406-036-1

The Container Store's Customer Service:

Recruitment and Training as Competitive
Advantage
"To be a great place to shop, you need to be a great place to work."'
-Doug Fleener,President, Dynamic Experiences Group'.
"One oftheir [fhe Container Store's] keys to successthat they hire very well, it's such a generous
place,such
a high-trust place, that employees love it. They hire people with the same values as the leaders. That's the
cornerstone.''3

- Leonard Berry,Author of Discovering the Soul of Service.

The 'storage and organisation'retail segment is part of thehome furnishing and housewares retailindustry. Storage
and organisation products include food storage containers,utility products like clothes baskets,garbage cans,shoe
boxes and home storage devices like storage drawers, shelving systems and filing cabinets for the purpose of
storing things at home. In addition to retailers like Target, who offer these products, some specialty stores also cater
to this segment.
By 2005, two specialty stores, OrganizedLMng and Hold Everything were closing down their operations due to
falling sales and heavy losses.In spite ofthe tough business environment, The Container Store, believed to be the
originator of this niche retail segment,continues to operate profitably. One of the primary reasons that the company
cites for its sucoess
is its unique recruitment and training policy.In addition,it spends 18% of sales on the employees,as it believes well-infonmed
and satisfied employees are essentialto satisfy the customers.Although The Container Store has so far been
sucoessful, skeptics continue to doubt the sustainability of its unique business model.

The Storage and Organisation Retail Category

The emergence of the retailindustry is believed to have taken place in the late eighteenth century,and the
evolution of retail fonms in the early nineteenth century.One of the earliest retailers were Sears, Roebuck & Co. that
started in 1893 to sell watclhes.The company later included other merchandise such as jewelry and firearms.
Later,stores specializing in a particular retail segment were established. In the home furnishing industry (Exhibit 1),
companies such as JKEA were established.ln 1978, The Container Store,started by Kip Tindell and Garrett Boone,
established a new retail category, storage and organisationin the housewares section' of the home furnishing industry.
5
Similarly,other specialty stores suclh as Storables (established in 1981) and Organized Uving(established in 1985)
also catered to the storage and organisation category. In 1994, the totalmarket for storage and organisation
products was $1.44 billion and this has grown to $8 billion in 2004.'
Powers, Vic!d 'Flndiog 'Nofkers Who FIT", http:flmonay.Clln.comlmagazineslbuslness2/bus1ness2_archlveJ2004/11/011818936Vindex.htm, November 1" 2004
Dynamic Experiences Group Is a Massachusetts-base<! retail consuttancy.

Roth, Daniel 'My Job At The Container Store. Employees at the best rompany 10 work for ln America sell boxes and garbage cans. Our reporter went moonl)Qht'ng to ftnd
out whafs so great about that", http:/lmoney.ron.comlmagazirleslfortunelfortune_archfve/2000,1J1/10J271741fllldex.htm, Januruy 10" 2000
Housewares forms a part of the home fumlsh!ng industry, it constituted 13% of the home furnishing Industry in 2003.
s Berry, leonard 'Disctl'lefing the Soul of Service', PaJe 197
Ammenheuser, Maura K 'The Container Store helps peop1e think inslile the box', http:ffHWN. .orglsrch/sctlsct0504/page57.php?reglon=, Mat 2004

Exhibit I
Home Furnishings Industry, Comparative Analysis
Rank

Company Name

Location

2005 2004

Sales (in$ millions)

2005

2004

%Change

No.of
stores

Bed Bath & Beyond

Union, N.J

5,769.10

5,147.70

1210

IKEA

PlymoulhMeeting,Pa

2,944.00

2,544.00

15.7

23

Unoos 'n Things

Clifton,N.J

2,694.70

2,661.50

1.2

542

Expo DesignCenters

/>Jianla

1,700.00

2,700.00

-37

34

Pier 11mports

Fort Worth, Texas

1,627.20

1,690.60

-3.8

1240

""lliams-Sonoma

San Francisoo

1,492.40

1,307.40

14.2

206

PotteryBam

San Francisco

1,113.00

946.70

17.6

18

Crate & Barrel

Northbrook. ill

1,073.00

1,007.70

6.5

145

Greallndoors (Sears)

