Muhammad Ateeb Khan
260362190

Patagonia Case

Company Objectives: To earn sufficient profit by delivering innovative, excellent, useful products and service to customers without the pursuit of growth for growth’s sake. To reduce or reverse the environmental harm caused by company operations

Strategy: Designing high-quality outdoor equipment and clothing. “Quality” is the way of doing business for Patagonia. This includes Quality products, quality service and quality life of employees.

Internal Controls: The company initiated a program called “The workbook process” that was aimed to get the employees actively involved with the companys performance and also to assess which work groups were meeting their targets and which weren’t. The Workbook process involved making every department’s and corporation’s plan visible to all employees and encouraged employees to become actively involved in the planning and operating review process. This process also made monthly department and corporate financial and operating repots visible to all employees. This new system was initiated as an improvement to the company culture of concern for employees’ quality of life, which in turn reflected motivation to serve company objectives

The Company uses results controls to monitor and direct the actions of its employees. The workbook process was designed for this very reason so that employees can be fully aware of the objectives their group needs to accomplish for the financial year and also serves as a numerical feedback as to how good their department/group performed and if they fell short, where did they fail. The Workbook process was a significant improvement in getting the employees actively involved in the budgeting and planning aspect of the business. Even though the bonuses linked to employee performance was very subjective, it still motivated workgroups to meet their budgets because at times the bonuses would be shared by all the employees in the workgroup.

There is also significant cultural control in Patagonia. Employees are expected to dress casually and lines of communication from bottom-up to bottom-down are very open. There are no formalities to go see a high manager or even the owner for that matter. These cultural controls are designed to motivate employees and make them feel as an important part of the company where there thoughts matter. The casual rules allow employees free time so when they are at the job they can be fully devoted and creative. The cultural controls reflect the values of the owner and his methodologies. Employees are also expected to be as environmentally friendly as they can, as reversing environmental damages caused by Patagonia are part of the key objectives.

Employee Desired Behavior: After the introduction of the workgroup process, the employees seem to be more motivated and happy due to the increased involvement in the goal setting and information sharing in the company. This is the case for most employees. Some have reacted negatively to this new process and are unable to process so much financial information and over time fewer employees were taking the time to refer to the workbook.

Issues: Accelerating the preparation of the monthly financial figures as the numbers were reported only a month or two after the month end, which frustrated some of the employees.

Too much paper work was required.

Nonfinancially oriented people did not understand all the needed concepts. There were also a lot of employees that did not want to participate from the start. Most, however, were initially excited about the Process but later on lost motivation as time passed.

There were also concerns in the quality of the objectives and plans that were set as in some cases it was not easy to judge that the objectives were accomplished.

Solutions: Offer more training: All employees must be given enough training so they can understand the financial components of the workgroup. Special attention must be paid to department heads as employee participation was particularly poor where department heads did not believe in the process. Getting all the department heads on board with the workbook process and understanding its importance must be a vital component of the training.

Computer the Process so less paperwork is required and information can be transmitted quickly. This can also help with quick financial reporting.

Link work group bonuses with work group objectives so that employees have the extra incentive to pay attention to their group’s objectives.

Objective setting must be more practical and measurable so that results can be assessed with regards to accomplishment. Goals and objectives must be assigned numbers so that employees know exactly what the target is and so that there is minimum vagueness.

The best way to go about objective setting is to meet with department heads to negotiate specifics and work the numbers out for an optimal target and a reasonable objective.