The Container Store: The Employee as an ‘Extension of the Brand’
By Gene Detroyer,
Senior Advisor, RetailWire
In the retail industry, a 100 percent plus
annual employee turnover is not uncommon. And, in these tough economic
times, that statistic doesn’t tend to be of greatest concern to operators.
More likely, they’re preoccupied with determining if they can get away
with one less person on the floor; cutting back on training; or increasing
the commission portion of the compensation.
There is one retailer, with 46 stores and
3,500 employees, which seems to have a very different philosophy. The
Container Store experiences just 10-to-15 percent annual turnover. How
does the retailer achieve a number virtually unheard of in the industry?
Perhaps the most eye-opening place to start
is on the interview process for a
“transition team.” The transition team at The Container Store
is a group of associates hired for a five-day or so tenure to transition
a store between themed selling seasons. There would typically be transition
teams before and after Christmas, Spring Cleaning, Back-to-School, etc.
At The Container Store, the selection process for this short-term associate
is more involved than what most retailers would have their full-timers go
through. It consists of two interviews: one in a group setting; and one
face-to-face lasting an hour and a half. If there is a next step, the candidate
is taken for a walk around the store with a group of other candidates and
asked
“what if” questions largely oriented to customer interaction.
(Note: This is for associates who are being hired to change displays, fixtures
and move merchandise – not to sell product.)
Karyn Maynard
is The Container Store’s director of recruiting. When asked about this
process, she said this type of attention to detail is not unusual for The
Container Store. “We believe each employee is an extension of
our brand. The staff in the office can write all day long about how
great we are, but it is our associates on the floor who communicate it
by action with the shopper.”
The evaluation process is very deep regardless
of the position. “We want to hire great people and we want to
retain great people,” said Ms. Maynard. “We have part-timers
who have been with us over 15 years.”
The evaluation process also goes both ways.
As with any screening process, The Container Store wants to be sure the
future employee is the right fit. But, The Container Store also wants
to be sure the company is the right fit for the employee. The company considers
it symbolic that their very first hire was a customer.
“This process has been an evolution,” recalls
Ms. Maynard. “When the founders started the company in 1978
they wanted to have ‘the best retail organization in the country.’ We
are certainly more sophisticated now than they were then, but even our
first hire started us in the right direction.”
Today, in fact, most employees are former
customers. Many are approached on the sales floor when they are shopping.
(“Have you ever considered…?”) The other source of talent
is online through The Container Store website, where every application
is reviewed and replied to.
When asked what mistakes other retailers
make, Ms. Maynard quickly answered,
“They are not making a commitment to time.”
(By the way, Karyn Maynard
did not come up through the Human Resource department. She came up
through the stores, like everyone else at The Container Store.)
Discussion Questions: The Container Store
seems to be an outlier when it comes to hiring in the retail industry.
Do you know of other retailers with unique hiring processes? Why
do you think many (if not most) retailers accept an annual turnover rate
of 100 percent? What does The Container Store gain from such an
extraordinarily low turnover rate?
The issue of training and development is sacrosanct. It is timeless and so is the value. Training assumes relevance and success when it is imparted both as a ‘fun area’ and ‘contribution area’.
Human nature has in itself to be recognised. This is true across all levels. The average award ceremony is a testimony to this fact. This is also the only path to sustained growth for an organization. Human capital is critical to an organization and it is imperative that we remove the silo in which the average employee works.
The wonderfully low turnover rate at The Container Store is due to more than just their ‘perfect’ hiring system. Add in the fact that an employee gets over 200 hours of training in their first year, and that paycheques are typically 50 to 100% higher than the average retail worker. Would you quit your job if you worked in a great culture, got the training you needed to succeed and grow, and got paid well?
We see it happen all the time with our clients. Put in a proper hiring system, do way more training, coach your staff every day on their performance, raise the bar on performance and offer more total rewards and in every case staff turnover rates plummet.
Our experience has shown Apple, Starbucks and Whole Foods represent additional best-in-class examples of organizations who view their employees as critical extensions of their brands.
In each case, new co-worker selection, interviewing, hiring and training initiatives include and engage existing employees in the process from the start. These brands both understand and have refined their selection, hiring and retention strategies to ensure much lower annual turnover rates than industry peers.