Hoffman Eslalas,Ill

986.00

1,048.60

-5.9

18

10

12 Cost Plus World Markel

Oa and, Ca!IT

970.40

006.60

6.8

267

11

Omaha, Neb

746.30

712.00

4.8

12

10 LuxuryUnens

Burlington,N.J

675.20

612.30

10.3

360

13

11 RC ""lley

West Salt Lake City, Utah 639.70

694.00

7.7

13

14

13

Corte Madera,Calrr

528.80

15.6

107

Nebraska Furniture Mart

Restoration Hardware

611.20

Source: Thau, Barbara "Hitting a home runn (HFN The Week{y Newspaper for the Home Furnishing NetworK] http://www.highbeam.com/

library/doc3.asp?DOCJD 1G1:143075667&num 29&c lnfo Round19%3AProd%3ASR%3AResull&ao &FreePremium BOTH, March 6

2006

The storage and organisation category constituted 5.3% ofthe housewares section of the home
furnishingindustry in
2000; this increased to 10.5% in 2002.7 Sharon Tindell,vioa president at The Container Store,observed, 'A
number of retailers who had not committed the spaoa to the storage category have woken up and jumped on the
bandwagon particularly massmerchants."' For instanoa,theUS retailer, Target offers storage and organisation
products in all its 1330 stores across the US. Apart from the large retailers, specialty stores like The Container
Store and Organized Living specialize in these products. 'Yes,there are many people who carry the products,
running the gamut from specialty stores, to mass merchants, grooary and drug stores, and do-it-yourself outlets.
But we {specialty stores) feel we have carved our own niche. Sc in a way,our competition is everyone ... and no
one",said Sharon lindell.' Specialty stores are considered to offer not only greater quality and quantity than
retailers; they also have wider experienoa and knowledge regarding customer needs. Personalized and extensive
servioas offered by them, in spite of comparatively higher prioas for their products,is also observed to have
contributed to their sucoass.Lyndon Lu Wendel, owner of Plaoawares 10 notes, 'We spend a lot of time making
sure our salespeople are familiar with all the products and what they can do."" Organized Living

fl

Lochner, Lauren Coleman 'Container Store Blings Home-Storage Prodi.ICts to ParamliS, N.J.', ht!p:/fflww.hlgh!>eam.comflibrarydoc3.asp?OOCI0=1G1:120433545&num=
22&ctrilnfO"Round19%3AProdo/o3ASR%3AResult&aO"&FreePremium"B0TH, M<i'f 6" 2002
Hill, Dawn 'Home storage continues growth. (organization and storage products)' httpJ/www.hlghbeam.com/library/doc3.asp?OOClD"1G1:f6459699&num=
21&ctrllnfO"Round19%3AProd%3ASR%3AResult&ao"&FreePremium.=BOTH, February 13"' 1995
Gill, Penny "Horne org's hot retan niche.(spec!aitj s\ol'es foster demand for hoo;e organ!zaBon, storage Items)', (HFN The Weekly Newspaper for the Home Furnishing
NetNork) http:/Aiwo'l.highbeam.comllibrary/doc3.asp?OOCID=1G1:18941476&num=8&ctrllnfo"Round19%3AProd%3ASR%3AResult&aO"&FreePremium=BOTH, September
1 1996
Placewares ls a retail store that sells products re!ated to tabletop, fJOors and wal\s along with other storage and organisation products.
'Home org's hot re!a] niche. {speciat'tj stores foster demand for home organization, storage .ems}", op.cft.

