Kip Tindell, CEO of The Container Store, a home-organization retailer, says frontline associates should be paid more. Although Container Store sales and stock recently took a hit, he has no plan to change his employee compensation philosophy or policy, according to a Wall Street Journal article by Rachel Fentzeig.
I think Mr. Kip Tendell’s credo regarding his employees is sensible; in fact what he espouses just makes good common sense.
- One Person is Worth Three: Kip says that a foundational principal of The Container Store is that “one equals three;” one great person can be as productive as three others. He goes on to say that if a company believes in that rule then by definition an employee can be paid 50 to 100 percent above the industry average.
- Let’s keep our super stars: The Container Stores wants to keep good people. That makes sense too. With services and products becoming so much more complex, consumers relish experience and want to interact with confident frontline associates. In The Container Store paradigm, employees are given large annual increases based on their individual contributions. In other words they are rewarded on their ROI.
- Provide Employees Quality Feedback: Employees are reviewed on an annual basis and their managers spend four or five hours not only providing feedback, but discussing each of the performance criteria in detail. This allows the manager and employee to study the overall assessment and create improvement plans that work.
- Motivate Entry Level Associates: Entry-level associates are reviewed and given increases after the first three months. While everyone appreciates a salary bump, Kip says getting a raise when first starting a career is a great motivator. It’s another way that The Container Store attracts good people to apply for positions within the company.
- Employees Recommend Future Co-Workers: The Container Store does not rely on Human Resources for the employee pool but encourages current associates to recommend individuals. This system has worked well. There are no rules about relatives not being recruited. Kip’s wife, Sharon, is the Chief Merchandising Officer. Certainly this is thinking outside the box. Associates have suggested interviewing a waiter they met at a restaurant whose customer service skills were great or a friend who they know would be a good fit for the company.
- Maintain Your Principles During Good Times and Bad: When asked about the recent stock decline, Kip states emphatically that he will not compromise his principles even when same-store sales are lower. There is always fluctuation and bumps in the road. Doing what a company believes is right is the constant.
Kip Tindell will become the new incoming Chairman of the National Retail Federation in a few months. It will be interesting to see if his leadership will influence those retailers who are satisfied with paying frontline associates either minimum wage or slightly above to meet the P&L. The Container Store epitomizes “Penny-wise, pound foolish.” Kip understands “you get what you pay for.” I’m looking forward to reading his new book, Un-containable. I know it will be an interesting read and a great tutorial for all retail establishments.