A Tip to Make More Money: Treat and Pay Employees Well

For people like Kip Tindell, this philosophy is a no-brainer. Kip is the founder and CEO of The Container Store, one of the largest and most recognizable retail brands in the United States. He was recently recognized by the National Retail Federation for his success with The Container Store, which is consistently listed among the ‘100 Best Places to Work’ and recognized as a Fortune top 50 employer.

Kip attributes the company’s success to one simple philosophy: if you focus on treating your employees exceptionally well, they’ll focus on treating your customers the same way.

CBS News recently interviewed Kip and other Container Store employees. Click the image below to watch the video (I couldn’t embed it here).

Just a few quotes from Kip’s interview:

“We focus on the employee the most. Not even the customer, the employee… If you take better care of the employee than anybody else, they’ll take better care of the customer than anybody else, and then wonderfully and ironically enough, the shareholder will be very happy too.

“You walk in the store and you can feel it. Everybody that’s in the store loves to be there. The customers love to be there. The employees love to be there.

“You can’t go around calling yourself an employee-first culture and then lay people off, so we didn’t do that… Everybody was very happy to not get 401K for a couple years, to freeze their salaries, because they know they’re literally saving their fellow workers’ jobs. Y’know, the team is a really beautiful human experience if it’s done right.

“I think everybody’s becoming a little bit more conscious in the way they do business. I think customers demand it. They vote with their pocket book… We’re not just being nice. It’s successful profit strategy as well.”

It’s obvious that this philosophy works. Why are so many business owners and leaders behind the learning curve? Why do so many businesses constrain their own potential for growth and success by undervaluing employees? Why do employers prefer a churn-and-burn strategy of costly employee turnover and reduced customer satisfaction over investment in long-term growth and profit?

Seriously, can anyone answer this question for me?

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2 Responses to A Tip to Make More Money: Treat and Pay Employees Well

  1. Here’s the answer I discovered while researching my forthcoming book about the retail industry — one in which, sadly, Tindell refused to be interviewed. (Richard Galanti, CFO of Costco, did step up.)

    There’s no line item cost to churn. It’s really that simple. When the bean counters and Wall Street analysts watch a retail company’s growth, they want to see lots of profit. Losses are, of course, minimized whenever and wherever possible, and there is no visible cost associated with even 100% annual turnover, bizarrely considered normal in this industry (and in no other.) Plus, if you save the cost of training your employees (as most do), cha-ching! They can come and go almost weekly and no one that matters, i.e. your investors, will ever know the difference….Even though your customers will and so will will your staff.

    I hope you’ll check out the book, given your passion for the subject.

    http://malledthebook.com/

  2. jkurth says:

    Caitlin — thank you for reading and commenting! Your book looks very interesting and I think you’ve touched on the foundational issue that separates mediocre companies from truly excellent ones.

    Shortsightedness.

    In an earlier post (https://succincity.wordpress.com/2011/01/03/what-are-your-non-financial-metrics-of-corporate-success), I discussed the detrimental impact of shortsightedness on company value. By focusing solely on the quarterly balance sheet, business executives fail to recognize the long-term costs associated with high turnover, employee dissatisfaction and sub-par customer experiences. This leaves the door open for competitors like the Container Store to dominate the market with more enduring value.

    Shortsightedness is just bad business. As more businesses catch on to the difference between pandering to the balance sheet and investing in long-term profitability, Shortsighted firms will wither and die.

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