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August 5th, 2019

EPISODE 2: Can Patagonia Change the World? With CHRO Dean Carter and Dr. David Rock

Patagonia, the clothing company beloved for its mountain-ready apparel, has for the last few years been embarking on a journey of its own. Rather than simply avoid doing the planet harm, Patagonia wants to regenerate and protect Mother Earth through its environmental practices. But one day Dean Carter, Patagonia’s CHRO, had an idea. What if those same regenerative practices were brought internally, so that the company put as much into its employees as it took out? Might the company also flourish?

Our host Chris Weller is joined by Dean Carter (Patagonia) and David Rock (Neuroleadership Institute).

Episode Transcript

Chris Weller:                 Working life is full of metaphors. Employees are rock stars, or maybe all-stars. Teams are families, leaders are coaches or captains, but Dean Carter, the Chief Human Resources officer at Patagonia, is thinking even bigger when it comes to his organization. For Dean, the lens through which he sees every system, every process, is agriculture. And as Patagonia transforms over the coming years from an apparel company to one focused on protecting the planet, that metaphor is taking on new life, too. Because it’s not just what Patagonia gets out of its people that Dean cares about, it’s what the company puts back in.

Chris Weller:                 I’m Chris Weller, and this is the Your Brain at Work podcast, from the Neuroleadership Institute. In today’s episode, I’m joined by Dean Carter, CHRO at Patagonia, and Dr. David Rock, co-founder and CEO of the Neuroleadership Institute. We dig into Dean’s philosophies on performance management, what it means to make an organization more human, and how Patagonia’s culture depends on just letting its people go surfing.

Chris Weller:                 David and Dean, thank you for joining me.

Dean Carter:                 Thanks, Chris.

David Rock:                   It’s great to be here, Chris.

Chris Weller:                 So, Dean, Patagonia is known all over the world for its apparel, but now the company’s looking to kind of make a different move and a different impact. Can you tell us a little bit about that?

Dean Carter:                 Yeah, sure. Making responsible apparel and gear for the outdoors has been a real core part of our mission for a long time. It’s the part that says, “Do no unnecessary harm.” But the more we’ve seen the planet in crisis, we realized just doing no unnecessary harm isn’t enough, and we’ve really leaned into our mission, as a matter of fact, we changed our mission now. It just simply says, “We’re in business to save our whole planet.” And in that mission we had to rethink everything that we’re doing. And so, we have leaned into a new product, which we’ve done in the past, we used to make climbing equipment and pitons and then we moved to apparel. But we’re really leaning into agriculture because we believe that if you do agriculture right, not only can you do less harm, you actually can actually reverse climate change and do some good in the process, in the way you make food, and also in the way you make clothes. We feel like with this new mission, and new products, and new way of making products, we can actually repair the planet, versus just damaging it less than anyone else.

Chris Weller:                 I love that because it’s so interesting. The corporate mission actually feeds into how you do performance management, and you kind of carry the metaphor of the agricultural approach to how you treat your people. So, can you talk a little bit about that?

Dean Carter:                 Yeah. The principle is basically this, when it surrounds agriculture, is traditional and conventional agriculture has a process where you put the seed in the ground, and when the seed goes into the ground, it forms this really rich microbial community that helps the seed grow, and the seed reaches its roots into the soil and draws nutrients from the soil into the plant. And then when it reaches the air, or reaches above the soil, it begins to sequester carbon and pulls carbon into the roots and [inaudible] enriches the soil. And at the end of the season, when the plant has grown and all these processes are happening, then we actually just rip the fruit off, slice into the plant, cut into the ground, in this very dramatic end of the whole season, and start the whole process over again.

Dean Carter:                 But what happens is, every time you do this process, you kill the soil a little bit more, you deplete it of nutrients. What you have to do, ultimately, is you have to spend a lot of money on fertilizers, and a lot more water, and pesticides, and herbicides, and all these things. You have to spend a lot more money because you’re basically killing the relationship and the community in the soil every time.

Dean Carter:                 So, regenerative agriculture says that instead of ripping into the ground at the end of the season, you basically just put a new seed in. You leave the community intact. So, the growth continues to happen, and the seed just goes right into this rich growth community, and also all of the carbon that had been sequestered stays in the ground. So, when I started looking at that and most of the damage that we do to the planet, we do unwittingly. People don’t wake up every day and say, “How can I figure out how to destroy the planet for my children?” I wonder, what are we doing in HR that we could be doing unwittingly like this? And so, we began to think about, what processes do we have in HR that feel more extractive in nature, and what processes do we have that are more regenerative in nature?

Dean Carter:                 One of the ones we really dug into is actually a performance management process, because it feels a lot like this growth process that feels good throughout the year, and it ends in this process which releases goodwill, and all of the things you’ve been focused on in growth, with this moment in time that the employee hates, and the manager hates, and basically everyone has to recover from, during the next cycle. So anyway, we made some changes, first in performance management, and looking at other areas based on a more regenerative approach to human resources.

