Check out this story from the Wall Street Journal... The Container Store pays its in-store retail workers nearly $50,000! That's $17,000 more than the average retail salesperson. The Container Store's CEO, Kip Tindell, believes that a well-paid worker will be more productive. Also, he believes that paying more will attract better workers. See his interview below..
http://online.wsj.com/articles/container-store-bets-on-50-000-retail-worker-1413340639?KEYWORDS=container+store
What do you think of Mr. Tindell's business plan? Will it work? Should other companies follow suit? How does it relate to the decline in employee benefits that we've seen in the last 40 years?
While it is hard to tell if the policy will be effective or not, I am a great fan of MR. Tindell's willingness to try a new business plan. Unlike many large companies he seems truly focused on making sure that productivity is at its highest and maximizing output that way. If the gains in productivity are really at nearly 3x the industry standard has cited in his "3 to 1 policy" then his company will have lower payroll costs then competitors. By providing workers with a strong incentive to be productive by continually rewarding them for their work he is able to attract strongly motivated workers and this results in the low-turnover rate he cites. While this policy is unconventional I see many upsides to the business plan and if it is effective it would result in an increase in the number of higher pay jobs available in the market for retail workers.
ReplyDeleteIt's nice to see that there are CEOs who are invested in paying their front-line employees well. Excellent wages are bound to attract strongly motivated and productive workers. However, it does amaze me how this company doesn't have an actual HR department specifically designed to hire these hardworking individuals. Regardless, I agree with the CEO that there are definitely people who can do the work of three. I imagine finding them would be difficult however. But with these types of employees in hand, I find that hiring people through performance-base incentives tends to be more productive then those hired on time-based. This is because people who are hired on time-based know that they will get paid for the time they spend at work whether or not they were productive that day. Thus, there is no incentive to work hard or above the expectation.
ReplyDeleteI like the business plan. Not only do you attract better workers, but these workers are far more likely to go the extra mile for you as the employer if you pay them well. I also think this almost works a a form of marketing. If I know a store pays its workers extremely well, I can assume that these workers will be highly motivated and efficient. This will make me as a customer want to go to this store because the employees there are likely to provide a great customer experience. I think this strategy will work. However, I doubt other companies will follow, which actually works in Mr. Tindell's favor. His store is now unique.
ReplyDeleteThis article reminds me about Entrepreneur Richard Branson is letting Virgin staff take as much holiday as they want. The business will doing better when their employee are happy that can boost productivity. I also hope the strategy will work in the long run.
ReplyDeletehttp://www.entrepreneur.com/article/232702