What Is the True Value of Agency?

Agency Definition: the capacity of individuals to have the power and resources to fulfil their potential (Wikipedia)

The most commonly used meaning of the word ‘agency’ is from business. An agency is usually a type of business that connects people or companies – think of a travel agency or advertising agency. However, there is a less common use that focuses on power – or the ability to change something.

This type of agency is what you will hear economists or business school professors talking about. An employee has agency if they are trusted to decide on their own working hours. They lack agency if they need to ask permission to visit the bathroom. It’s a simple concept, but extremely powerful.

Think about why people leave their jobs. Sometimes it is a simple reason, like the employee just wants to earn more, but most of the time there is a problem with agency.

The MIT Sloan Management Review found that a toxic corporate culture is 10.4 x more likely to be the driver of resignation, rather than an employee seeking better compensation.

Culture is ten times more important than salary.

A positive culture is usually underpinned by giving control and agency to workers. Pointing them in the right direction. Giving them the tools they need, then allowing them to get on with it, rather than micromanaging every individual action they need to take. Granting agency is a key ingredient in creating a positive corporate culture.

Most of us know this intuitively. Think about a time when you had a good boss or great job. It’s almost certain that you enjoyed some autonomy. The boss allowed you to get on with the job. You could take control of your day and what you planned to deliver.

Now contrast that to the interfering boss that constantly changes priorities and dictates how every last task should be undertaken.

Agency is more important than many managers realise. Many brands are already considering the value of their services in terms of agency – what power does our product give to the consumer, compared to our competitors? This can be important where some products are almost identical to the competition.

If the marketing people have already realised this, then what about managers that need to create a working environment where people care about what they are doing? This is important because creating a workplace with agency creates value for the business itself:

• Lower attrition: team members with a stronger sense of control over their work are less likely to quit than those who feel endlessly controlled by a manager.
• Wellbeing: employees with more control over their schedule will feel more in control of their work and life generally – this naturally boosts wellbeing.
• Engagement: employees that have greater agency are more likely to be positively engaged in their work – interested in what they are doing and keen to perform well. This can be critical in customer service work – have you ever been served by someone that just doesn’t care? Contrast that to when you have been served by someone who is engaged and interested in what they are doing.
• WFH and hybrid teams: distributed teams are harder to micromanage – some managers complained during the pandemic that they could not manage without seeing their team all in one place. But granting more agency to remote workers allows them the ability to deliver what is needed in a flexible way.

Agency may sound like a concept from an economic report, but it is extremely valuable for managers to understand it. Building a positive culture at work through increased agency has a number of positive outcomes and is an important tool for managers that are struggling to retain people and expertise.