Patagonia Shows Why Putting Your Money Where Your Mouth Is Is a Great Strategy
It was a move that shocked the business world. Earlier this month, billionaire Yvon Chouinard announced that he was relinquishing ownership of Patagonia, the outdoor apparel company he founded almost 50 years ago.
A lifelong social and environmental activist, Yvon, along with his family, transferred their shares of the Ventura, California-based company to a nonprofit that will direct the entirety of its profits — some $100 million a year — to fight climate change.
Patagonia is no stranger to corporate do-goodism. The company’s mission, “We’re in the business to save our home planet,” is as universally lauded as its iconic fleece pullover. In some ways, the announcement was a natural next step in the evolution of a company whose purpose-driven approach to business can be traced to its origins.
As Fast Company observed: “Just as Patagonia has helped move the goalposts on sustainability in the supply chain, and speaking out on social and environmental issues, it has now established a new standard for how a company can truly walk the walk on its values.”
History is short on billionaires putting principles before profits, but Patagonia’s announcement reinforces what many in the talent acquisition community already know: Organizations thrive when they have a clear purpose and a culture that supports it. Before the pandemic, the retailer boasted a 4% employee turnover rate, more than three times lower than the average for that sector. “I call us the Hotel California,” mused Dean Carter when he was the head of HR at Patagonia. “You check in but you don’t check out.”
Research conducted by management consulting firm Blue Beyond Consulting shows that 52% of knowledge workers said they’d quit their jobs if their employer’s values didn’t align with their own. More and more, workers are questioning the purpose of their jobs, and asking, “What is this for?”
The phenomenon even has its own name: the Great Reflection. “The era of merely providing financial compensation in exchange for employees’ work and services is behind us,” writes Jaimie Green, an HR executive and contributor at Forbes.
Jaimie says companies need to reinvent their employer value proposition (EVP) if they hope to attract and retain top talent in today’s market. And that means offering more than a competitive wage, a generous wellness package, and flexible working hours.
“(People) want to work with companies that enjoy building connections and thriving communities,” she adds. “They also want to feel a higher sense of purpose and to know how their work contributes to society.”
HR consultant Madeline Hall doesn’t think employers have to go quite that far. “Values do not necessarily mean changing the world,” she writes in a LinkedIn post reacting to the Patagonia news. Madeline adds: “They are what they sound like: a set of principles and fundamental beliefs that guide your company. CEOs need to own them.”
Louisa Mars, a brand consultant in the United Kingdom, views values as more than an employer proposition. She sees them as a company’s reason for being.
“If there’s one thing we can learn from this,” she wrote on LinkedIn following Patagonia’s announcement, “it’s that mission and purpose as a brand is everything. It’s why people will believe in you, and it should be the reason you exist. So live and breathe it.”
*Photo from Patagonia
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