Mixing Business with Passion
That’s a totally cool way of treating employees, I think to myself as I pass by the company’s retail store, Great Pacific Iron Works, and turn into the company’s parking lot.
While I get the grand tour of Patagonia’s sprawling mustard-colored headquarters by public relations assistant Jody Benzer, I notice a distinct air of friendliness and playfulness in the workers I meet--from the receptionist, Chip Bell, to the onsite child-care workers at the adjacent Great Pacific Child Development Center. And talk about your casual dress code. Shoes are optional, and comfortable clothing reigns supreme. Employees’ attire could be described as being somewhere between "California casual" and "business sporty." These people are, well, earthy.
Being down to earth is a fitting description for this outdoor-clothing and gear company, whose mission states: "Patagonia exists to use business to inspire and implement solutions to the environmental crisis." And the company really does put its money where its mouth is. The organization donates 1 percent of sales to environmental causes. The resulting funds average about $1.3 million annually. Since 1985, the corporation has pledged more than $14 million toward grass-roots activism in the cause of the protection and restoration of the natural environment.
But the company doesn’t just make a financial investment. It also makes a human investment, allowing every long-term employee to take as much as two months of personal paid leave each year to donate time to work for such environmental causes as Save the Whales or to pursue outdoor activities such as mountain climbing in Peru. The Patagonia internship program has allowed employees to work all over the world in support of environmental causes.
At Patagonia, a subsidiary of Lost Arrow Corp., no one has to pretend they like their work better than bungee jumping or cleaning birds’ wings after an oil spill. In fact, workers are encouraged, if not compelled, to pursue outside activities. Spending time cultivating, restoring, and enjoying the great outdoors is a passion for Patagonians. The company sells its products through specialty retailers, a catalog, and 28 of its own stores in the Americas, Australia, Europe, and Japan.
Part of what makes Patagonia successful--and why its HR department has been awarded the 2000 Workforce Optimas Award for the quality of work life it helps nurture--is its singular vision, and how it carries out that vision through its HR practices, including everything from building culture to creating environmental internships. There’s a circle of life kind of motion to the relationship between this company and its employees that can only be described as symbiotic: Patagonia hires people who fit their culture and mission. The company gives workers lots of time to pursue their outdoor and environmental passions--which mirror the company’s passions. In turn, employees return to work excited about their passions and spread their enthusiasm to other workers. And the cycle continues.
According to Jim Collins, co-author of "Built to Last: Successful Habits of Visionary Companies" (HarperCollins Publishers Inc., 1994), companies that see themselves as more than just revenue-generators--those that have a strong mission--consistently outperform the Dow. That’s certainly true for Lost Arrow. The result of this symbiosis is a company that has been successful at making some of the world’s best clothing and equipment for outdoor enthusiasts. Lost Arrow Corp., including Patagonia, grossed $180 million in 1998. The more money it makes, the more it gives back.
Mission drives culture.
When I ask Jennifer Van Horn, interim HR director for Patagonia, whether HR drives or supports the company’s culture, she responds: "That’s a really interesting question. A lot of our culture has to do with whom we bring into the organization. So there’s a really big responsibility [for HR] in terms of the gatekeeper role."
Van Horn, who’s been with the company for nine years and in HR for six, took the helm when Terri Wolfe, the previous HR director, left the organization in February. She doesn’t believe that HR at Patagonia drives the culture per se. Rather, she sees the culture as a reflection of the 779 individuals who work at company headquarters in the Reno, Nevada, customer service center, and at its production facilities in Japan, and its salespeople worldwide.
On one hand, HR’s role is to be a sounding board to keep the culture thriving with new ideas. "I don’t live in HR," says Van Horn. "I spend a lot of time walking through the building checking in with people to see what they’re doing. I don’t wait for people to come to me." Because of this approach, Van Horn and others in HR tend to get a better feel for what’s going on with people. "We really strive to be a part of the culture just like any other department here," she says. "We’re not outcasts. We’re part of the whole."
It’s not unusual to see Patagonia’s HR pros out surfing, running, or hiking with other employees--or taking a lunchtime yoga class in the onsite exercise room. All the close contact with workers pays off. "When I reach out to them, they’re more willing to tell me what’s happening--both the good and the bad," she adds.