David Rock:                   That’s really interesting, Dean, and it reminds me of the way the brain works in these kind of spirals. We can be in this upward spiral where you’re feeling optimistic and positive, and so we create this positive momentum, or we can be in this downward spiral, which is depleting, because certainly there are negative cycles, when you start on that depleting cycle. And so, I think it’s a similar construct. So, the metaphor actually plays out in terms of building rich connections or depleting connections, in some ways, as well.

Dean Carter:                 And that’s the stress that most people endure during the annual performance review process, and the way that it has existed literally for decades, and remained unchanged. Everyone just accepted that it was going to be a horrible moment in time for everyone, and everyone… There’s a lot of science around also, some of the work that you’ve done, that says people literally feel depleted at the end of the process. And obviously, companies then have to spend a lot of money, literally, a bigger raise or a bigger bonus, just to recover from those processes. It’s not only damaging to the person, it’s also, it’s expensive.

Chris Weller:                 Yeah, it starts to create this cascade of new behaviors, that when you start treating people with a regenerative approach versus an extractive one, suddenly now you’ve triggered this whole new way of people working and relating to one another or to their managers.

Chris Weller:                 What have you found have been some of the biggest benefits around Patagonia?

Dean Carter:                 When we announced that we weren’t doing performance ratings, and that we were making a change to our performance management process, it’s pretty much the only time I’ve ever made an announcement like that that the entire company cheered. They stood up and applauded, so… [crosstalk] Yeah. I didn’t expect that, actually.

Dean Carter:                 Interestingly enough, Patagonia’s pretty famous for having other things better to do than tennis and HR training class, but when we talked about the new system and how we were thinking about performance, we had record attendance, literally, a few times, standing room only, around how we were going to think around performance, which was also a big surprise. What we have now is a system where HR is providing a tool that people can use and opt into, that they feel is helping their performance, and they can lean into it as heavy as they need based on their personal situation, and their needs, and the needs of their manager, versus this policed HR effect.

Dean Carter:                 What’s happened is it frees a few things. It frees the HR organization up to look for insights and other interesting pieces of data that can help us, well, help people form and help us continue to improve the system and structure, versus policing how many people have gone through the process in the system. It also frees up time for the employee and the manager to lean in and do better work, or in Patagonia’s case, maybe go catch a surf. So, it’s a lot less time-intensive and we are certain [inaudible] connect it to improved performance for the people that are using the system. And also, on the HR side, we get a lot better information to make sure we continue this.

Chris Weller:                 We’re going to take a quick break, but when we come back we’ll have more with Dean and David.

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David Rock:                   It’s an interesting domain. I mean, this whole space is really counterintuitive. If you’re a CEO, it feels like you want lots of data, and you want lots of metrics on people’s performance, and so you want to rank them and rate them, and it kind of gives you a sense of control and certainty. But there are these unintended consequences where people feel really strong emotions being assessed and being treated like a number.

David Rock:                   We’ve done a lot of research over a lot of years on this, and Patagonia’s been leading the way in some really innovative practices, but there’s now over 400 companies, as well. Sorry, Dean, not to steal your thunder. But there’s now over 400 companies that have taken this path since about 2010, when the movement really started to kick off. I’m curious to hear what your more recent lessons are from this space as well.

Dean Carter:                 This idea of really understanding what we put into people as well as what we take out, I think is really important, because when you take things out of people, ultimately you have to put something in, just like you do with the plant fertilizers or herbicides or… Literally, David, and I think you all know this, when we cause stress with people, it literally makes them sick, just like we make the ground sick or a plant sick. The stress that we’re causing people, perhaps, in the performance review process or other things that we’re doing is literally making them ill, and not come to work, and then it raises medical cost, all these things. One of the things we looked at recently was even a change to our work schedule. At first it was to help people who like the snow have more time to get to the mountains, but we did ultimately move to a schedule where we go two nine-hour days and then we close every other Friday, giving everyone in the corporate office 26 three-day weekends a year, which they were pretty stoked about.

Dean Carter:                 But that wasn’t necessarily the interesting part of this. We actually did a survey before and after, and we measured what we were putting in and taking out of people’s lives. So, of course we measured the extractive things, like what is the level of productivity, how much are people working, and engagement. So, those were the extractive things, like is the company still getting out of these people what we get in? But we also measured what we’re putting into their lives. For example, as a result of this, did this help with your relationship with your spouse? Did you have more quality time with your children? Were you able to prepare healthy meals? Were you able to have time to go to the doctor? Did this improve your relationships and your ability to contribute to your community? And in every case, all of the things that we were putting into people’s lives improved. In addition to that, the extractive things, engagement went up and there was no difference in productivity in the time change.