has actualroom settings to demonstrate thebenefits of their products.Nevertheless,retailers with larger customer
base,retail sector being the second largest industry in US in terms of the number of establishments, 12 contribute
to the increase in awareness of this category.
The retailindustry is also the second largestindustryin terms of the number of employees and accounts for
11.6% of the US employment." However,the employee turnover rate is go% in the US retail sector." Major
reasons cited for this is the lack of adequate training, which Is a cost-cutting measure in the intensely competitive
industry, and lesser growth opportunities within the organisation for the employees.15 The average training period
in the US retail industry is seven hours" and the average employee-related expenditure amounts to 3% to 4% of
the sales revenue. 16Atthe same time, retailers also complain about lack of talent.However,analysts observed that in
this sector employees are not given enough responsibilities to showcase their talent. Itis alsolearnt that the levelof
employee satisfaction is low.
The retailindustryis also plagued with problems in relation to employee practices.There were suits filed against
some retailers in relation to gender discrimination practices adoptedby them.In 2004, Wai-Mart,the largest retailer
in the world, hadto face a class action suit by1.6 million of its former andcurrent women employeesin the US,who
claimed that Wai-Mart discriminated against women with regard to pay, promotion and training. Similarly, Home
Depot, a US-based home improvement retailer,had to pay $104 million in 1997 to settle a similar charge brought
by its 25,000 women employees.
In 2005, sales of the retail industry reached $3.8 trillion",which was 6.6% 19 more in comparison to 2004
sales. The top 100 specialty retailers on the basis of revenue witnessed a growth of9.2% in 2004.20
In 2005,Organized Uving, a storage and organisation specialty store,inits attemptto expand on a nationalscale
failed to secure adequate financing and was forced to liquidate inventory inits 22 stores and file for
bankruptcy.One of its stores at Scottsdale,US,was purchasedby Storables, a private company with six specialty
stores in the country.Williams-Sonoma,
a retailer, also plans to close down all11 of its storage and organisation specialty stores by name 'Hold
Everything'by 2006. Hold Everythinghad the largest market share in the storage andorganisation segment in 1990.21
The retailer contends that the products being offered in its Hold Everything stores overlapped wtth the products in
its other branded stores. Howard Lester, chairman at Williams-Sonoma said, 'Although there is significant growth
potentialin the merchandising categories
offered in the Hold Everything brand, in it is strategically and financially advantageous for us to capitalize on these
opportunities by leveraging the marketing authority, multichannel expertise, and scale of our other brands.""
However, other specialty stores such as The Container Store and Storables continue to operate profitably.

The Container Store: Building Competitive Advantage through Training and

Recruiting
The Container Store has enjoyed a 20% annualgrowth rate since 1985. 'You can find people who grow faster
than 20 percent for a few years, but we haven't found anyone who grows 20 percent a year for two decades,"
said Kip Tindell (Tindell), CEO of the company." The Container Store was established in 1978 by Tindell and
Garrett Boone, (Boone) the Chairman of the company,with a core strategy it still persistently follows:1obetter
consumers' lives by giving them more time and spaoe."24 Boone was an architect, and with an objective to start his
own enterprise partnered wtth another architect John Mullen, and Tindell, a colleague from Montgomery Ward" and
Storehouse", where Boone had worked earlier.
Vargas, Melody 'RetalIndustry Prome', http://retailindustry.ebcutcomlod/abouttheretamndustrytplre!aiUndustry.htm
lb!d.
eBircha. Jonatl'lan 'Proof that training does Improve shelf life', Fmanda! Times, March 8" 2006, page 10
Wilson, Anamaria 'WHERE'S THE RETAIL TALENT?', ht!p:/!www.hlghbeam.comflibrary/doc3.asp?DOCI0=1G1:82364925&num=4&ctrllnfo"ROund19%3AProd%
3ASRo/o3AResult&oo::&freePremlum=BOTH, January 23rd 2002
6
'RetaJllndustry Profile', op.clt
17
"The Container Store@ Tops Fortune's 100 Best LJsr, http:J.WV.w.soc!alfunds.com/news/release_save.cgi?sfArtlcleld=531, Delmber 18"' 2000
> Ibid.
" Timmer, Marcel P. et al 'AI'.amalive output measurement for the U.S. retail trade sector', htlpJIWwwJindartic!es.corn!pfartic!eslml_m1153!is_7_128!al_n15922460fplinJl uly
12
Q

2005

I>

'Top 100 Specialty Store Retal1ers', http:ffretallindtiStry.abolllcom/od/sales_retaJlerslaf04_topspec_nrf.htm

