Black Diamond Equipment

Final Report - July 16, 2015

Submitted by:
Iban|Stuart|Prerna|Sofia|Wataru|Alejandro|Riccardo

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Introduction
Black Diamond Equipment is an employee owned company based out of Salt Lake City,
Utah, with approximately 400 employees, 203 million dollars of revenue in 2013 and is a
leader in equipment for climbing and backcountry skiing. This paper will cover the Five
Factors that combine to make up Black Diamond Equipments unique human resource
position, and then outline human resources policy to sustainably reach their corporate
goals.

Five Forces
Strategy
Black Diamond Equipment operates in a niche market providing high quality
differentiated goods at a price premium by guaranteeing safety, providing novel products,
and following business practices that are consistent with the ethics of their target market.
Novel products are provided through a commitment to Research and Development. Ten
percent of Black Diamond Equipment employees are employed in the R&D department.
The employees come to Black Diamond Equipment with good educational background
and work experiences related to product development, but also experience and technical
knowledge related to the climbing and skiing industry as current users. This allows for
the R&D Department to provide instant and pre-emptive market research as well as the
technical product development that enables Black Diamond Equipment to be both on the
cutting edge of the technology needed for new products, but also identifying the real
needs of their end users. Black Diamond Equipments location in Utah provides a
consistent environment for product testing by these employees.

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Black Diamond Equipment has a reputation for safety as evidenced with its ISO certiSicate.
Their products go through extensive testing and are guaranteed to Three Sigma of their
rated strength. Moreover, each product is individually tested to half its rated strength
before being sold. This testing takes place on machines developed in house at Black
Diamond Equipment. Quality of product and the production throughout the supply chain
is maintained through vertical integration into both the manufacturing and retail of their
product offerings.
Finally, Black Diamond Equipments reputation as a custodian of the sports and the
environmentalist gives further differentiation. This aids not only in sales, but also in
attracting talents necessary for a workforce that is knowledgeable in the technical and
practical side of climbing equipment.
Workforce
Not very much is said about the demographics of the workforce. However, the location of
the business (Salt Lake City, Utah) and drive to hire employees that participate in climbing
and skiing suggest that hires are predominately white, male and American, as Andreas
described in APPENDIX 2. There is signiSicant homogeneity within the workforce, as the
company tends to hire people that are a good cultural Sit with shared interests. The target
hires are people that are passionate about the sport communities that Black Diamond
Equipment serves, and this includes skiing during lunch breaks, a passion for the work
and a shared commitment to support their communities and their environmental causes
that the company does. This is particularly true because Black Diamond Equipment is an
employee owned company, thus the employee values are the company values.

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Organiza2onal Culture
Black Diamond Equipment is a company of users. The organizational culture of Black
Diamond Equipment attempts to be indistinguishable from the culture of the sports that
they serve. The focus is on quality, collectivism, ethics, a family oriented atmosphere, long-
term relationships and environmental custodianship. The companys role in Corporate
Social Responsibility is signiSicant through improvements in the process of wastewater
recycling, usage of power from wind energy, and commitment of employees to commute
via carpool, bus, bicycle, foot, etc. These goals are explicit delineated in Black Diamond
Equipments Five Pillars and Ten Commitments. This culture is explicitly demonstrated by
the activities of the companys CEO and the awards received for their business practices.
Technology of produc2on and organiza2on of work
The job design in the R&D department is ambiguous and creative. Individuals are in
charge of developing new products, coming up with product ideas, performing initial tests
on the products, and designing production and testing methods. A successful product
development by a technician may or may not lead to commercial success due to
regulatory, safety and price considerations in the market, leading to high uncertainty of
easily quantiSiable success regardless of the quality of work put in.
Furthermore, a key assumption given the collectivist nature of the company and the
difSiculty in product development is that employees working in the R&D Department work
in small teams to combine necessary expertise and aid the creative process. As such, there
is signiSicant work interdependence and cooperation. Employee tasks are also largely
specialized, as employees at Black Diamond Equipment R&D Department have signiSicant

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technical and professional experience prior to their arrival at the company and the
development of novel equipment is part of the process.
Environment
Legal
The death of Chouinard Equipment user does not highlight the consistent threat of
litigation that equipment manufacturers, like Black Diamond Equipment, face. When
occupying extreme equipment market one must be consistently vigilant to protect
himself from legal action resulting for equipment failure that could economically or
reputational damage the company.
Social
While Black Diamond Equipment is based in the state of Utah, the social pressures that
force policy stem from the expectation of the community that it serves. End users want
ethically produced equipment. This is apparent in their strictly enforced and monitored
Vendor Code of Conduct. It is also part of the values that lead to their recycling and
carbon emission reduction initiatives. Lastly, it is once again seen though Black Diamonds
8th Commitment, to share company success with its employees. These social pressures
are not necessarily those predominate in the geographic or political space the Black
Diamond Equipment operates, in fact many of them are antithetical to traditional
American individualism and Utahs traditional conservatism. Nonetheless, they are strong
social pressures on a company that, in part, differentiates its self by its ethical behavior.

