Reference no: EM132256953
The Container Store’s Secret to Success: Employee Satisfaction
Can you form a successful company by selling containers, boxes, and other storage products? The Container Store has shown that the answer is yes. With more than 10,000 products available, The Container Store sells items such as hanging bins, drawers, trash cans, and other items to help make a hectic life more organized. While there might have been skeptics in the beginning, particularly as the firm started out in a small 1,600 square-foot store, the idea quickly caught on with consumers.
“Word of mouth spread incredibly. It was just the oddest collection of merchandising anybody had ever seen to organize your home and to organize your life. A week into it, we knew we had something,” co-founder and CEO Kip Tindell said.
Yet in addition to its unusual product mix, The Container Store is also unique for its dedication to employees. The retail world can be difficult for employees because of high turnover, different hours every week, lower benefits, and constant interaction with people. The turnover rate in the retail industry is about 100 percent. This increases training costs, which can cause companies to decrease the amount of training offered.
This trend is reversed at The Container Store. First-year full-time employees receive 263 hours of training, much higher than the industry average of seven hours. Employees receive 50 percent more pay than at other retail establishments. Employee turnover at The Container Store is a low 10 percent. For more than a decade, The Container Store has been elected as one of the top 100 companies to work for by Fortune magazine.
Yet, the satisfaction that employees feel toward the company is not solely a result of higher pay. According to Frederick Herzberg’s two-factor theory, good workplace conditions can prevent dissatisfaction but do not motivate the employee topage 289 go above and beyond what is required of them. As CEO of the company, Kip Tindell realizes that the amount of time and effort an employee gives to the company will determine productivity.
“The first 25 percent for any employee is mandatory. If they don’t do that, they’re going to get fired. But the next 75 percent of an employee’s productivity for any business in the world, I believe, is more or less voluntary. You do more or less of it depending upon how you feel about your boss and your product and your company.”
Therefore, to enhance productivity, the firm has made employee satisfaction a priority. Employees come first, followed by customers and then shareholders. One of the ways that The Container Store motivates its employees is by creating an open communication culture. Employees are encouraged to approach their managers on any topic. This causes employees to feel as if the organization cares about them enough to take their concerns seriously. The Container Store also holds several events to show their appreciation of employee efforts. For instance, every February 14, The Container Store holds its “We Love Our Employees” day. At one of the events, the company announced the establishment of an emergency fund for employees. The company contributed $100,000 for unexpected costs that employees may find themselves having to pay for due to natural disasters, terrorist attacks, or significant medical issues.
Employees also receive many perks for working at The Container Store, and even part-time employees are eligible for health care benefits. Because employees take precedence at The Container Store, the company bases its decisions on what is best for employees even during hard times. During the recession, for instance, The Container Store refused to lay off employees. In addition to benefits, employees have access to all company data, including financial reports.
Does this mean that The Container Store ignores its customers for the sake of its employees? The high-quality customer service that The Container Store offers suggests just the opposite. In fact, the extensive employee training and the company’s values demonstrate its high commitment to customer satisfaction. According to Tindell, the key to great customer service, however, is highly motivated employees.
“We believe that if you take better care of your employees than anybody else, they’ll take better care of the customer than anybody else, and if those two guys are ecstatic, ironically enough, your shareholder’s going to be ecstatic too.”29
Discussion Questions
Name some of the hygiene factors at The Container Store.
Name some of the ways that The Container Store motivates its employees.
Do you believe Tindell’s statement that highly satisfied employees will lead to highly satisfied customers and shareholders?