TCSE: Ted Corpus Search Engine

Recorded at	September 29, 2021
Event	TED@BCG
Duration (min:sec)	11:20
Video Type	TED Institute Talk
Words per minute	185.37 fast
Readability (FK)	54.32 medium
Speaker	Warren Valdmanis


1	00:04	In 1995, a fellow named Chris Klebba decided to open a gym
2	00:08	in his hometown of Northville, Michigan.
3	00:11	Fitness had changed his life,
4	00:12	and he wanted others in small-town Michigan
5	00:15	to have the same experience.
6	00:16	But the problem with gyms is they can be intimidating.
7	00:20	It's the ultimate irony.
8	00:21	You go to a gym to get in shape, but if you're out of shape,
9	00:24	you feel like you need to get in shape just to show up.
10	00:27	That's why as many as 50 percent of gym members quit within the first year,
11	00:32	which is fine if you open a gym in New York or LA
12	00:34	with millions of people.
13	00:36	But in a small town, you might simply run out of customers.
14	00:40	Now many gyms try to solve this problem by making it difficult to quit.
15	00:45	So now not only am I feeling guilty about not going to the gym,
16	00:49	but I’m stuck paying 100 dollars a month, and I’m still not getting any thinner.
17	00:54	But Chris decided to do something different.
18	00:58	Chris decided to invest in his workers.
19	01:01	He hired overly helpful, overly friendly employees
20	01:04	who at any moment were eager to step in
21	01:07	and help you learn how to use a piece of equipment
22	01:09	without making you feel like you're being judged.
23	01:12	The idea was for the 55-year-old mom or dad,
24	01:16	who’d never been to a gym before in their lives,
25	01:18	to feel welcome and comfortable immediately.
26	01:21	Now my question as a private equity investor is:
27	01:26	Could this really be profitable?
28	01:28	There's an old joke about a man who's had too much to drink
29	01:31	looking for his keys under a streetlight.
30	01:33	A cop comes by and offers to help
31	01:36	and asks where he thinks he lost them.
32	01:38	"In the park," comes the response,
33	01:40	"but I'm looking here because the light's better."
34	01:43	That's a little how we investors look at companies today.
35	01:48	We know that value at companies is driven by people,
36	01:50	but we focus on short-term profit because it's so much easier to measure.
37	01:55	I’ve worked in and around private equity for 25 years
38	02:00	on six continents,
39	02:01	and I've seen this error in thinking again and again and again.
40	02:06	In private equity,
41	02:07	we buy companies and seek to improve them
42	02:10	so we can sell them at a profit.
43	02:12	But very often that improvement comes in the form of cutting costs,
44	02:16	especially labor costs.
45	02:18	Private equity employs roughly nine million people
46	02:22	and has cut over a million jobs in the past decade.
47	02:26	Too often we ask a company for their org chart
48	02:28	just to figure out who is getting fired.
49	02:31	Now I think investors should take pride for helping to make companies lean,
50	02:37	but I'm worried that we may have done our job too well
51	02:41	and are now at risk of starving companies of the people
52	02:44	that they need to be successful.
53	02:47	So the big opportunity for investors, for executives and for you
54	02:53	is to create rather than cut good jobs.
55	02:58	Creating good jobs is now the focus of my work as a social impact investor.
56	03:03	But to create good jobs, you first need a definition of a good job,
57	03:06	which was surprisingly hard to find.
58	03:09	Spreadsheets and numbers are comforting, but people are complicated,
59	03:13	which is why impact investing can sometimes feel squishy.
60	03:17	Good for the soul, perhaps, but risky for the pocketbook.
61	03:21	But my partners and I work at a company
62	03:24	that prides itself on using data to solve problems.
63	03:27	So we spent the last two years looking at all the academic research,
64	03:32	reading all the case studies.
65	03:33	We interviewed human capital experts
66	03:35	and surveyed workers across hundreds of companies.
