Companies suffer when workers are disengaged, but employers and investors need consistent standards to benchmark and drive change

• Even before the pandemic, 50% of workers described themselves as disengaged. This is a big problem for companies.
• Investment in workplace issues has been held back due to a lack of consistent standards and metrics.
• The conversation was part of Insider's virtual event "Financing Net-Zero," presented by IDA Ireland, which took take place on Thursday, May 13, 2021.

Companies benefit when their workforce is motivated and satisfied, but a commonly understood metric to demonstrate that ROI is still elusive.

This topic was discussed in a interview on Insider's virtual event,"Financing Net-Zero," presented by IDA Ireland, which took place on Thursday, May 13.

Moderated by Insider's finance features correspondent, Danielle Walker, the conversation featured Warren Valdmanis, partner at Two Sigma Impact, a private equity firm that invests in companies that are more dependent on human capital than more tech-driven companies.

Valdmanis said the COVID-19 pandemic has helped prioritize workforce issues in ways they haven't been previously. "One of the silver linings of the pandemic is that it has helped the investment world to focus on the "S" in ESG [environmental, social, governance targets]," Valdmanis said.

Workforce issues predate the pandemic. "Long before the pandemic in America, 50% of workers described themselves as disengaged," Valdmanis said. "But 13%, that's one in 8 workers, is so disaffected by how they are treated on the job they actively work against the interest of the company that employs them."

The discussion touched on the definition of a "good job" in this context. Valdmanis said the characteristics are pretty widely understood - fair terms of employment, pay, and benefits, as well as a career path and the training to support it. A connection to the mission of the company is also important.

"When those things are present, that activates the discretionary effort that all of us have...that extra little bit of energy that you bring to your job," he said.

That "extra bit of energy" is tough to quantify in terms that drive increased investment in the workforce. "If you talk to 10 different labor economists about what their definition of a good job is, you'll probably hear 10 different answers," Valdmanis said. "Our belief is that until you can set a benchmark and actually have a clear measure for what a good job is, it's really hard to show progress at a company."

Valdmanis also endorsed companies being required to disclose workplace issues, so investors can have more visibility into the organization's health.

Companies looking for benchmarks will find a wide array of frameworks to choose from - possibly too many to be helpful, Valdmanis said. "I think we're on a path, but it's going to be important in the next few years to really coalesce around a small number or a single standard."