Container Store CEO gives the inside scoop on We Love Our Employees Day

At NRF, we’re pretty good at keeping secrets. So when The Container Store reached out to us last week with inside information on their latest initiative – an inaugural “National We Love Our Employees Day,” slotted for Valentine’s Day – and asked if we’d consider blogging about it, we were more than happy to oblige. And keep their secret.

Kip Tindell

So last week, in the midst of all the chaos and excitement gearing up for this huge surprise to employees, The Container Store Chairman and CEO Kip Tindell set aside some time to answer a few questions from us on how this day came about, why he believes in treating employees even better than customers, and what’s behind The Container Store’s mysterious customer mantra about “the man in the desert.”

The Container Store is surprising its employees today with its inaugural “We Love Our Employees Day.” Tell me about this.

The idea actually came about many months ago as we were getting ready to launch a new section of our website, “What We Stand For,” which for the first time really tells the story externally about our employee-first culture. In one of those conversations we were all reveling in how amazing our employees have been in this recession, holding hands, getting through this, working so hard for our customers and each other. So, we wanted to celebrate everyone and really scream it from the roof tops how proud we are of each other.

Valentine’s Day seemed the perfect day to send this “hug” out to all of our employees – it’s the day before our annual elfa Sale ends, everyone has been working so very hard, and we wanted to do something fun to honor our folks across the country.

The press release says that employees at The Container Store will be “treated to special celebrations and recognition at the retailer’s stores, home office and distribution center” all week long. Can you share any inside scoop on what some of those festivities will be?

Our amazing vendors really came through! We assembled 4000 goody boxes filled with fabulous products donated from our vendors – one for each employee. Our vendors are a crucial component of our interdependent circle of stakeholders and it’s part of our core principles to craft mutually beneficial vendor relationships. Sometimes it’s hard to tell who’s an employee and who’s a vendor here at The Container Store. These vendors feel a part of the culture, so – sure – when something like this comes up they are happy to participate.

Employees are also receiving fun Valentine’s Day inspired National We Love Our Employees Day t-shirts, sweet treats in the stores, and we have a full-page ad in The New York Times’ Sunday edition that includes a thank-you to employees and even lists every single employee’s name.

You’re encouraging other businesses to embrace Valentine’s Day as a day to recognize employees. Why?

Creating and nurturing an employee-first culture is the most fun, productive and profitable way to run a business. There are some really great companies – retailers – that are doing a good job at this. But think about if the thousands of the companies across the country would put their employees first, communicate to them, make them feel a true sense of ownership in the business. Can you imagine what the business world in America would look like? And talk about customer service. When you have happy employees, there’s no doubt you’ll have happy customers.

Congratulations on your recognition – for the 11th year – as one of the 13 retailers on this year’s Fortune list of the 100 Best Companies to Work For. What’s the rationale behind The Container Store’s employee-first culture?

The FORTUNE honor has been a great boon for our business both internally and externally. Two-thirds of the honor is employee driven through an anonymous survey, so we’re very proud of that.

It was Milton Friedman who said, “the only reason a corporation exists is to maximize return for the shareholders.” Well, no. Not really. We actually put the employee first. We don’t even put the customer first. Now, you know we love our customers. But we put our employees first. We believe that if you put the employee first and take better care of them than anybody else, they will take care of the customer better than anybody else. And if those two are happy, if you have the happiest employees and customers around, ultimately your shareholders are very, very happy as well.

We hire GREAT people – who are inspired every day to do what great people do and are inspired every day by the folks they are surrounded by. That’s one of our seven Foundation Principles – 1 GREAT person equals 3 good people in terms of business productivity. So why not insist on hiring ONLY great people?

We work to pay them well (50-100% higher than the industry average) and we’re obsessive about training them well (first year, full-time salespeople receive 241 hours of formal training…and that’s just the beginning). Those of you know in the retail business know, sadly, the average salesperson receives 7-8 hours of training.

And so that’s one of the real doctrines of putting our employees first.

The other aspect is serving our entire, interdependent group of stakeholders that includes our employees, our customers, our community, shareholders and our vendors. It’s actually pretty difficult to tell who is an employee and who is a vendor at The Container Store. The relationships that we have with our vendors are the same as we have with our employees. Our vendors always say that they feel like they work for The Container Store. They love it. We love it. It’s the most sustainable form of business. It’s the most profitable form of business. It’s the most fun for the customer, for the employee, for the vendor, and yeah, even the shareholder! And it’s something that I’m so fanatical about.