" Kelly, Mary Ellen 'Closet organizer chains step out specialty outlets explore new markets', {Discount Store News} hltp:J!www.hlghbeam.comf!ibrary/
search.asp?FN=HP&ctrlinfo'<Round\ge.' %3AHP%3ASearch&q- n!a1ner \ore&search_documents =on&search_! es:orl&search_re ence=on, September1990
"- Tierney, Jim 'Sonoma pa<:ks up Hold Everything', http:lfW"I'ffl.h hbeam.coml braryfdoc3.asp?D0ClD=1G1:141448913&num=3&ctrllnfo=Roundt9%3AProd%3ASR%
3AResult&ao=&FreePremium=BOTH
a nms, Dana 'Contalner Store opens out:et In Portland, Ore., shopping center', http:JMWN.h1ghbeam.comllibfaryfdoc3.asp?OOCID=IG1:134840753&num=19&ctrllnfo=
Round\9%3AProd%3ASR%3AResult&ao=&FreePremlum=BOTH, AugtiS!4"' 2005
:< Beny, leonard 'Disr:rllering the SOI.II of Servia!, page 69

406-036-1
The Container Store's Customer
Service...
They started a store that carried unconventionalstorage items such as Mason's toolbags under the name 'overnight
bags', eggbaskets were called 'canyalls'and wire leaf burners as 'toy barrels'.The Container Store thus
introduced the niche retail category- storage and organisation,in the home furnishing industry and attracted many
other companies into the segment who were unable to survive in the long run."
Thelayout of the company stores is dMdedinto different sections like closet,kitchen,office and laundry with
each one showcasing products related to that particular section of a house. Typicalcustomers ofThe Container
Store are affluent suburbanites. 'Eifa storage system', a patented,Swedish ventilated shelving and drawer system
is its highest selling, and most profitable product acoounting for 23%" of the company sales of $375 million In
2004 (Exhibit II)." The company has
37 stores across the US,and it is believed that the limiting factor of its expansion is finding and training people
who fit the quality of employees at The Container Store." The company also intends to continue as a private
company." The
Container Store sales per square foot amount to $450 in 2004",in comparison to the housewares industry-wide
sales
average of $125 per square
foot."
Exhibit II
Revenues and Employee details of The Container Store
Year

Revenues
($million)

Employees

2001
2002
2003
2004
2005
2006

260
271
NotAvailable
375
425
500'

1473
1677
1741
1832
2464
2857

' Sales

* Future projection.
Source: Compiled by the author

The Container Store, that was consecutively placed on the Fortunes 'best companies to wori< for' list for seven
years,
{Exhibit Ill) values the contribution ofits employees towards its sucoess.The company believes that to satisfy the
customers, employees have to be satisfied. "If we expect our employees to astonish customers,we have to first
take care ofthem, because they're going to treat customers the way we treat them. Someone needs to rolemodelhow we treat each other," saidBarbara Anderson, director of community services and staff development of
the company.The company towards this end practices a 'focused people strategy' that intends to- 'hire for fit, train
comprehensively and pay and support for longevity'." The store spends 18% of its sales on employee related
expenditure every year."

Montgomel)' Ward, established In 1872 deals with the mail order bus!ness of the home furnishing goods and atso seliS through its website- Wards.com.
:.; Storehouse iS a home fumishlng retaner estabiTshed In 1969 and operates through 60 stores In 15 states In US.
" Berry, Leonard 'Discovering the Soul of Service', page 197
z; "The Container Store helps peple think !ns.lde the box', op.cit
z;

l!

Augstums, leva M. 'Container Store rearranges office', http://www.dallasnews.com/sharedcontentfdws/buslstorlesiDNcontalnerstore_04bus.ARTO.State.

Ed'iiion2.135d2e94.hlrnl, Janl!al)' 4" 2006
BerJY, Leonard 'Discovering the Soul of Servicl!, page114
'Leftovers from the Category Kl!lers BBBr http:fforandautopsy.tjpepad.com/brandautopsy/2005l01/leftovers_from_.h!ml, JanuaJ)' 312005
"The Container Store helps people think Inside the box', op.clt
lb!d.
Laabs, Jennifer Koch "Thinking Outs!de the Box at The Conta.Tier Store', (l;\'orkforce) http:/Mww.findartic:SS.com/p/articles/mLmOFXS!is_3_80/alJ1836861, March 2001
BerJY, Leonard 'Oisco'lefing the Souf of Service", page179

The Container Store follows a highly selective recruitment policy. It prefers to keep a position vacant for as
long as two months rather than hire aperson unfitforthe job.33 The recruitment policy involves a telephonic
screening, group interview, along with two to three further interviews that last about three hours. Moreover,The
Container Store prefers to hire people referred to by its employees and rarely places advertisements on
recruitment. Tindell observes, "Our director of recruiUng realizedthat ifs not his job torecrurr great people,ifs the job
of our 2,500 employees.We want their friends,their family,their cousins."37 Employees are paid $200 for every
successful recruit referred by them."

