Why Your Company Should Embrace Organizational Change: The Case of Patagonia

Written by Rossina Gitto, Founder @ The Humans of HR, June 2020

If there’s something the COVID-19 pandemic has taught the world, it’s that very small things, as small as a virus, can create big changes and make a huge impact. Change can be difficult, stressful, and overwhelming, but it’s inevitable and both leaders and teams of organizations need to develop specific skills to manage it. Although organizational change is usually seen as a negative thing, it is necessary and can lead to positive results. There’s no better example than the one set by Patagonia, an outdoor clothing company that embraces change and is inspiring other businesses to do the same through big & small impactful actions. 


What is organizational change?

Organizational change refers to the different processes of growth, transformation and decline within an organization (Nilakant & Ramnarayan, 1998). Managing change in organizations has always been a very important issue for companies. From technological changes to global competition, different factors influence the need for change and flexibility. Poole & Ven (2004) define this concept as a difference in quality, form, or state over time of an organizational entity. The specific entity might be an individual’s job, an organizational subunit, a work group, the organization in itself, or even larger communities of organizations such as industries. The change can be determined by measuring the entities at a certain period on certain dimensions or characteristics and by then comparing the differences that have occurred over time. Change can happen at any given moment and can take on many forms, since it can be planned or unplanned, recurrent or unprecedented and incremental or radical. It can shift an organization into equilibrium, fluctuation, or chaos in its behavior.

Whether organizations are big or small, they will always have to face the inevitable process of change (Nilakant & Ramnarayan, 1998). The way organizations can change varies, meaning they can go from small to big or vice versa, they can possibly not grow in size but in value, and they can also completely disappear due to an infinite amount of reasons. Since change manifests itself in a boundless number of ways, the experience can be perceived as challenging, exciting and fulfilling for some, but it can also be perceived as a cause of stress and unpleasant emotions for others. For the reasons stated above, it is understood that dealing with organizational change involves the management of resources, processes and emotions simultaneously.

According to Nilakant & Ramnarayan (2006), there are certain factors that can suggest that an organization is in need of change. Some of the most typical elements that indicate a need of change are the following:

·     A company’s level of profitability.

·     The growth rate of revenue, sales or activity.

·     The morale and motivation of employees.

·     The financial strength of a company.

·     The public image of a company.

·     The level of adaptability.

·     The stability in the level of performance from one year to another.

·     The operating efficiency.

·     The level of innovativeness.

·     The social impact of the organization.


Essential skills for leaders that deal with change

When dealing with change management, Salerno (2008) expresses that the leaders of organizations need to have good communication skills to clearly express the business issues that have made change necessary. Communicating effectively implies highlighting how the changes are going to be made, addressing the business issues and acknowledging the good and bad side of change. Leaders must also be open to answer questions about why the change is taking place, what the change implies, when it will be made effective, and how it will be implemented. Difficulties and disappointments in past changes must be acknowledged when they are brought up, and leaders must avoid overselling the benefits of the change in case something does not go as planned.

In addition to having good communication skills, the Center for Creative Leadership (2020) also states that two other skills are essential for leaders:

collaboration and commitment.

Collaboration refers to being able to bring people together when planning and implementing change, while commitment refers to the ability to be resilient, persistent, and adaptive when faced with challenges. 


Essential skills for teams that deal with change

Despite the help that organizations can give to make those affected feel like they are still in control while facing change, teams should take a proactive approach to a changing environment in order to stay healthy and resilient, as Douglas & Shaw (n.d) state. Team members should try to face difficulties and not run away from problems, which requires an important skill: 

adaptability.

People that work in a changing organization need to comprehend why there are different expectations and challenges arising at work, and why they should embrace the new tasks they face. In agreement with Salerno (2008), Douglas & Shaw (n.d) also understand that good communication that runs both ways is essential in the context of change. Despite all of this, there will always be employees that will show resistance, push back and work against the change in sign of discontentment (Stokes et al., 2016). 


Effective change management: How Patagonia turned into an environmentally responsible business

Patagonia is an outdoor clothing company that was founded by Yvon Chouinard and whose main competitors are companies such as The North Face and Columbia Sportswear. According to Patagonia (2020), Chouinard, who was passionate about rock climbing, started the business in 1957 by making pitons (a rock climbing tool). By the 1970’s, his company had become the largest supplier of climbing hardware in the United States. Although he was running a successful and growing business, Patagonia’s founder realized that his company had become highly damaging to the environment.

Encouraged by the desire to reduce the negative environmental impact of its production process, Patagonia’s top managers decided to introduce radical changes and create a new way of doing business, even if it meant the company would see a decrease in its revenue. To modify its role as a corporate polluter, the company started using recycled-content paper for its catalogs in the 1980’s, it developed recycled materials and it eliminated toxic metals and sulphides from its products, among other changes. To increase awareness on environmental causes, it also started making regular donations – up to 10% of profits per year – to specific NGOs. 

