Retail with a Purpose: The Case of REI

With the shift in consumer shopping toward online retailers such as Amazon, big box

retailers are struggling, with well-known names including Toys R Us, Radioshack, and

Sports Authority declaring bankruptcy. There are those who buck this trend, though.

Recreational Equipment Inc, or REI, the seller of outdoor clothing and gear with 12,000

employees and 151 stores around the United States, is still going strong. The company

has been among Fortune magazine's top 100 companies to work for 20 years...How does

the company survive the rough terrain of retail industry while keeping and engaging its

employees? To answer this question, it helps to understand REI's structure and mission. Having

owners understand customers is a boon for all businesses, but in REI's case, customers

are the owners. In 1938, Lloyd and Mary Anderson started the company to help outdoor

enthusiasts shop for gear more easily. The company is organized as a cooperative (or co-

op), which means that it is owned by its customers. In other words, REI is owned by its 16

million customers who share a passion around the outdoors. The company's CEO Jerry Stritzke defines REI as an organization driven by a clear

purpose: to connect people to nature. This purpose allows the company to focus its

energies and resources on goals and problems its employees and customers care about.

REI's core passion around connecting individuals to nature also is infused into its

employee management practices. For example, employees are given two Yay-days a year,

which allows them to spend the day outdoors. They simply need to hand in their

certificate to their manager and tell them what they will be doing instead of coming to

work that day. The company also made the news with its #optoutside movement. The

company closed all stores on Black Friday (the day after Thanksgiving, which is a major

shopping day when many retailers offer unusually long hours) and encouraged

employees and customers to spend the day outside.

REI gives employees voice and aims to build a sense of community. In their online

platform "campfire," employees have the ability to speak up and engage in debates about

issues important to them. The year after the platform launched, 40% of REI employees

had logged into the system...

In addition to bonuses for individual goal achievement, individuals get bonuses based on

reaching departmental and organizational goals. The company also utilizes a profit-

sharing program where employees receive up to 10% discretionary funding toward their

retirement plans based on company profitability.

A) What connection can you see between REI being a purpose-driven organization and

employee motivation?

B) Do you believe that Yay Day and #optoutside are practices other retailers can and should

embrace? What is the role of giving employees voice in employee motivation?

C) In your view, what are the motivational advantages and disadvantages of tying employee

compensation to company profitability and departmental performance?