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We're Just One Big Happy Commune
Employees flock to these PC payrolls as pilgrims, seeking empowerment and profound happiness along with their paychecks.
"Employee expectations are often so high, they're impossible to manage," says editor Cox. "If you come to work for a socially responsible company, you expect to have more flexibility, more informal relations with supervisors, the autonomy to fashion the job the way you choose," he points out. "It can be quite a shock to find out that the visionary founder is not an attentive manager or that there's still a hierarchy and still some lousy grunt work that somebody is going to tell you to get done."
There is a secret premium exacted from employees for the privilege of living their values 80 hours a week: "Many of these companies pay less, expect longer hours, and offer harder working conditions," says Meredith Maran, a former editorial director at Smith & Hawken and now a consultant to several socially responsible companies. Outmoded equipment and relatively high rates of worker injury plagued Ben & Jerry's for years, for example.
At Smith & Hawken and Patagonia, two companies at which employees were laid off after financial crunches in the early 1990s, the disappointment was nearly terminal. "People were so stunned by how far short the company fell of their expectations," says Maran, "they started to feel afraid, powerless, and ultimately unwilling to fight for their point of view when it came to important business decisions. When fear and then resentment set in, productivity was killed by that."
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The Oath of Office: Now Lean to the Left and Repeat After Me
It is only natural that founders surround themselves with people sympathetic to their values. Who doesn't want employees who will culturally fit an organization? The problem arises when the requisites for a proper "fit" become too restrictive. Does running a politically progressive company mean you won't hire Republicans? Are meat eaters or gun owners or pro-lifers among those who need not apply? Is it possible that a conservative chief financial officer or a libertarian sales manager might be an asset and not just an anomaly in your organization? The temptation to conduct political litmus tests, even tacitly, is real. And the danger of alienating longtime customers or employees should not be dismissed. After the Body Shop issued a statement against the Gulf War, it was surprised to find fierce opposition in its own camp: no one had consulted employees with loved ones serving in Desert Storm.
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Who's Minding the Store? (Oh, That)
The genius in these businesses can almost always be located in their marketing or design. A visionary leader such as Chouinard or Hawken or Roddick harbors a passion for the product and for the salvific message packaged along with it. But an ardor for cash flow? Or inventory control? Or even management? The stuff of which businesses are made does not always fire the soul. A passion to do the right thing may not translate into a passion for doing things right.
Witness Patagonia, which suffered a cash crisis that eliminated as much as a third of its workforce in 1991. According to former executives, the company's infatuation with its social mission made it inattentive to, even disdainful of, the mechanics of running a business. In a year in which sales grew at a 30% rate, overhead rose twice as fast. Meanwhile, the company's finance function remained literally exiled in an outlying building. Patagonia has since reorganized and sworn off growth.
"One of the problems at Smith & Hawken," says Maran, "was that you had a bunch of people walking around with this nonprofit mentality, acting like they were working for Greenpeace instead of a direct-mail business." Smith & Hawken was sold to the CML Group last year.
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Since When Do Nice Guys Finish First?
The success of these companies ensures competition. Some companies, so seduced by doing good, lack the survival instincts to do well in a crowded market. Others stay and manage to fight. Yet if they respond too forcefully, they're pilloried as bullies. Ben & Jerry's withstood a barrage of criticism for aggressively shutting its competitors out of distribution (in much the same manner the Pillsbury Doughboy had earlier tried to squelch Ben & Jerry's). While other companies are free to be ruthless competitors, two ballyhooed nice guys don't have the same license.
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The Costs: What You Don't Count Won't Hurt You?
Virtue doesn't come cheap. It may pay off in a bonanza of free publicity or in undying customer as well as employee loyalty, but there's no avoiding hefty up-front costs and plenty of variable costs thereafter. Pollution-control equipment or day-care subsidies might yield dividends in the end. But such "investments" will remain expenses for a long time first. And even when returns are realized, the costs do not necessarily abate. The Body Shop boasts an exotic collection of cost centers, including an Environmental Department, a Fair Trade Department, and an Against Animal Testing Department. The bill paid by the Body Shop, for example, to screen suppliers and enforce its animal-testing ban runs more than $100,000 a year. It is, admittedly, a small fraction of the company's revenues. But as the company grows and its network of suppliers expands around the globe, the costs will only rise. Profit margins may not.
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You may succeed as a business and fail as a force for social change. But you cannot succeed as a reform movement while failing as a business.
Any business, even the most altruistic, cannot be merely a means to a social end. There must be something in the process -- either making money or building an organization or producing a product -- that sustains you. No matter how salutary your aim, you won't be excused from the ordinary chores of hiring and firing. You'll still have to develop a product, manufacture it, ship it, distribute it, and get paid for it. You'd better have some fun on the way to a better world.
