeting—Chapek backtracked, pledging to combat similar legislation in other states and pause political giving in Florida, where Disney has tens of thousands of employees. (The Florida bill passed and just awaits Gov. Ron DeSantis’s signature.)
- “You needed me to be a stronger ally in the fight for equal rights and I let you down. I am sorry,” Chapek wrote to Disney staff. “You have helped me better understand how painful our silence was.”
- As noted by Sonnenfeld regarding Russia, employees are playing an increasingly active role in pushing corporate leaders to take stands on societal issues.
- When considering a new job, some 60% of people expect the top executive to speak publicly on controversial social and political issues that they care about, according to a recent Edelman Trust Barometer survey.
Pay and career advancement drove record resignations last year. Nearly 20% of American workers surveyed by Pew Research Center quit a job in 2021.
- Some 63% said low pay or a lack of opportunities for advancement were factors.
- Childcare issues were a consideration for 48% of those who quit. A desire for more flexible schedules and relocation were cited less frequently.
- Some 37% of adults younger than 30 quit last year, compared with 17% of those ages 30 to 49, 9% of those ages 50 to 64, and 5% of those ages 65 and older.
- Some pre-pandemic surveys had found compensation to be a more minor factor behind job changes, with career advancement the biggest driver. It’s hard to compare that survey data to the latest Pew numbers, but certainly over the past year rising wages and labor shortages mean that more workers have had opportunities to job hop for higher pay.
- Gallup earlier had found that it took at least a 20% pay raise to lure most employees away from a manager who engages them—and almost nothing to poach a worker with a lackluster manager.
Greater women’s participation in the workforce would boost the economy. If women’s labor participation matched that of other countries, the US real GDP would grow 4% over Moody’s baseline forecast, the ratings firm estimated.
- That would represent $1 trillion in additional economic activity over the next decade.
- In the US, there’s an 11% gap in labor-force participation between women and men aged 25-54. That compares to 6.6% in the UK and 4% in Sweden.
- “The lack of family friendly policies in the US keeps more prime-age women out of the labor force during their most productive years compared to other nations,” Moody’s wrote, noting that the pandemic had a worse impact on women in the US and Canada than peer countries.
Workplaces are lagging on diversity, equity, and inclusion. Nearly 85% of employees reported “a lack of meaningful progress on building a more equitable environment for employees of color,” according to a recent survey of 3,000 workers by Hue.
- A similar number said their employer did not invest in recruiting racially diverse job candidates.
Booming businesses often mean surging carbon emissions. Microsoft reported a 21.5% hike in its emissions during a recent 12-month period, following earlier declines.
- The tech company, which plans to be “carbon negative” by the end of the decade, cut its own so-called Scope 1 and 2 emissions by 17% during the period.
- But Scope 3 emissions—generated by its supply chain and customers—jumped by 23% amid rising energy usage to build data centers and manufacture devices like the Xbox, as well as by consumers to power those devices.
- Microsoft is counting on further emissions cuts and carbon removal to achieve its goal—but the reversal of earlier emissions declines highlights the challenges it and others face.
Return to workplace speed round:
- Office attendance in March is at 38% of what it was two years ago, according to Kastle Systems, which looked at access data from 2,600 buildings. During that same time, attendance at NBA games has bounced back to 93.5% of pre-pandemic levels, TSA checkpoints are at 91.1%, and OpenTable restaurant reservations are at 80.4%.
- The CEOs of Goldman Sachs and Morgan Stanley are campaigning for workers to return to the office. Morgan Stanley’s James Gorman says his firm has seen relatively few departures. However, despite Goldman’s five-day edict daily occupancy at its headquarters was recently still below normal.
- American Express, one of the financial firms to embrace remote work, said more than 40% of its US employees have chosen to work remotely on a full-time basis—double the number from before the pandemic.
- The US government dramatically undercounted the share of remote workers. About half of all US workers currently perform their jobs remotely at least some of the time, says a new paper by economists.
- Some 18.9 million Americans plan to move thanks to the freedom afforded by remote work. Some 4.9 million have moved since 2020, according to UpWork research.
- The number of days that employers expect workers to work remotely continues to rise and is now over 2.1 days a week, according to new data from WFH Research.
- Meta is cutting back or eliminating free perks like laundry and dry cleaning. The company said the changes are part of its shift to a hybrid work model as it expanded employees’ wellness stipends to $3,000 from $700.
Here are some of the best tips and insights from the past week for managing yourself and your team:
- Head off conflict by saying “I hear you.” It helps to defuse any tension with colleagues if you start by showing you’ve heard what they just said. “Yes, and….” is another effective way to begin any response.
- Acknowledge the elephants in the room. Meetings aren’t effective if participants are all distracted by unaddressed concern or background stress (which could include troubling news such as atrocities in Ukraine.) Start by acknowledging the issues and inviting any discussion. That helps people to move on and focus on the work.
- Stop to ask what’s going right or wrong. Reiterate your shared goals and then ask what as a team you’re doing right and wrong in pursuing them, and what other opportunities you should take advantage of. This helps surface problems and uncover different views. You can also ask what should be continued, stopped, or started.
- Practice small talk ahead of returning to work. Some people are finding it awkward to pick up in person with colleagues again. One way to prepare for officer banter is to proactively make small talk in line at the grocery store or in other low-risk situations. And it’s OK to acknowledge any awkwardness when you do return, by saying "I'm relearning how to do this."
When the bathroom is a place of work. Some 73% of people acknowledge working from their bathroom—e-mailing, messaging, and attending virtual meetings (audio muted and video off we hope!) About 60% do so at least once each week.
Companies don’t know where their employees are. Just 46% of HR professionals are confident they know where their company’s staff are located, down from 60% last year.
- Two-thirds of workers acknowledge not always reporting to their employer when they’re working outside of their home state or country.
Whither the mid-day nap? About one-third of workers say they’ve napped during the workday while remote. Some offices have dedicated napping spaces, given the health and productivity benefits. But there’s no sign of any significant uptick in nap-friendly initiatives amid the current return.
The handbook for this new era of business doesn’t exist. We’re all drafting our own as we go along—and now we’d like to start doing so together.
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Best wishes for a great week!