Change trigger #1: a need to improve the social impact of the organization

By being innovative, adaptive, leading change effectively and gaining popularity through its environmental activism, Patagonia grew at a rapid pace. But in 1991, the company was hit by a recession that crumpled its sales. Due to a financial debilitation of the company and in an effort to pay off debt, it introduced a second big moment of change in the company’s history and laid off 20% of its workforce as a result of their recovery strategy. 

Change trigger #2: the company’s financial difficulties

Patagonia eventually managed to recover, and in 2007, decided to go public on all its efforts – both good and bad – in an attempt to educate others on environmental issues and help them introduce positive change too. By 2012, it became the first company in California to be recognized as a “benefit corporation,” and is now backed up by legal framework that allows such companies – the ones that take care of their workers, community, environment and stakeholders – to keep fighting for the causes they believe in through growth and change.

The company is committed to inspiring its clients and other businesses to change for the better, and includes recommendations of educational resources on their website such as films, books, and a whole section dedicated to activism in support of environmental causes.

Figure 1. Photograph of book “The Responsible Company.”
Taken from Patagonia Webpage by Patagonia, 2020.


Embracing organizational change

The COVID-19 pandemic has forced both big and small companies to change in many ways. Some companies have disappeared, others have reduced in size and most have become more flexible by introducing new ways of working. Companies should be training their employees on how to deal with change and how to embrace it in the best way possible.

The end of this crisis will be a great moment to think of new change opportunities in organizations, just like Patagonia did 50 years ago for the sake of the environment. As everything returns to normal, companies should reflect on which causes are important to them and what they wish to support.


Will your organization become a positive leader of change?

Only time, and great leaders, will tell.


About The Author
About The Author

Rossina Gitto is the Founder of The Humans of HR. She is a Behavioural Scientist that is specialized in Labour Psychology and holds a Master’s Degree in International Human Resources Management from the University of Paris II Panthéon-Assas. Having a vast experience abroad in 6 countries, she is passionate about the global perspective of people management. She contributes content on a wide range of topics including Leadership Development, Change Management, International Mobility and Workplace Wellbeing.

*The views and opinions expressed in this article are those of the author and do not necessarily reflect the official position of The Humans of HR.


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The Humans of HR is a Digital Social Enterprise that is on a mission to humanize the world of work. We aspire to be recognized as a high quality International HR & Business media outlet for a diverse body of professionals from all over the world. Our Magazine currently reaches readers in over 80 counties.

We believe everyone is entitled to have access to professional content that is backed up by relevant sources, as well as the work of the global scientific community, no matter where they come from. That is the reason why we started writing, and also why we will continue to do so. In order to keep growing and keep our content open to our global audience, we would like for you to consider supporting our work.

Your contribution is highly appreciated.

The Humans of HR is a Digital Social Enterprise that is on a mission to humanize the world of work. We aspire to be recognized as a high quality International HR & Business media outlet for a diverse body of professionals from all over the world. Our Magazine currently reaches readers in over 80 counties.

We believe everyone is entitled to have access to professional content that is backed up by relevant sources, as well as the work of the global scientific community, no matter where they come from. That is the reason why we started writing, and also why we will continue to do so. In order to keep growing and keep our content open to our global audience, we would like for you to consider supporting our work.

Your contribution is highly appreciated.

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References


Douglas, H., Shaw, P (n.d). The resilient team. Praesta Insights, Praesta Partners LLP.

Center for Creative Leadership. (2020). How to be a successful change leader. Retrieved June 22, 2020, from https://www.ccl.org/articles/leading-effectively-articles/successful-change-leader/

Nilakant, V., & Ramnarayan, S. (1998). Managing organisational change. SAGE Publications India

Nilakant, V., & Ramnarayan, S. (2006). Change Management : Altering Mindsets in A Global Context. New Delhi: Sage Publications Pvt. Ltd. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&db=e000xww&AN=278172&lan g=es&site=ehost-live

Patagonia. (n.d.). The responsible company [Photograph]. Retrieved June 24, 2020, from https://eu.patagonia.com/gb/en/product/the-responsible-company-what-weve-learned-from-patagonias-first-forty-years-paperback-book/BK233.html?dwvar_BK233_color=000&cgid=books

Patagonia. (2020). Our company history. Retrieved June 23, 2020, from https://www.patagonia.com/company-history/

Poole, M. S., & Ven, A. H. V. de.(2004). Handbook of organizational change and innovation. Oxford University Press.

Salerno, A., & Brock, L. (2008). The change cycle: How people can survive and thrive in organizational change. Berrett-Koehler Publishers.

Stokes, P. et al. (2016) Chapter 3: Using Critical Management Approaches in Managing People and Organizations, Organizational Management: Approaches and Solutions, London, Kogan Page.

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