67	03:38	And from that work, we developed a common sense definition of a good job,
68	03:43	one that correlates with worker productivity
69	03:46	and helps us to build better companies.
70	03:49	So here it is.
71	03:51	A good job is where a worker, one, is fairly treated.
72	03:57	Two, has a promising future.
73	04:00	Three, feels psychologically safe.
74	04:03	And four, has a sense of purpose.
75	04:06	Now by this definition, only about a third of jobs today
76	04:11	qualify as good jobs.
77	04:14	But that's where data-driven impact investing can help.
78	04:17	By putting hard numbers to each of these conditions,
79	04:19	we can score each job at the companies we invest in
80	04:22	and then work to improve the number of good jobs at these companies.
81	04:26	So let's go through each of these four conditions in turn,
82	04:28	and as we do, think about the place where you work.
83	04:31	How does it measure up?
84	04:33	If the answer is "not good," don't worry,
85	04:35	you can help point your company in the right direction.
86	04:38	So here we go.
87	04:40	Number one, a worker is fairly treated.
88	04:43	Now we spend roughly a third of our adult lives working.
89	04:48	So whether you work at Marshall's or Microsoft,
90	04:51	you want your employer to pay you fairly for all that time.
91	04:55	But many investors see worker pay as a zero-sum game.
92	05:00	Whatever a company gives to workers must somehow come at our expense,
93	05:03	which is why when Home Depot announced early in COVID
94	05:07	that they would be offering danger pay and making investments in worker safety,
95	05:12	they saw their market value crash by billions of dollars.
96	05:17	But our research found over 100 studies that show that appropriate incentives,
97	05:22	attractive benefits
98	05:24	like retirement accounts and health care and things like flexible schedules
99	05:28	more than pay for themselves
100	05:30	through improved productivity, higher retention, lower hiring costs.
101	05:35	Home Depot itself is a company that's built on the idea
102	05:39	of providing better service to customers by employing experts on its shop floors.
103	05:43	People who have seen your problem before
104	05:45	because they've worked in home repair and construction,
105	05:47	and they can help you to fix it better.
106	05:50	Now Home Depot is thriving today thanks to its investment in workers.
107	05:55	Now fair pay is a critical, critical thing,
108	05:58	but it's not the only thing that matters.
109	06:00	Which brings us to our second condition: a promising future.
110	06:04	Fast food restaurants not only pay low wages,
111	06:08	they also offer very little in terms of learning and growth,
112	06:11	which is why their employees quit after six to 12 months on average.
113	06:15	Think about that the next time you get rude service at the drive-thru window.
114	06:19	But training and career path can help to solve this riddle.
115	06:24	Restaurants like Tender Greens in California
116	06:27	and Boloko in Boston
117	06:28	offer training to their low-wage workers
118	06:31	that qualifies them for management roles.
119	06:33	So you might start out as a dishwasher earning 12 bucks an hour
120	06:37	and then with the right training,
121	06:38	you can become a restaurant manager in a matter of months,
122	06:41	making nearly three times that much.
123	06:43	Now the prospect of tripling your wage is a powerful motivator.
124	06:47	And the data shows that workers are much more loyal and dedicated
125	06:50	when they feel that their company is helping them to build a career.
126	06:54	Our third condition, psychological safety,
127	06:57	should be a fairly obvious one.
128	06:59	Think of the best boss you've ever had,
129	07:02	the one that motivated you to go above and beyond at work.
130	07:05	I bet that person was a listener.
131	07:08	Because the modern workplace is increasingly a place
132	07:10	of communication and collaboration.
133	07:13	But many workers find it difficult or risky to speak up.
134	07:17	Professor Amy Edmondson of Harvard has studied this issue
135	07:20	in government, nonprofits and companies
136	07:23	and found that most people's first instinct is to self-protect.
137	07:28	Let's face it, life's too short to correct your boss's mistake
138	07:31	if you think you might get fired as a result.