On the other hand, HR perpetuates the nonconformist and hip culture that already exists. "[In HR], we support the culture and move it in a positive direction by hiring like-minded people, people who are hard-core users [of outdoor clothing or equipment] or who have a really strong commitment to the environment," says Van Horn. HR purposely makes it tough to get into Patagonia because they want to make sure they hire people who are as committed to experiencing and preserving the earth as they are. In fact, HR at Patagonia has honed its skill in hiring like-minded employees to a science.
"One of the reasons Patagonia has been successful is because the founders really started by hiring their friends," says Lu Setnicka, director of public affairs, who’s been with Patagonia for 13 years and was formerly the company’s recruiter. "So there’s this atmosphere and culture of familiarity and closeness. The culture has grown up that way."
If it seems like an exclusive club of hard-core outdoorspeople, it is. Patagonia strives to employ people who’d jump at the chance to go hiking, biking, or surfing at a moment’s notice. There’s an HR challenge: How to get a company full of people who’d rather be out racing mountain bikes to stay at their desks for hours on end.
There are no clear answers, but there are trade-offs. The firm’s managers also have figured out that by hiring people who match their market--outdoor enthusiasts--they get a built-in side benefit: market research on their core product user. And employee feedback on product performance in the field translates directly into the higher-quality products for which Patagonia is recognized.
Balancing work and life.
What makes Patagonia, which ranked number 80 on Fortune’s list this year of the "100 Best Companies to Work For," exemplary is that it clearly understands the importance of workers’ balancing their professional and personal lives.
According to data gathered by Lincolnshire, Illinois-based Hewitt Associates that analyzed the people-practices data of the more than 200 companies that applied for this year’s list, the 100 best companies have three main characteristics in common: They take more steps to engage employees in the business, make an effort to create a supportive and inclusive company culture, and give greater consideration to their employees’ quality of life. Patagonia clearly fits all three categories.
When there’s a real need within the employee base, and filling that need would clearly benefit the company, HR at Patagonia tends to throw it a line and reel it in. That’s how the company’s onsite child-care program got started in 1984--years before most companies had even heard of the concept. "We had a lot of women in the organization who had young children," says Setnicka. "It just made sense." But even before a formal child-care program was put in place, workers often brought their kids to work. "So children have always been a part of the culture, but having a formal program just sort of acknowledged that kind of need."
The child-care center accommodates as many as 120 children, ranging in age from eight weeks to nine years. Parents pay tuition comparable to local community rates. Tuition constitutes the majority of the center’s income, but it’s supplemented by parent fund-raising and company-sponsored events, in addition to being subsidized by Lost Arrow Corp.
The benefits lineup includes such other perks as a generous vacation plan (up to five weeks after 10 years), a 401(k) plan, a profit-sharing plan, education reimbursements, and product discounts.
HR at Patagonia isn’t policy-driven. So as new people come in and new needs develop, those needs are acknowledged--though not always acted on. Part of the challenge comes when one worker has a need, but it doesn’t make financial sense to implement a new program companywide. In these cases, Patagonia provides a resource-and-referral service through its Great Pacific Child Development Center that helps workers with family-related concerns and questions--from elder care to pet care.
Employees at the company’s Reno service center also can call in for help. There are brown bag lunches on topics such as "How to Handle the Strong-Willed Child." And Setnicka says the whole organization is also a resource, because workers often share experiences and resource lists on a variety of work/life-balance topics.
Patagonia has one of the few HR departments in the world that have quantitatively measured the return on investment of their work-family benefits. In its 1996-1997 period, for example, the company figured it saved $3,749 more than the company’s total subsidy of $585,231 for its work-family programs. But measuring ROIs isn’t the only way that HR at Patagonia is innovative.
Challenges bring out HR’s ingenuity and resourcefulness.
Life hasn’t always been a walk in the park for HR at Patagonia. In 1991, for example, the firm hovered on the brink of financial disaster and had to lay off 120 of its 620 employees. It was a painful period--especially for HR. But like most employers, Patagonia doesn’t guarantee employment. Yet the company tries to hang on to those whom it hires.