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Poli2cal
Black Diamond Equipment faces no unique political pressures outside of the normal
support that small manufacturing businesses receive in the United States.
Economic
Black Diamond Equipment is one of a relative few players in the market for climbing and
skiing equipment. The size of the market has been growing in recent years and Black
Diamond Equipment offers a highly differentiated niche product even within this market.

Suggested Human Resources prac2ces

In order for the company to succeed, it is important to align the company's strategy with a
consistent HRM System. After the analysis of Black Diamond Equipments Five Factors, the
following HR practices were considered for the design of the Human Resource
Management System for Black Diamond Equipment.
Hiring
Black Diamond Equipments hiring practices for their R&D Department should be focusing
on Sinding qualiSied, long-term employees that Sit the company culture with experience in
the sporting community that Black Diamond Equipment serves. The company is a
desirable employer and their reputation and subsequently mentioned HR practices should
maintain their ability to be selective during the recruiting process and to attract culturally
appropriate candidates.
As such, Black Diamond Equipment should run a multistep interview and reference-based
process. Application review and initial interviews should be conducted by HR. However,

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the immediate supervisor of the recruit and the potential co-workers should conduct
subsequent interviews. Similarly, recruited personnel should be hired on a probationary
basis to conSirm cultural Sit and sufSicient technical ability. References should come not
just from professional sources, but also from community leaders within climbing and/or
skiing. Hiring at Black Diamond Equipment is a long-term commitment, as these recruits
will be both employer and partial owner of the company. Black Diamond Equipment must
negate information asymmetry as much as possible before giving a Sinal commitment.
Training and Development
Black Diamond Equipment does not hire many new employees for its R&D department
due to low churn and small size. As such, a formalized training and development
structure simply would not be used enough to be effective. An Onboarding Program
though would be necessary. During the aforementioned probationary, new hires should
begin their employment with off site team building within their work team. The initial
two months should consist of job rotations to better understand that supply system and
aid in the development of future products.
After the initial onboarding, HR will sit aside rolling over funds for annual training and
conferences to be used at the employer and supervisors discretion. Staying on top of each
researchers individual Sield is their duty to personally evaluate and peer pressure and
direct report supervision should ensure appropriate use of funds. Black Diamond
Equipment should support reasonable training and educational requests that surpass the
allocated funds through a formal review process if employees would like to return to
school or otherwise increase their professional applicable knowledge and skills.

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Job Design
Our analysis was based on Hackman & Oldhams Job Characteristic Model (Table 1).
Due to the nature and peculiar characteristics of the R&D Department, in order to achieve
high intrinsic motivation, job performance, satisfaction, low absenteeism and low
turnover, the R&D job design should feature signiSicant collaborative work. This is to
ensure peer monitoring of performance, and regular safety and ethic check of product
development. Collaborative product design is also helpful for innovation, especially in an
environment that allows for cross-disciplinary collaboration.

Table 1: Hackman & Oldhams Job Characteristic Model

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Performance Appraisals
The performance appraisal designed for Black Diamond Equipment is not only a matter of
design but also how it is implemented.
Due to the nature of the jobs being performed in R&D, it is very difSicult to give traditional
performance appraisals. Similarly, the collectivist, Slat hierarchy and employee owned
nature of the company does not lend itself to a top down performance appraisal method.
As such, peers, supervisors and direct reports will do performance appraisals.
Employees will be evaluated on the quality of their work done as judged by their peers
(quantity, quality and innovativeness), the adherence to Black Diamond Equipments
Commitments and Pillars, their technical skills and their ability to work in teams. Being
found lacking in any area may lead itself to suggested training, reprimand, or further
review by ones peers. Reviews will be conducted semi-annually or at the end of individual
projects.
Compensa2on
Base compensation will be at industry average with annual increases for 5% per annum.
However, after a year of employment an employee will receive an annual allotment of
stocks with which pay a fraction of the proSits from that year. Stocks must be retained in
the company at the end of employment through the sale to another employee or back to
the company at a set rate. As such, direct Sinancial compensation will be directly related
to seniority and company health.

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Non-salary compensation will include a health plan, and the perks that one would expect
with working for an equipment manufacturer, including discounts, outings to climbing
and skiing locations, workshops offered on site and Sirst access to new product offerings.
Type of employment rela2onship
The primary focus of HR practices for Black Diamond Equipment is to build long lasting
relationships with its employees, who will continue their innovative and socially
responsible culture. A compensation scheme, reward seniority, recruitment which
focuses on Sit, and seniority based proSit sharing aims to attract good employees and keep
them long term.

Summary
It is important to mention that Black Diamond Equipment needs to make sure that the
HRM System being designed and implemented within the company has to be aligned with
external and internal factors mentioned throughout this report. Those factors must be
aligned and consistent with the companys vision, mission and values, and the success of
the implementation of this HRM System will depend on the commitment and dedication of
Black Diamond Equipment.

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