139	07:34	Not speaking up is invisible,
140	07:36	but it can cost the company valuable ideas.
141	07:39	It can squander employee talent or worse,
142	07:42	it can put customers or employees at physical risk.
143	07:46	Google found from its quest to create the perfect team
144	07:50	that the most important ingredient was not the people involved
145	07:54	but rather the team's overall willingness to share and listen.
146	07:58	It also found that great teams don't hide from their mistakes,
147	08:02	but rather embrace them as opportunities for learning
148	08:05	and to add to the overall IQ of their companies.
149	08:08	Which brings us to purpose.
150	08:10	It's a lot easier to share and listen to others
151	08:14	if you and your colleagues feel passionately about your work.
152	08:18	But do you feel passionately about the idea of going to work each day
153	08:21	for the sole purpose of maximizing shareholder value
154	08:24	for investors you've never met?
155	08:27	It's just not a very energizing idea.
156	08:31	Humans, unlike machines, want to feel connected to a higher purpose.
157	08:35	They want to feel proud and useful.
158	08:38	And fortunately, most companies out there do exist for a reason.
159	08:42	But it can be hard to tell when so many of their mission statements
160	08:45	read like they were generated by a robot.
161	08:48	I actually used an online mission statement generator for this talk
162	08:51	to see what would come back.
163	08:54	"The mission of my TED talk is to offer smart insights with empathy,
164	08:59	care and thoughtfulness."
165	09:01	Not bad for a computer.
166	09:04	But a good mission statement is more than just nice words on a PowerPoint.
167	09:08	A good mission statement can be the most distilled form of strategy,
168	09:12	the guiding light for a company and its employees.
169	09:14	That fitness chain I mentioned earlier,
170	09:16	Impact Fitness,
171	09:18	has a very clear mission to offer health through fitness
172	09:21	in underserved communities,
173	09:23	and they're deadly serious about it.
174	09:25	The founder, Chris, likes to repeat that mission at company meetings.
175	09:29	Most gym owners would be thrilled if their customers never showed up,
176	09:33	so long as they keep paying the monthly bill.
177	09:35	But Chris wants people to show up at workout in his gyms and get healthier.
178	09:39	That's why he not only tracked gym usage,
179	09:43	but tied it to executive pay.
180	09:46	The company has gone from strength to strength,
181	09:48	growing from that single gym in Northville, Michigan,
182	09:51	to now over three dozen gyms across small-town Michigan,
183	09:54	Indiana and now Canada.
184	09:56	And it's done so in a way
185	09:58	that their employees have every reason to be proud of.
186	10:02	It's an old corporate chestnut
187	10:04	that our employees are our most valuable asset.
188	10:08	Today those words ring as hollow as the automated voice,
189	10:12	telling us how important our call is when we've been on hold for 10 minutes.
190	10:16	(Laughter)
191	10:17	But fortunately, creating good jobs isn't rocket science.
192	10:21	These four conditions: fair treatment,
193	10:24	a promising future, psychological safety and purpose
194	10:27	are relatively easy to track and improve.
195	10:31	And to do that, though, requires investors and executives
196	10:36	to work together.
197	10:38	Because too often well-meaning CEOs
198	10:41	are cut short by short-term oriented investors
199	10:44	and the boards that represent them.
200	10:46	But I believe with a better measure of good jobs and the associated benefits,
201	10:52	investors will support more investments in workers.
202	10:55	Because who wouldn’t want to create good jobs
203	10:57	if you're creating more valuable companies at the same time?
204	11:00	And our research shows that companies with a higher proportion of good jobs
205	11:06	grow faster and are more profitable.
206	11:09	They attract better talent and are more innovative.
207	11:12	Investors ignore this issue at their peril
208	11:16	because in today's economy,
209	11:18	good jobs aren't just good for society,
210	11:20	they're good business.
211	11:22	Thank you.

Warren Valdmanis: What makes a job "good" -- and the case for investing in people