It is also important to note that in each case, these organizations strive to nurture authentic, engaging cultures in which employees are respected, empowered and rewarded for their contributions.
Zappos has a “pay to quit” program. After some weeks of training, the employee is offered $1000 to leave. This weeds out people who really don’t want to work there.
You can read the piece I wrote here: http://is.gd/ocoH
It’s a great concept, really.
The Container Store provides a uniquely welcoming environment to more mature sales associates. Associates in their 40s and 50s find a pleasant place to work, and just don’t have the desire to move around as frequently as a teen or twenty-something. Shopping at TCS is always a rewarding experience because of staff’s willingness to inform and assist.
I totally agree with Kevin. It’s a no-brainer. When you treat employees well, train them properly, make them part of the bigger picture, and show that you value them, it works to make the retailer (or any company) more successful. You can see it at The Container Store (great store), Trader Joe’s, and the Apple Stores. On the other hand, when I go to Macy’s, I can’t even FIND an employee to help me. And Walmart? Forget it.
I could write a book answering this question and in fact, I have. But I have also written a recent article entitled “The Front Line Is Disposable” and even though most companies would disagree with it, in principle, their actions speak louder than their words.
Two quick points:
1. Yes better hiring practices will reduce turnover to some extent.
2. Just as important is a great retention strategy.
There are three stages to the process.
1. You must recruit the best. (Take a marketing approach to recruiting.);
2. You must Hire Tough. (Hire the best employee, not the best applicant.) “The most important decision every retailer makes every day is who they allow in the door to take care of their customers.”
3. Retain the BEST: Become a place where great people want to work.
Yes, there are a handful of retailers out there, in all segments of the market, that have done the three steps listed above.
If you would like a copy of the article, drop me a note and I will send it to you.
Yes, I would say based on my experience that their approach is unique. I am aware of other retailers who employ a group interview during the process but not with the level of detail at the Container Store.
That being said, I firmly believe that the employee is an extension of your brand. The paraphrase an old series of United Technology ads in the WSJ “You tell on yourself by who you hire.” Am I hiring a person I would want to wait on my spouse, my parents, my children? If the answer is no, then don’t hire them.
Retail turnovers are notorious for lots of reasons. Some are due to the nature of the retail and the interactions with the public. Some are due to poor hiring, training, or retention practices. We use a convention of wisdom that states “If you want good people, you have to treat people good.”
The best hiring process in the world is strengthened still more by relationship-driven leadership. Numbers-driven leadership is the #1 cause of strife in retail.
I’ve admired the Container Store’s hiring processes for quite some time and have met CS employees over the years who have left professional careers to work at CS stores (and they have STAYED there). The sad fact is, most retailers (and the vendors who serve them) spend more time choosing overnight shipping providers than they do hiring their front-line employees. As consolidation has made the big even bigger, retailers have become incredible people-eating machines. With all kudos to the Container Store, they do only have 50ish stores, not 3,000, so they can afford to take a bit more time to ferret out top tier players.
We find that vendors, on the other hand, tend to get intimidated by the hiring process and they often wait until hiring is an emergency situation. This double-whammy often has them casting a very narrow net among a few word-of-mouth favorites in order to short-cut the process. The result? Barely vetted status quo hires who tend to look a lot like those who came before, right down to length of employment!
Ditto on Zappos as another example of thorough culture-fit hiring and training practices (and this time, in big numbers).
The factors that contribute most to the success of The Container Store are: a culture of customer service excellence driven by top management, a comprehensive selection strategy, a result based pay and benefit structure, and ongoing training. I was lucky enough to be at a conference where The Container Store’s founder Kip Tindell spoke. The guy is a customer-service guru. He understands the importance of each customer and how they drive the company and the bottom line and communicates that enthusiastically to his entire organization. Zappos.com’s CEO, Tony Hsieh, is another company founder whose management style and selection and training strategies are well defined and executed. I think the “$1,000 to leave” program is a great tool to help them evaluate where their selection strategy failed. When someone takes the money and runs, I’m sure management conducts an extensive post mortem on why they were hired in the first place.
Why do retailers accept a 100 percent turnover rate? A couple of reasons come to mind: they don’t believe that the time and money investment in developing the selection and training strategies necessary to cut turnover are worth it to the bottom line, and the mentality of “that’s just the nature of the business.”