Exhibit Ill
Recognitions Received by The Container Store
TheContainer Store's positionin the Fortunes 'Bestcompanies to work for' list
Year
2000
2001
2002
2003
2004
2005
2006

Rank
01
01'
02
02
03
15
06

The Container Store's other awards were:

It won the 'Workforcemagazine Optimas Award 2001' in the category of 'General Excellence for
outstanding people-management strategies'.

It received the No. 3 posiUon in the large business category in the 2003 edition ofthe 'Dallas

BusinessJoumals

Best Places to Work' awards.

It ranked No. 31 on 'The Dallas Morning News Top 100'list of privately held companies in 2005.

* The Container Store was the first company to consecutively feature twice as No.1 in the fist
Source: Compiled by the author

Apart from employee referrals,the company also believes in recruiting its customers,'When we are in the
stores,we look for opportunities to engage customers in conversation.Who knows? They may be interested in
testing the waters as employees," say Tindell and Boone." Another significant characteristic about the recruitment at
The Container Store is that
62% of the company's employees are women. Tindell said,"I'm very,very proud of it, the smartest thing a retailer
can do is hire their customers.Also,Ithink female executives make fabulous team players." 40
The employees at The Container Store are also allowed to choose the work of their interest. For instance, for
a store manager who preferred a sales job,a new sales and training position with the same salary was created.
Also managers' recommendations and employee-specific skills determinepromotionsIIithin the organisation as the
company does not issue any notices on its internalopenings.
The Container Store has extensive training programs for its employees.Each of its stores has a full-time sales
trainer called 'super sales trainer' dedicated to only training the employees. The full-time employees are trained for
about 235 hours, part-time employees for about 100 hours in their first year and, further, full time employees
receive 160 hours of training annually aftertheirfirst year. The first week of the new employee training comprises
of the orientation program

Mil!er, RK 'The Right Package', http:l/wwN.worl\index.comteditoriallhre/hre0101-1.asp

Hanington, Llsa 'At Long Last, Logistics Reaches The Boardroom', http:/Mww.lnboundlog!stics.comfarticles/features/0603_feature02 shtml, June 2003

Drickhamer, David 'lnteNiew: The Container Store-Thinking Outside of !he Bo:<, http1flalw.mhmonline.comfniD/4066/ii0120914!MHMMewStory.asp, June 2005
Tinde. 1\tp and Boone, Garrett 'Containing a Counter Cuiture', http:/hr,o,w.1nc.com/articles/2002/03123988.htrnl, March 2002
" 'Container Store rearranges office', op.cit
J;
J;

conducted by the store manager and other employees,called 'Foundation Week' to welcome the employees,along
with a welcome box with more than $150 worth ofThe Container Store's products as a souvenir.During
theFoundation Week,the employees are educated about the company's history and philosophy through tts
Foundation Principles or 'do unto others' philosophy (Exhibtt IV). The rest of the training addresses the necessary
functions to be learnt by the new employees, such as inventory control, space planning,marlleting and visualsales.
The employees are also acquainted with the products and their functions in an interactive way through skits that
makes it more effective. Additional training is provided when the employee receives a promotion or takes up new
responsibilities.The training instructs the employees even about where to park their vehicles and how to dress on
the job.
Exhibit IV
Foundation Principles of The Container Store
1.

Fill the other guy's basket to the brim. Making money then becomes an easy proposition. Creatively
craft mutually beneficialrelationships with customers,vendors,andemployees.

2.

Man In the desert.Don't stop with providing customers with the obvious -water in this analogy.
instead,find out what their needs are andhelp design a solution to fill them.

3.

One average person equals three lousy people; one good person equals three average people;
one great person equals three good people. With one great employee, you get three times the
productivity, meaning that you can afford to pay that person twice as much. The employee wins because
he or she gets paid twice as much.The company wins because it gets three times the productivity at two
times thepayroll costs.And the customers win because they get exceptional service.