HR at this firm clearly recognizes that workers are its most important commodity, which is why it helps nurture a culture that makes it attractive for people to work there, and why so few leave voluntarily. Turnover was clocked in at a low 26 percent in 1998. And the company receives approximately 8,000 résumés a year but hired only 84 new people in 1999.
HR at Patagonia closely reflects the company’s vision, values, and culture. There are no four-inch-thick HR manuals here. Their strategy is to be flexible and creative, with their ears close to the ground. In addition to the HR staff at headquarters, two people serve Reno employees. "In HR, we don’t have a lot of rules and policies, procedures and steps--and that’s very much like our culture," says Setnicka. "It’s not that we don’t like rules, but one of our core values is to not be bound by convention." Translation: When you’re scaling the side of a mountain, you’ve got to know the finer points of climbing--but in the end, do what works.
So when HR’s structure wasn’t mirroring its goals to be more responsive to their customers’--employees’--needs a few years back, the HR team of five (now four) reorganized the department. They’re all now generalists rather than specialists. Now, each of the HR professionals can respond to employees’ questions and requests. If Van Horn’s on vacation in the Bahamas or Dewers is hiking in the Himalayas, Smith can easily take over.
They also initiated a new process whereby new employees--from the recruitment stage on--are teamed up with one human resources person for most of their HR needs. "So the idea is you’d start with an employee when they come in during the recruitment stage, and you’d get to know them through that process. And then you get to know them better by watching them go through their training and so if anything comes up, you have a really strong relationship with this person all the way through. You know them," says Van Horn. "We came to this decision as a group because we thought it would give us the opportunity to have closer relationships with employees." There’s that symbiosis thing again.
"It’s based on our commitment to great relationships in all that we do, so it makes a lot of sense that we would set things up to nurture that relationship, just like we nurture a relationship with a manufacturer, for instance," adds Setnicka. "That’s a big piece of why we’re successful." The challenge comes when there’s a busy HR period for a certain work group, such as production. "We’re very willing to help each other out if someone’s got a really heavy recruitment period, for example," says Van Horn. "It ebbs and flows."
But HR’s move to a generalist structure also came about so they could all develop their own HR careers. "There’s not a lot of turnover here, and we wanted to continue to learn and develop," explains Van Horn. "It has worked out pretty well." A better HR staff usually translates into a better-served customer base, namely, employees.
Training is a natural.
Patagonia commits to giving employees 45 hours of training per person, per year, minimum. Besides the three-day new-hire orientation that’s taught by workers (not HR), HR offers such "brain food," i.e. classes, as time management, surfing, introduction to French culture, business and communication, Japanese style, and beginning sewing.
And then there’s the internship program, a rarity in business environments, and praised by employees: "I’ve always respected Patagonia. But seeing what truly profound effects it can have on the groups we support, I now feel even better about what we do," says Kevin Mack, who works in the returns department in Reno. Mack spent his internship working for the Great Basin Bird Conservancy in Nevada.
Cross-training is a mainstay at Patagonia. When an employee goes on vacation, takes training classes, or pursues an internship opportunity, HR helps fill the position with another employee who’s interested in the job that’s temporarily left open. "There’s a domino effect, because you send this person out into the world to get experience they might not be able to get here, and in the meantime, you create an opening for somebody else to grow and learn." HR ends up having to be extremely flexible, organized, and proactive to make this internal internship, or employee development program, work.
The benefits to Patagonia are numerous. By letting workers have time to pursue their passion, they feed their passion--and bring that passion back to the company. There’s that circle of life thing again. Workers who go on "field trips" usually come back with ideas for new products or designs. And let’s face it, the fact that few companies offer such elaborate paid-leave benefits causes résumés to flood in from all over the United States. So the organization can be picky--even in the tight unemployment market--about whom it hires. That’s not a bad position to be in.
As I drive home, I think, "Patagonia certainly has its HR and company act together: Work hard. Play hard. And leave the world a better place than you found it."
Driving by the Pacific Ocean, I do a double take. "Didn’t I see that surfer in the HR department a few minutes ago? Nah, it couldn’t be ... could it?" Perhaps even HR people like to do a little "product testing" and "field work" now and then.
Workforce, March 2000, Vol. 79, No. 3, pp. 80-86.