We, at The Container Store, and I'm just speaking with my Container Store hat on as the CEO
of Container Store, one of the foundation principles, the company is sort of based on
a sort of seven foundation principles that are all very simple but very thought-provoking,
kind of like the golden rule: very, very simple but very thought-provoking at the same time,
things that nobody ever disagrees with.
How many people do you know that say I don't know about that do unto others thing, maybe
that's not such a good idea after all.
So one of them is one equals three; that one great person can easily do the business productivity
of three good people.
It's actually an understatement.
There's all kinds of things that you do 14 times or 38 times better than me, but one
equals three allows you to kind of hold out for only the great employee.
I mean we think the most important thing that we do is who we hire to join The Container
Store, that wonderful company, so we're looking for people that we think will do at least
three times the productivity that someone else might hire for that position, and no
one's overqualified.
I mean we always joke that if a retired federal reserve chairman wants to work in our accounting
department that's fine with us.
If you go to our stores and look at who's working there you have masters degrees.
The average full-time sales person in the store makes about $48,000, which is not an
enormous amount of money but it's a lot of money, it's a whole lot of money for a retail
sales position.
First you have to believe that you can get great people to work in a retail sales position
or in a hot distribution center in Dallas Texas.
And boy have we been successful at that.
And we've been on Fortune magazine’s 100 Best Companies to Work for in America list
for 15 years in a row, number one twice, number two twice.
We have a reputation for being a great place to work, and so we seek out great people.
We put you through eight interviews, so we wind up with great people and they're very
productive and they're very innovative.
Then you can pay them well and you need to pay them well.
People join The Container Store and they never leave.
I mean our turnover is single digit in an industry that averages triple digit, and pay
is part of that.
It's an inverted pyramid.
I don't, as CEO, I make substantially less than industry average.
The vice presidents make maybe about industry average, but the people closest to the customers
and the people in the stores make well above industry average.
In fact we say in general 50 to 100 percent above industry average; that can vary a little
geographically.
It's different in San Francisco and New York than it is in Fort Worth and Atlanta.
But you're getting three times the productivity at only 50 to 100 percent higher labor costs.
So the employee wins because she's getting paid 50 percent more than somebody else would
likely pay her, the company wins because It's getting three times the productivity at that
only 50 percent higher cost, and the customer wins because they're getting this engaged
really great employee.
When you go in the stores the people that wait on you have been there four years or
eight years or 12 years, they love their jobs and they're truly interested in your storage
and organization problem.
So, we're not advocates of paying mediocre people well, we enjoy excellence, we insist
on a meritocracy and we really believe in paying great people well; we give much bigger
than usual annual increases.
I'll look forward to the day when we have people on the sales floor making $100,000
a year.
We don't have a single one yet but I think we will sometime and I think plenty of people
are good enough to make that.
A great place to work it's not just about pay, but pay is still important.
People's families depend upon it.
It's very important.
We're trying to pay in accordance to contribution.
Most business people will tell you I don't know, some of my worst people make the most
money and some of my best people make the least money.
And you just have to realize how important it is.
You have a finite pie of compensation.
The person who makes the 15th biggest contribution should have the 15th biggest slice of the
pie.
I think it's important that people feel mildly tickled, maybe you don't want them to feel
wildly tickled, but maybe if they feel mildly tickled about their compensation they feel
very hopeful about the opportunities they have for advancement if they want that or
more money or a lot more money if they want that.
So, there's also a pride factor.
There's also the new groom wants his new father in law to be proud of what his salary is,
so this stuff’s important.