It’s always good to see Container Store get attention for their culture, and it’s the culture that’s the difference. The hiring, training, service, compensation; it’s all about the belief system Mr. Boone and Mr. Tindell put in place decades ago and committed to never compromising.
I have long since traveled away from Dallas and on with my retail-related business journey, but to this day, my brief time I spent with and around Mr. Boone remains my most treasured lesson in what it takes to be TRULY successful in this business.
We once sat together at a luncheon with Stanley Marcus speaking; he said that day that “you train seals and bears; you educate people.” I realized then that Mr. Boone already understood the difference, and I fortunately caught on soon after.
Why do you think that in this world of mass over-expansion and over-extension of brands, does the CS have less than 50 stores; they could have 500 or more, easily? It’s their culture. Mr. Boone and Mr. Tindell once held out for over four years for a corner site in Ft. Worth in front of a shopping center they knew was best for them, but the developer repeatedly told them they were not going to develop that particular corner pad position. They have a store there today.
Container Store is the direct opposite of the Circuit Cities of the world, from top to bottom. I only hope that once the founders hand it down, those who carry it on will understand just how unique they are in American retail.
My fellow BrainTrust panelists are spot on when it comes to retail turnover. Hire the best people available. Train, pay, retrain, lead. Make the work environment a place where employees want to come to visit. Who wouldn’t want to work in a chocolate store or an ice cream store? Work must be fun, challenging, rewarding and informative. When you are an expert in the workplace (because of continual retraining) the workplace satisfaction increases and becomes a reason to stay, combined with great pay, great conditions, and working around other “great” people.
I’ve watched the Container Store for years and have always been impressed that they have never wavered from their “commitment to time” in talent acquisition, education, and ongoing improvement of these processes. We all know that having extraordinary people outweighs any temporary lack of extraordinary products, services, or strategies. But few companies focus on the people side with the same level of intensity that The Container Store executes daily. Why? It started at the beginning with the founders’ personal focus on hiring and educating the best workforce anywhere.
For any company wishing to emulate The Container Store’s success, it must start at the very top. The leader must ensure their lieutenants share their focus and stay on this forever. Any relaxation in this focus will allow slippage. There is no shortage of information on developing excellent hiring, education, and retention processes. There is, however, a terrible shortage of leaders willing to make this the company’s #1 priority.
Look at it from the viewpoint of a prospective employee. If *their* next employer demonstrates a slipshod approach to hiring, what does that reveal about the company in general? They do things half-heartedly? Low standards are expected? Quick and dirty is preferred over thorough and professional? Your replacement is five minutes behind you?
It’s like getting a marriage proposal on a first date: You’d immediately question the commitment of the proposer. You might say “yes” for a bit of quick fun, but you certainly wouldn’t expect it to last, would you?
One of the benefits of their product line is that there is high gross margin in plastic and storage products.
They are one of the few retailers that “gets it” when it comes to understanding that word of mouth is the best form of advertisement. Treating the customer right is huge since it is rarely seen these days.
Size helps tremendously because it is easier to influence a smaller organization. The slow growth rate also allows for a greater investment of time for training.
As far as the other big box/big ego retailers, their arrogance has brought them to their knees. Does anybody remember the former CEO of Target talking about building at least 100 stores a year for the next 10 years in 2007? They have 5 in the pipeline for 2010??? Sounds like a 95% correction. Who predicted that it wouldn’t be profitable to build stores two years ago? When the cheap credit for the big box retailers dried up, they had no customer service to fall back on to retain their customers…justice.
In retailing it is a bottom-up industry where the customer meets your staff first, not the CEO and a marketing plan. Front-line staff are the business and training and retaining are key for long-term growth and brand recognition.
Retailers that focus on their head office will find that there is nothing left to manage in a downturn when customers won’t come through your doors. Case in point; a well known coffee brand that is not flexible enough to let employees make a decision in relation to a request for something that is not on the menu. Customer goes elsewhere, employee is frustrated and retailing is not done by the book.
HR managers are known to tell their executives that, “Our employee turnover rate is a few points above/below our industry’s average, so we are doing well.” Or “We are different, so we can’t go by our industry’s average.”
If a retail operation wants to reduce their employee turnover rate, they need to stop hiring future unsuccessful employees. Yes, it sounds too obvious but it is doable. The Container Store should be able to reduce their 10% to 15% turnover to a 5% to 10% range.