Video Case: Patagonia Nurtures the Environment—and Employees Patagonia, Inc. is an outdoor sports equipment and apparel company with a difference. It started in the 1960s when climbing enthusiast Yvon Chouinard began looking for ways to make climbing hardware less damaging to the environment, first with iron pitons (mountain climbing spikes) that could be reused instead of left in the rock, then with aluminum chocks that left the rock unscarred. As Patagonia has evolved into a highly successful firm with 39 stores in seven countries and annual revenues of $260 million,1 Chouinard has kept his company private so that he can follow his mission: earth first, profits, second.2 Patagonia is committed to making the best products while causing the least possible harm to the environment. The statement of purpose, drafted by employees, reads: “Patagonia exists to use business to inspire and implement solutions to the environmental crisis.” The company’s twofold focus on quality and environmental issues has propelled Patagonia toward innovation. Revolutionary, durable outdoor gear and clothing and iron-clad guarantees assure that products meet high expectations and have earned the company a loyal customer base. All the while, Patagonia is loyal to its principles. It has limited its product line. Its catalog has discouraged customers from buying items they don’t need. The company recycles wherever possible, including Patagonia garments and other brands. Patagonia uses only organic cotton, to minimize pollution caused by traditional chemical-intensive cotton production. Its 170,000 square-foot distribution center in Reno, Nevada, uses a skylight system to reduce pollution from generating electricity for lighting, and the company installed a solar-electric system at its Ventura, California headquarters.3 Patagonia’s unconventional corporate culture is based on commitment to environmental, moral, ethical, and philosophical causes. Many workers with similar career and personal life values join the company to further the social responsibility efforts. Patagonia tries to foster “psychological success” for employees through meaningful work, health, family, and flexibility in doing their jobs. Employee satisfaction is boosted through job sharing, flexible work hours, a childcare center at company headquarters, an annual bonus based on profits, and full medical benefits to all employees, including part-timers. Besides the benefits, innovative policies help Patagonia ensure that employees maintain the same attitude and passion for its environmental programs. New hires can opt for a morning of surfing lessons during their three-day orientation. Employees set their own schedules, a flextime arrangement based on Yvon Chouinard’s philosophy (and the title of his book): “Let My People Go Surfing.” A passionate surfer as well as an accomplished climber, Chouinard believed that you surf when the surf’s up. Getting out of the office regularly to play outdoors is required and lets employees test products or think of improvements while balancing work and personal lives. When they need to work, they get their jobs finished. The company demands hard work, creativity, collaboration, and results, and it doesn’t keep those who don’t produce.4 Employees who have been with Patagonia for a year may apply to take up to two months’ paid sabbatical to work as full-time volunteers for nonprofit environmental groups. On returning, they present a video report to other employees to keep them up to date on environmental issues. Some employees have left Patagonia after internships to become full-time activists. Patagonia employees serve on the grants council that each year chooses nearly 150 proposals to receive money from the company’s “earth tax” –one percent of yearly sales or 10 percent of pretax profits--dedicated to funding environmental activities. Employees also participate in company-sponsored conferences that teach organizational and marketing skills to grass-roots environmental activists. Named one of America’s top companies to work for by Fortune for many years, Patagonia’s reputation is such that it has to spend very little on recruiting; for each new hire, the company receives 900 résumés. It experiences very low turnover, about 4 percent annually. Between its formal environmental programs and the steady labor pool of like-minded workers, employee motivation is all but inevitable. Discussion
Questions 1. Which approaches to employee development are used at Patagonia?
2. How does employee development at Patagonia contribute to the company’s strategies relating to employee retention, building intellectual capital, and business growth?