Dean Carter:                 So, I think that’s one of the things we need to think about. What are we putting into people’s lives in addition to what we’re taking out, when we measure things like impact of performance systems or even how we look at scheduling.

Chris Weller:                 It sounds like what you’re really talking about, Dean, is creating just kind of a more human organization, like just treating people in a way that respects the demands of their time, and their energy, and their money, and their family, and emotions, and everything. And what’s really interesting to me about that is that there’s a lot of interesting research around the way that power changes the brain to focus less on people and more on goals. And from what you’re telling me, it sounds like Patagonia has taken a lot of concrete steps to build in systems that, intentionally or not, counteract what the research has found around this extractive approach.

Dean Carter:                 Well, I think that’s certainly an important thing of Patagonia. We have hierarchy, but we don’t like bureaucracy, and we certainly, we have a very egalitarian approach, because we feel like some of the most innovative things that we’ve done have come from people who are in positions of power. And to get to that, we have to level the field a bit.

David Rock:                   Yeah, it’s a really interesting thing. There’s these two networks in the brain. There’s a network for thinking about your goals and a network for thinking about people, and there’s very, very few situations where you’re activating both. What happens is, you think a lot about goals, and the future, and what’s important, and you literally don’t think of humans as humans.

David Rock:                   When you’ve got hiring power and you’re very goal-focused, you’ve got this double whammy of really thinking of people as resources to utilize, and you don’t mentalize or take perspective. And so, it’s a really interesting challenge. First thing you want to do is try and remember that these are humans you’re dealing with, and I think Patagonia is doing a good job of re-humanizing the workforce in many ways, and interesting to hear what you’re studying, relationships at home and the really human stuff, looking at the impact of work on human experience. It’s a really interesting way to study the whole person and the real impact of your people strategies.

Dean Carter:                 Yeah, interesting, David, this idea of people as resources to deplete, and it’s not too far off. Like all things, there’s so much to take from Patagonia’s business model and the way we look at how we’re doing business, the planet as something full of resources to deplete versus looking at the planet as a resource to steward.

Dean Carter:                 I think that our view of people at Patagonia is that they are resources to steward, not just resources for extraction and depletion. You get what you measure, so if you’re only measuring those things that you extract, and the typical things we would do, the annual extraction surveys, I jokingly call it, the annual engagement survey, which is literally not just what we’re extracting, what you’re willing to give us in a discretionary way, your discretionary effort. Like, are we measuring our full impact on people? Are we measuring the things as if we’re stewards of this resources, versus the extractors of the resource? I think we need to look at the more holistic view of these resources that we’re stewarding, versus just looking to deplete.

David Rock:                   It’s a fundamentally different philosophical position, isn’t it? Stewards of resources versus having the right to deplete them. Does this come from the top, do you think, at Patagonia, or is it woven into the culture, or how do you think you got to that philosophy?

Dean Carter:                 You know what it is, everything about being a steward is woven into the culture. Certainly, in Yvon Chouinard’s book, Let My People Go Surfing, he talks a lot about what we put into people. Core to the company is also children, how we nurture that relationship between parents and children, and we keep them close, is another part of the things that we do and we’re not only just stewards of the employee, but we feel like we are stewards of their children, and in a ridiculous way, Patagonia has a philosophy that we run the company as if we are going to be in business a hundred years from now.

Dean Carter:                 If I take those things literally, I’m stewarding this employee population as if I’m going to employ this population for the next hundred years, then yes, I don’t want them stressed. I want to take good care of the children because it’s highly likely a hundred years from now that not only will I be employing their children, but I could be employing their grandchildren. And that’s actually true at Patagonia. We’ve been in business for 40 years, and we literally have people who grew up in childcare at Patagonia, under this philosophy, who are now working at the company, who have children in childcare now. So, we have probably over a couple of dozen who were in that situation. So, literally, it pays off to be good stewards of not just the employee but their children, because they’re actually our employees, and are our future employee base as well.

Chris Weller:                 Sounds like a good place to wrap up. Dean and David, thanks so much for the engaging discussion. Appreciate it.

Dean Carter:                 Yeah, thanks, Chris. Thanks, David.

Chris Weller:                 Yeah, thanks, Dean.

Chris Weller:                 Your Brain at Work is produced by the Neuroleadership Institute. You can help us in making organizations more human by rating, reviewing, and subscribing, wherever you get your podcasts. Our executive producer for Your Brain at Work is Noah Gelb, Danielle Kirshenblat is our editor, Gabriel Berezin our associate producer, and Brian Crimmons our sound mixer. Original music is by Grant Zubritsky, and logo design is by Ketch Wehr. A special thanks to Dean Carter and David Rock and to you for listening. We’ll see you next time.


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