4.

Intuition does not come to an unprepared mind. You need to train before it happens.

5.

Provide the best selection anywhere plus the best service anywhere plus the best - or equalto the
best
- pricing in our marllet area.

6.

Create an air of excitement.

Source: Harrington, Usa "At Long Last, Logistics Reaches The Boardroom", http://www.inbound!ogistics.com/artictes/features/
0603_feature02.shlml, June 2003

Such training is believed to increase the employee loyalty.Analysts observe that employees after the training
session feel investedin,more secure andrespected. Kevin Fuller,director of training and recruiting says, "(After the
training),you have such confidence about your selling, and that rubs off on the customer.It makes you do a better
job andgive back 110% to the company. The productivity per employee at The Container Store is twice the
industry average. 41
Trainingis also required as the storage and organisation products at The Container Store are not easy to
understand. Boone said,"A lot of our bestselling products are something that people cannot figure out on their own,
every year we've just discovered more andmore how important training is to the success of our business.'" The
training aims at aiding the employee in identifying and satisfying the customers' needs. Beth Barrett,vice president
of operations at the company's Dallas headquarters,said,"There's alot of philosophicaldiscussion and education as
opposed to justlearning thekeystrokes." The employees are advised to give the customer a $2.99 waste bin rather
than its most expensive $199.99 model, if the low-cost versionis what the customer needs.Employees are also
taught criticalthinking skills. 'The impact of the training is long-term oriented,Imean, what we do today is going to
impact the customer who comes in three months from now. So, its over time, and we've watched our dollar-percustomer grow from the late eighties when our average dollar-per-customer was in the low $20s. Our average
dollar-per-customer now (2001), depending on the marllet and the store, is headed for
$50,"43 said Barrett. In addition,the employee turnover rate of the company is as low as
10%."

"The Container Store: the power of customer se . http:l/uk.biz.yahoo.com/060320061241/container-store-power-customer-service.html, March a2006

'" Steen, Margaret 'Container Store's fetus on traln!ng a strong appeals to employees', http:lfnww.h hbeam.comfllbrarydcc3.asp?OOCI0:1G1:119466008&num=
1&ctrllnfo=Roundl9%3AProd%3ASR%3AResult&ao=&FreePremlum=BOTH, Oclober 2:1 2003
e "Thinking Outslda !ha Box. at Tha Container Store', op.cft.
"' 'Proof that training does Improve shalf lffe', op.cit