I’m really thankful to have our “culture” during an economic climate like this. When you’re having to make difficult decisions that are going to protect the future of the business…it’s vital.

As part of Fortune’s “100 Best” issue, you traded places with Build-A-Bear CEO Maxine Clark for a day. What was that experience like, and what lessons or insight were you able to take back to your own company?

It was such a fun experience! I learned a lot about their business and the customer loyalty they’ve built. It really validated that, yes, retail is a hard business, but you can have fun, create an air of excitement, differentiate yourself and you’ll craft a retail experience that transcends value for the customer. I did love their “Strive For Five” selling metric. That is, work with the customer to find four more items that would make their Bear/animal complete.

I’m curious if you’ve tuned into the new CBS show “Undercover Boss,” where company executives spend a week incognito working rank-and-file positions throughout their company. If you went undercover in your own organization, what do you think you’d learn?

We were actually contacted early on to participate in that show – they really wanted The Container Store on board. But our structure and communication style is such that we didn’t think there would be a way to effectively have any of our executives go undercover in our stores or distribution center without anyone recognizing us.

We do encourage feedback from each and every employee. When I go into our stores, I say, “Folks have been telling us the great things we do for the last 30 years, but tell me what we’re doing wrong – what are some things we could do better?” That’s what I want to hear.

I’m all for that feedback and thrive on it. We use voicemail, email – a real open door policy for employees to have a voice. And this year we want even more of that. Maybe through employee surveys and such.

While the retail industry shed over a million jobs during the recession, The Container Store hasn’t laid off a single employee. One question I’m sure retail executives everywhere are asking: How?!?

For us, it was about driving costs out of the system and strict expense management. And really challenging every employee in the business to look under every rock to help drive sales today. We did have to make some tough decisions like a salary freeze and a 401K match freeze, but those were sacrifices we were all really make to save thousands of jobs and secure the future of company.

Tell me about “the man in the desert.”

This is our selling philosophy and we use it to illustrate how we astonish our customers by exceeding their expectations. Imagine a man lost in the desert. He’s been wandering for weeks. He stumbles across an oasis, where he’s offered a glass of water, because surely he must be thirsty. But if you stop to think about what he’s experienced and what his needs really are, you know that he needs more than just water. He needs food, a comfortable place to sleep, a phone to call his wife and family, maybe a pair of shoes and a hat to screen the sun’s rays.

When a customer comes to our store looking for shoe storage, for example, we equate her to a “Man in a Desert,” in desperate need of a complete solution. We start asking questions about what her needs are. “How many shoes do you have?” “If shoes are a big problem for you, how does the rest of the closet function?” By anticipating her needs, we know that she needs an organization plan — a complete solution — for her entire closet.

Most retailers are pleased with helping her find a shoe rack — that glass of water — but not at The Container Store. We don’t just stop with the obvious. Providing our customers with a complete solution through our Man in the Desert selling philosophy has been key to achieving one of our main goals of having our customers dancing in their organized closet, pantry, home office, etc., because they are so delighted and thrilled with the complete solution we provided them.

What do you believe is the largest misconception of retail careers, and how – as an industry – can we change that?

I think the largest misconception is that it is not challenging and has to be low pay, long hours and can’t offer a long-standing career. For us, we want to provide a team-oriented environment where you’re highly trained, motivated every day to change our customers’ lives and can make a great living working on the sales floor. It really goes back to the core culture of the retail environment. As retailers, we must focus on creating a nurturing environment, differentiate and communicate to our employees so they are a true part of the business.

I read that you and Whole Foods CEO John Mackey were housemates when you both attended the University of Texas in Austin. What do you see as the parallels between your two businesses?

Well, we both run our business based on a stakeholder model where the shareholder does not come before the other stakeholders – employees, customers, vendors, the community, etc. – but rather is in balance with them. That makes for an unusually profitable and joyful business! And that leads to the whole, balanced community of stakeholders not only being mutually beneficial, but extremely interested in one another. Working towards something pretty much like the common good.

Our businesses are both rooted in creating a retail experience that goes far beyond selling products – it’s about transcending value for our customers through providing a great selection of items and great service delivered by inspired, energetic salespeople.

What does Kip Tindell look for in someone he interviews? How can young professionals stand out? Read more of Kip Tindell’s Q&A on the NRF Foundation’s Retail Careers blog.