200 - 500 word answer only

Question: Do you agree with Jeffrey Swartz's belief that "doing well and doing good are not separate ideas" but "inseparable ideas"? Do you share his confidence that Timberland's new owner, VF Corporation, will continue to uphold Schwartz's ideals and act on them? How could this continuity be assessed today? Explain.

Case: Timberland and Community Service

Jeffrey Swartz, the President and CEO of Timberland Company, was the third-generation leader of a formerly family-owned business that went public in 1987.⁹⁰² In 1955, Swartzs grandfather, a Russian immigrant, bought the Abington Shoe Company, located in South Boston, Massachusetts, and brought his two sons into the business. The iconic Timberland boot was introduced in 1965 when the Swartz family developed a process for fusing rubber soles to leather uppers to form a rugged, waterproof boot that was also less expensive to produce. The success of the Timberland boot led the Swartz family to relocate in 1969 to Stratham, New Hampshire, and to change the name to Timberland Company in 1978. The growing company began to market a variety of casual and work footwear under the Timberland brand, and, later, introduced clothing and accessories for men, women, and children, as the company expanded sales to Europe, Asia, and Latin America. After graduation from Brown University and the Amos Tuck School of Business at Dartmouth College, Jeffrey Swartz assumed a variety of positions at Timberland, becoming chief operating officer in 1991 at the age of 31 and president and CEO seven years later.

Commerce and Justice

Under the leadership of Jeffrey Swartz, Timberland Company developed an expanding program of community service in an effort to combine commerce and justice. The centerpiece of this program was the trademarked Path of Service, launched in 1992, which allowed employees to devote 16 hours of company-paid time each year to community service. Path of Service was expanded to 32 hours in 1994, and to 40 hours in 1997. The purpose, as stated by Swartz, was to engage the skills and talents of employees to create long-term solutions for critical community needs. Although participation was optional, employees were encouraged to use the hours for their own favored causes or to participate in company-sponsored events. A new Community Enterprise Department was created to support the Path of Service program and other community service initiatives.

The origin of Timberlands commitment to community service was a chance encounter that Swartz made with the Boston-based nonprofit organization City Year. City Year was founded in 1988 to engage young people in a year of full-time service that gave them the skills and opportunities to change the world. After Timberland responded twice to requests for donations of boots, a founder of City Year called on Swartz to thank him and invited him and other Timberland employees to spend four hours of community service with a group of City Year volunteers. Swartz accepted the invitation and was appalled by the social problems he saw, as well as inspired by the possibilities for change. He reported of his experience:

And I found myself not a mile from our headquarters, face to face with the stories you read in the newspaper, face to face with a vision for America not unlike the one that drew my grandfather to leave Russia in steerage so many years ago . Behind my desk again, safe no longer, moved by my own sense of purpose having served, albeit briefly, all that mattered was figuring out how service could become part of daily life at Timberland.⁹⁰³

Swartz gradually increased Timberlands support for City Year by making an initial pledge of $1 million annually for three years, later extended for another five years, and loaning a Timberland executive to assist in marketing for City Year. Swartz became chairman of City Years national board. In turn, City Year organized team-building exercises for Timberland employees, aided in creating community service projects, and, in 2000, located an office in Timberlands headquarters. Timberland expanded its community service program with two full days of activities, one in the spring that coincided with Earth Day and another in the fall called Serv-a-palooza. The company extended its collaboration with nonprofit organizations by establishing links with Share Our Strength, an antipoverty group, and with Skills USA, which provided vocational training for young people.

Testing the Commitment

If Timberland had remained a family-owned business, then Swartz could indulge his passion for service because he would be using his own resources. As a public company, however, he was responsible to shareholders. This responsibility was tested in the mid-1990s, when profits fell, and in 1995 the company suffered its first loss in net income. Although he was urged to cut the community service program, Swartz resisted. He believed that instead of being an expense that could be cut in bad times, the cost of community service was an investment of resources that contributed to the companys success. Community service, in his view, was a key part of the strategy at Timberland for fulfilling the companys mission and values, which in turn were integral to the companys main goals that included strong financial performance.

The mission of Timberland was stated in the companys 2006 CSR Report as To equip people to make their difference in the world. Four core values were identified as guides for all company activity. These were humanity, humility, integrity, and excellence. And five bold goals were set forth:

• Become the authentic outdoor brand of choice by providing inventive and practical products to our consumers
• Be the business partner of choice by providing distinctive value to our customers
• Be a top employer of choice globally
• Be the reference for socially accountable business globally
• Deliver exceptional financial performance for shareholders

Swartz believed that these measures of the companys successits mission, values, and goalsrequired not only the community service program but also ambitious initiatives to protect the environment and secure human rights in its manufacturing facilities worldwide.

Swartz expressed his belief in this connection of commerce and justice in the following way:

We operate on the core theory, on the belief that doing well and doing good are not separate ideas; they are inseparable ideas. That, in fact, they are inextricably linked and that everything we do, every business decision we make, every strategy we promulgate, every speech we make, or every pair of boots or shoes that we ship, have to be the embodiment of commerce and justice, and thats a different model.

This is a model that had served Timberland well as it survived and even prospered in the highly competitive footwear industry. The questions remain, however, whether this is a model for many companies or industries, and whether it would remain a viable model for Timberland if its competitive environment changed or the company faced another economic downturn.

Do you think Timberlands commitment to communities and social values was sustainable?

The economic situation did change for Timberland in 2011, when rising leather prices and higher labor costs combined to squeeze profits, which dropped 30 percent in the first quarter of the year.⁹⁰⁴ A bid by clothing giant VF Corporation to buy Timberland for $2.3 billion was quickly accepted by the board of directors and the shareholders, and Jeffrey Swartz gave up his leadership position and left the company his family founded and had managed for three generations. VF Corporation, which marketed Lee and Wrangler jeans, Nautica apparel, and North Face outerwear, kept the iconic Timberland brand but rolled operations into its Outdoor and Action Sports divisions. Swartz was apparently comfortable with the change, declaring I am confident that while our ownership structure has changed, what makes Timberland unique and special will not.⁹⁰⁵

His confidence was borne out. A human relations executive for the Outdoor division said, VF recognizes that service is a critical element of Timberlands culture, and announced that beginning in 2012, the two events of Earth Day and Serv-a-palooza would be observed by both the Outdoor and the Action Sports divisions. The VF executive explained, We joined Timberland in service at last years Serv-a-palooza and saw the benefits service brings to the work environment, the community, and to the business.⁹⁰⁶ In April 2012, more than 4,500 VF employees observed Earth Day with service projects in 71 locations across the United States.