Despite starting out with just a $US35,000 investment in 1978, The Container Store founder and CEO Kip Tindell has grown his business to one that has 67 US locations and rings up annual sales of nearly $US800 million.
Equally impressive is the fact that he’s done all that while paying his retail employees nearly twice the industry average.
According to Tindell’s book, “Uncontainable,” the average Container Store retail salesperson makes nearly $US50,000 a year compared with what the Bureau of Labour Statistics says is a national average of just above $US25,000.
In an interview with Business Insider’s Jenna Goudreau, Tindell explains that the secret to the company’s high wages is what he calls “the 1=3 rule,” meaning that one great employee will be as productive as three employees who are merely good.
As a result, Tindell feels he gets ahead by receiving three times the productivity of an average worker at only two times the cost.
“They win, you save money, the customers win, and all the employees win because they get to work with someone great,” he tells Business Insider.
Tindell then keeps these “great people” by giving them annual raises up to 8% of their salaries, based on their performance. He tells The Wall Street Journal that he has managers rank each of the employees they supervise and encourages them to work toward a pay structure where employees are paid in accordance with their value to the company.
“Everybody loves to say that it’s not all about pay,” he explains. “But pay is more important than most people realise, particularly if you’re trying to attract and keep really great people.”
Tindell’s views on generously compensating employees will be interesting to watch in the coming months, as he is set to be named chair of the National Retail Federation, an industry group, later this month.
Though the NRF has in the past opposed raising the minimum wage, Tindell tells Bloomberg he is working to get the NRF to “moderate its views” on the issue.
Business Insider Emails & Alerts
Site highlights each day to your inbox.