Why Patagonia CHRO Dean Carter Sees Onsite Child Care as a Bedrock Benefit

September 10, 2019

Dean Carter gets HR. He was the staffing manager for Pier 1 and then the CHRO for Fossil and Sears Holding. He pushed the boundaries of HR with innovations around data, performance, and healthcare. But Dean had a blind spot.

“For years at other companies,” Dean says, “I didn’t pay enough attention to supporting families with onsite child care. I didn’t do my homework and I wasn’t courageous.”

It’s his big regret. But at the time he thought of child care like offering a health club — nice, but hardly a bedrock benefit like health care or time off.

And then four years ago Dean landed a job as the head of HR, finance, and legal for the U.S. company that may be most identified with onsite child care: Patagonia.

Though he was a national leader in HR, Dean discovered there were many things to be learned about corporate culture at the iconoclastic outdoor apparel company. He’ll share some of his most provocative lessons at Talent Connect 2019, where he will deliver one of the keynote addresses.

And one of those will undoubtedly be how important the sound of children at play is for the workplace.

How child care started at Patagonia

Child care began at Patagonia when Malinda Chouinard parked a trailer in front of the Great Pacific Iron Works in 1983 so that her friend and colleague Jennifer Ridgeway, the head of marketing and advertising, had a place to retreat to when she needed to nurse her colicky newborn. Malinda had cofounded the Great Pacific Iron Works with her husband, Yvon, in Ventura, California. They later changed the name to Patagonia (which fits more easily on a down jacket).

The Chouinards believed that providing onsite child care was a moral imperative. Their early employees, like Ridgeway, were friends and they looked at their lives holistically. “I began to make unilateral decisions for which I had no budget, no authority, and zero preparation,” Malinda writes in Family Business, a hard-cover book from 2016 that delves into Patagonia’s child care experiment.

The decision to invest in child care has been easier because Patagonia is privately held and doesn’t have to surrender to the needs of the next quarterly report to shareholders. “Even in times of economic struggle the program was never cut,” writes current CEO Rose Marcario, “because [our founders] believed in providing a supportive work environment for working families. Taking care of our tribe is part of our culture.” 

The result? “I think the kids whom come out of here,” Yvon once told Inc., “are Patagonia’s best products.”

What onsite child care looks like at Patagonia today

The Great Pacific Child Development Center has a climbing wall (a nod to the company’s founding as the go-to gear shop for alpinists), garden, playground, mud kitchen, and space for 100 children, from newborns to 9 year olds. The GPCDC, which is based at Patagonia’s HQ in Ventura, offers an afterschool program and a summer surfing camp, where “boardroom” takes on a whole new meaning.

Patagonia also operates the Truckee River Child Development Center at its LEED-certified national distribution warehouse, repair facility, and customer service center in Reno, Nevada, where it has almost 500 employees. Both centers have bilingual programs and each classroom has teachers who are trained in child development. 

Child care is but one aspect of what Dean calls the “family-affirming policies” offered by Patagonia: 16 weeks of paid maternity leave, 12 weeks of paid paternity leave, and a travel support program for nursing mothers. As well, parents can not only drop in on their children at daycare, they can bring their kids into the office — as many regularly do.

The child care program is subsidized but not free. Employees in Ventura pay anywhere from $500 to $1,300 a month to enroll their children at GPCDC. According to SHRM’s 2019 Employee Benefits Survey, only 4% of U.S. companies offer free onsite child care and another 4% offer subsidized onsite care. Companies that offer workplace daycare include Disney, Cisco, Boeing, Home Depot, Clif Bar, and Procter & Gamble. So, while Patagonia isn’t alone, it is hardly lost in a crowd.

What Dean sees as the benefits of onsite child care

Workplace child care isn’t child’s play. It presents challenging compliance and licensing issues, increased liability, and the need for sufficient space and facilities. And it can be expensive — at least at first glance.

But Patagonia CEO Rose Marcario has said that high-quality child care isn’t “as expensive as you’d think.”

She pointed first to tax benefits, which allow the company to recoup about 30% of the net cost of the child care programs. 

Patagonia figures that avoided turnover costs — lost productivity, recruitment, relocation, and training time — offset another 30% of child care costs each year. While one study found that 34% of new moms choose not to return to the workplace, Patagonia has had nearly 100% of its new moms return to work over the last half dozen years. And loyalty extends beyond new moms. “Turnover for parents who have children in our onsite child care program,” Dean notes, “runs 25% less than for our general employee population.”

Finally, Patagonia estimates the enhanced employee engagement created by the child care program and the increased productivity and work quality that comes with it further offsets another 11% of the costs. So, Patagonia figures it reaps benefits that cover about 71% of the costs they’re left with after tuition payments from employees. Rose has also noted that JPMorgan Chase calculated a 115% return on its child care investment and KPMG figured its clients received a 125% return on their daycare programs. (Those percentages may have declined because of changes to the tax laws.)

There are other benefits beyond tax breaks and employee loyalty and engagement.

“When you do the homework,” Dean says, “you see that every study that has ever been done on this points to healthier children, healthier parents, better relationships between parents and children, better gender parity on pay, better gender parity in opportunity, more women in management.” To bolster his final two points, Dean can point to Patagonia, where half of the workforce is women as is half of upper management.

And as companies struggle to achieve work-life balance — the workplace Holy Grail that will attract candidates, improve retention, and lower absenteeism and medical costs — they could do worse than consider onsite child care.

“People,” Dean says, “are still hanging onto this idea that we shouldn’t bring life into work, but the iPhone changed all that. Work is with you constantly, and life is going to be with you constantly. Very soon, more and more people are going to demand that life and work are integrated.”

Onsite child care can give your company access to a larger talent pool. Many families are stunned by what one writer calls “new-mom math”: They realize that most or all of a mom’s income when she returns to the workplace will go to child care. A study by the Economic Policy Institute found that in 33 states annual infant care costs are greater than the average cost of in-state college tuition at four-year public universities. Change the math with free or subsidized child care and your pool of female candidates will get much larger.

Final thoughts: Child care is a great benefit for everyone

Dean says he is perplexed by the fact that the number of U.S. companies that offer onsite child care is roughly the same as the number that allow dogs on campus.

“It’s just incredible for business in every metric possible,” he says.

But Patagonia sees things differently because it frames them differently. “The philosophy is,” Dean says, “we’re going to run this company like we’ll be around for a hundred years.” The company’s child care commitment arises from that. “If your employees’ kids are going to lead your company someday,” Dean asks, “what would you do?”

It’s not a rhetorical question. Patagonia has 13 current employees who grew up, in part, at the company’s child care center.

Dean also believes that onsite child care benefits everyone, not just working parents. “Even for the people who don’t have kids,” he says, “you bring your best self to work around children.”

Dean assures other companies that if they do it, and do it right, they’ll have no regrets. “There is no greater benefit,” he says, “you can give to your working families and to the rest of the organization than onsite child care. Period.”

More tickets have been added for Talent Connect 2019 September 25 to 27. So if you want to see Dean, Dallas Maverick CEO Cynthia Marshall, serial entrepreneur Gary Vaynerchuk, NBC correspondent Mariana Atencio, and former First Lady Michelle Obama, click here and register while space is still available.

* Photo from Patagonia

To receive blog posts like this one straight in your inbox, subscribe to the blog newsletter.

Topics