Editor’s Note: This article originally published July 3, 2018.
When Jennifer Hyman co-founded Rent the Runway, she sought to disrupt an industry and change the way women shopped for clothes. Now she’s focused on shaking things up within her own company.
In May, the 37-year-old CEO announced the company will offer the same benefits to all 1,200 of its employees. Everyone – from salaried C-suite executives to hourly warehouse workers – will have the same bereavement, parental and family sick leave and sabbatical packages. “It’s the right thing to do,” says Hyman.
But it wasn’t always the case.
“I, in founding Rent the Runway, had set up a system where I just copied what best-in-class companies [did],” Hyman tells CNN’s Poppy Harlow in a recent episode of Boss Files. “And what I realized was that we were perpetuating income inequality in this country.”
When she announced the new policy at the company’s warehouse in New Jersey she said it was “some of the most profound hours of my life, let alone my career.”
Hyman recounts a seamstress asking her if she could use the new paid family sick leave policy to take care of her daughter who was having a baby via C-section the following week. She says the seamstress intended to quit her job so she could be home with her daughter because she wouldn’t have had the flexibility to take time for a medical procedure that wasn’t her own.
“That’s exactly what we created the policy for,” Hyman says. “My contribution to Rent the Runway as the CEO is higher than the contribution of someone on my warehouse team, but my pregnancy is not any more important than the pregnancy of any single person who works at my company.”
Soon after announcing the new policy, Hyman penned an opinion piece for The New York Times making her new policy public. “I had inadvertently created classes of employees and, by doing so, had done my part to contribute to American’s inequality problem,” she wrote.
She says it is “incumbent that business leaders have to start acting like moral leaders” and she’s calling on Wall Street to start having a “morality index.”
Hyman admits it will cost her company millions of dollars to implement the new policy, but says her board of investors have been “incredibly supportive.”
“Our company wouldn’t exist and wouldn’t be around without our warehouse employees and our call center employees. And these employees, not just at Rent the Runway, but at tens of thousands of other companies throughout the country, are treated unequally,” Hyman says.
“By no means are Rent the Runway’s benefits policies the most generous in the country right now. They’re not. But they’re the right policies financially for where our business is today and the promise that I made to my employees as Rent the Runway gets bigger,” she says.
Hyman co-founded the New York-based company in 2009 as a rental service for designer gowns. The company has experienced significant growth since, partnering with more than 600 brands and expanding to include an unlimited fashion subscription service for everyday wear.
Today, Rent the Runway’s “closet in the cloud” has close to nine million members. Hyman says her company is trying to create a game-changing consumer behavior that is “bigger than Amazon” by getting people to rent clothes instead of buy them.
She sees renting higher quality clothes as a better way to spend money than buying cheaper clothes from the likes of retailers like H&M and Zara. In fact, the CEO pledges to put the two behemoth retailers out of business one day. “No one is going to stop me,” she says.