Patagonia Case Study

After watching the video and/or reading this case study, answer the three questions found at the end of the case study.

The link is http://www.mhhe.com/business/management/videos/Mgmt-other/Flash/Pantagonia.html

Yvon Chouinard began climbing as a 14-year-old member of the Southern California Falconry Club. At the time, the only available pitons (spikes used in mountain climbing) were made of soft iron, used once, and left in the rock. In 1957 Chouinard bought a used coal-fired forge to make reusable iron pitons; the word spread and soon he was in business.

From climbing equipment to apparel, his company, Patagonia, has evolved into a highly successful private firm with annual revenues of $250 million. Chouinard has kept it private so that he can continue to pursue his mission: earth first, profits second.

According to CEO Michael Crooke, Patagonia is a very special company with a set of core values that is more than the bottom line. Because of the basic values, employees come to work every day with the attitude that they are making a difference. For each new hire, Patagonia receives 900 résumés. To understand the firm's success in satisfying employees, one needs only to look at a catalog. Not many companies place such significance on environmental and social issues. From the start, Yvon Chouinard advocated a purer, equipment-light approach to making climbing hardware in order to preserve the environment. The philosophy has continued. A recent catalog featured an essay entitled, "Do You Need This Product?" The message? If you don't need another shirt or jacket, don't buy it. Patagonia's management believes that this honest approach, while rare, creates loyal customers and dedicated employees.

To many environmentalists, corporations are the enemy. Patagonia takes a different approach. The company's goal is to make a difference; to do so, it must use its power to work from within the system. Patagonia is a successful company socially, environmentally, and financially. The success starts with great products and great people. Product quality and guarantees assure that the products meet high expectations at any store no matter the location in the world. In choosing employees, Patagonia looks for people passionate about an interest or cause. Over the years, many workers with similar causes and values have joined the company. The culture is based on commitment to environmental, moral, ethical, and philosophical causes. Patagonia employees derive true meaning from work, family, and health, rather than money and status. The goal is psychological success, achieved through a protean career. Patagonia spends little on recruiting. The firm experiences very low turnover, about 4% annually.

Each year, Fortune magazine rates the company as one of the best to work for. Why have workers found so much satisfaction with their jobs at Patagonia? Four reasons:

Let My People Surf. The philosophy of Yvon Chouinard, not only an accomplished climber but also a passionate surfer, is that you have to surf when the surf's up. At Patagonia, workers set their own schedules; when they need to work, they get their jobs finished. To develop great products, you need to be users of the products. You can't develop great surfboards if you don't surf.

Enviro Internships. After employees have completed a year, the company pays up to 60 days' salary for each individual to intern for an environmental group. The only requirement is that employees present a slide show when they return. Some employees have left Patagonia after the internships to become full-time activists. That's fine with the firm. Patagonia recently joined with several other apparel companies and six leading anti-sweatshop groups to devise a single set of labor standards with a common factory inspection system.

Child Development Center. Started in 1985, the child care facility is one of the first of its kind and an integral component of the company. Children are part of the campus all day, every day. The connection between work and family increases job satisfaction. Knowing their children are being well cared for onsite helps employees become fully committed.

One Percent for the Planet. In 1985, Patagonia started an "earth tax" and donates 1% of sales to grassroots environmental activists worldwide. Each group has its own budget for local activism. Patagonia employees serve on grant committees that fund proposals. Because of employee involvement, this program also contributes to worker satisfaction.

Questions for Case Study:

1. What values are important at Patagonia? How do values play an important role in attracting and retaining top employees?

2. How does Patagonia foster organizational commitment?

3. How does the firm influence the work attitudes of job involvement and job satisfaction?

References:

www.patagonia.com/culture/patagonia_history.shtml

Abraham Lustgarten et al., "14 Innovators," Fortune, November 15, 2004, p 193.

www.patagonia.com/culture/clean_climb.shtml

Aaron Bernstein,"A Major Swipe at Sweatshops," BusinessWeek, May 23, 2005, p 98.