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People, Planet, Profit: Analyzing Patagonia’s $10 Million Tax Cut Donation

From the perspective of industrial and organizational psychology, this smart business decision is good for our planet and thus Patagonia’s customers.

News reports that Patagonia, an outdoor gear company, elected to pass along $10 million in savings from tax cuts to non-profit environmental groups is quite exemplary–and fully consistent with the company’s mission, vision, and values.

Well known for its public spirit and commitment to the environment, the company routinely contributes one percent of all sales to various environmental causes.

 

How Patagonia’s decision applies to Industrial and Organizational Psychology

From the perspective of industrial and organizational psychology, I view this is a smart business decision, as well as being good for our planet and thus Patagonia’s customers.

It is admirable, and increasingly common when policies directed at enhancing the public good also serve the bottom line of organizations that promulgate them. It reflects favorably on the leadership of those companies.

Some other companies that come to mind include:

 

The Patagonia brand, in particular, has now become positively associated with environmental causes–which is also fully consistent with their product lines. This creates a very symbiotic and reciprocal relationship, between product sales and the environment, which constitutes a true “Win-Win” scenario for organizations sufficiently astute to finesse this phenomenon. It is truly an organizational “best practice” that admittedly is easier to articulate than to implement.

It becomes irrelevant that part of the altruism may (or may not) be motivated by self-serving public relations and publicity agendas, in order for Patagonia to gain favor and loyalty with their environmentally conscious customer base. We don’t care!

 

Examining the Triple Bottom Line

From the perspective of business psychology, this type of decision making is compelling–even if a bit Machiavellian. But that doesn’t make it any less useful in serving the public interest–and that of our planet.

Modern management philosophy embraces what is commonly referred to as the Triple Bottom Line, which can be summarized by a focus on each of the three P’s:

  • People
  • Planet
  • Profit

It seeks to determine how these three concepts can effectively interact within the world of business.

Patagonia understands that these are interdependent dimensions that rely on each other in order to optimize their company, their employees, and their world. Organizations that don’t understand this are destined to suffer diminished performance and may not survive. Sacrificing any one of these dimensions in the service of the others is a certain path to mediocrity or failure–over time.

The financial, social, and environmental impact of an organization and its policies have become inextricably interwoven. Businesses must navigate all three of these dimensions, simultaneously, in order to thrive. Customers are demanding it, as are employees, Wall Street, and environmental regulators. Two out of the three dimensions are just not sustainable.

For example, an organization that takes care of its employees and is environmentally conscientious, yet is losing money, isn’t good for anyone (shareholders, customers, employees, or the world) because it simply cannot sustain itself—thus it can’t continue its laudable practices. Employees and customers are increasingly perceptive and demanding about this phenomenon.

It is roughly the equivalent of having the nicest, smartest, and most caring politician, but who can’t get elected. She cannot provide value or live up to her potential without being elected or remaining in office.

Patagonia obviously understands this and will hopefully serve as a positive model for other organizations.

Business Psychologists and management gurus have long maintained that the most fundamental obligation of an organization is to sustain and perpetuate itself. Otherwise, it can’t do anyone any good– neither for the public, its employees, nor the planet.

It’s easy to miss this fundamental truth when we are caught up in competitive or adversarial decision making. Unions and employers may find themselves in a negotiation trap when they lose sight of the interdependence of their company, their employees, their customers, and their planet.

 

If you are interested in learning more about Industrial and Organizational Psychology or Business Psychology programs at The Chicago School, fill out the form below to request more information. Or you can apply today through our application portal.

 

Jay M. Finkelman

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