Tindell and Boone consider learning a never-ending prooess.Foundation Principles,which are considered at par
with corporate policies,are constantly reinforced to the employees. Barbara Anderson,manager of employee
relations and community services at The Container store, said,'One of my greatest responsibilities is taking our six
foundation principles to the stores and making sure every one understands.I look for the principles being
practiced. I believe a company can grow and stilt retain its values. We have found 1500 people who share our
values.""
Some of these values are codified. 'Gumby', a cartoon character mascot,conveys the attitude of serving the
customer and also helping the teammates in completing their tasks, as at The Container Store it is believed that it
is not sufficient if an employee is a top performer. He is expected not only to help others perform better, but also
to communicate how he could achieve such goodperformance.Teamwork is considered to be the largestcontributor
to success at The Container Store. Amy Caroviltano,vice president of inventory controland distribution, says,'No
one takes the blame and no one takes the credit on our culture; it is a group effort.""
The company's management structure Is relatively flat. The focus here is on developing 'talent rather than
titles',and employees even at the senior levelprefer being addressed bytheirfirst names.At The Container
Store,even part-time employees are treated equally and are called 'prime timers'. Boone,when he visits any of
the stores, dines along with the employees and spends time with them. He says,'My purpose is not to examine
the store but to talk to every one in the store."" As per a Fortunfis survey, 97% employees agreed that 'people
care about each other' at the company."
The employees also have acoess to allthe financialinformationlike profits,sales andrevenue and also the
growih and expansion plans of the company through daily huddles (a meeting at The Container store where all the
employees at each of its stores gather every day.This meeting provides information and also acts as skill building
andteam building activity),in store bulletin boards, regular communication through e-mails and faxes and through
frequent company meetings." It is believed that such communication builds faith in the employees. 'The more
people know about the organization,the more they wilt care', says Jon Wavra,operations manager at The
Container Store."'
Analysts opine that the employees at The Container Store are awarded with the recognition they
deserve;Boone himself sends notes to employees to acknowledge their good work.Further,he forwards the letters
received from customers thanking a particular employee, to them, with his personalnote. Employees at The
Container Store are also known for appreciating each other with a 'thank you' or a 'job welt done'.
The Container Store has performance reviews that measure the performance of employees on the basis of set
standards. However, the company considers the actual performance review to be the strength and improvement of
employees in characteristics like attitude,passion forknowledge,and communication.A quick review is undertaken in
case of new employees after the first 45 days of their employment;on the basis of this review,pay is hiked 50-75
cents per hour. And thereafter, another more formalreview is carried out with an opportunity for up to 75 cents
perhour raise. Reviews,then are continued every six months. The reviews carried out across the whole company
are alike without variation among the warehouse, office and the store employees.
In-store sales clerks earn a salary of an average $40,000 ayear with no sales commissions,in comparison to
the nation average of$23,970 a year.51 'If you realty believe that one great person can do the business
productivity of three good people, you can afford to pay them 50-100 per cent above industry average and
everybody wins," says Tindell." The employees' salaries at The Container Store are based on their value rather
than their specific job function. The company in addition to the salary contributes 68% of its employees' (both fulltime and part-time employees) healthcare insurance premiums that also covers their families, along with various
other benefits (ExhibitV).
The company also occasionally conducts events such as 'wellness programs' to make employees healthconscious. And to encourage them to participate in the events, employees are offered credits. Employees with
maximum credits win rewards such as a $500 healthreimbursement account and certificate of appreciation.At
theheadquarters, employees have
.,; BellY, leonard 'Oiscrmring the Soul of Sef'lia!, page 56
,; Barry, leonard fJiscq;ering the $(J!Jf of SYVicd, page 30

" Berry, Leo!la!d OiscO'Ien'ng the Soul of Sefllia!, page 43

.s "The Con!afner S!O.fe Tops Fortune's 100 Best Usr, op.cit
.,., Berry, leonard 'OisCO'Iering the Soul of SeMel!, page 176
;) lb!d.
s. "The Container Store helps people think lns!de the box', op.cft.
" 'Proof that tralnlng OOes Improve she:t life', op.cit.

406-036-1
The Container Store's Customer Service...

access to benefits like free yoga classes, company-subsidizedmeals at an onsite cafe and free chair massages
twice a month,an automobile concierge, free minor repairs and car washes.Employee disoounts are also available
on bank loans, YoungMen's ChristianAssociationmembership and Sam's Club membership." The company
considers the opinion of the employees while designing the benefits package. Rene Morris,benefits manager said,
"Idon't think that a company that cares about its employees should do a benefits structure without doing a survey
of employees.'"

Exhibit V
Employee Benefits at The Container Store
Benefits enjoyed as an employee of The Container Store include:

Wages far above the industry average

An environment that ensures open communication throughout the entire company including daily store

Extensive training programs, customized to theindividual and job function

Individual and team-based incentive programs

Health and dentalbenefits and vacation for full-time andpart-time employees

Casual work attire

Generous 40-percent merchandise discount

Full-time,part-time and flexible positions
Security in a financially stable company
sales, company goals and expansion plans

401(k) savings plan, with dollar-for-dollarmatching company contributions

Flexible benefit spending accounts for medical and dependent care expenses
Ample opportunity to create a future within a fast-growing, fun
company

Source: "Learn About Us", http://www.containe store.oomlleam/index.jhtml;jsessionid"803XEH1ADORPBQFIAILSM44AVABBQJVC

Analysts believe that such training and empowerment of the employees, leads to inimitable customer service
and transforms the company itself into a brand. Stan Hoffman, general manager of Corte Madera", says, "They
have absolutely the best customer service in the indusby. Everybody in there is knowledgeable, courteous;you've
never met a nicer bunch of people.'"
AlthoughThe Container Store is one of the best companies to work for,skepticsinquire about the durability of its
business model. Spending 18% of the company sales on employees rather than reinvesting it in business like other
retailers is questionable,as Tindell observes,'When you're that far above a benchmark you really look at it and
make sure you haven't lost your mind and can really afford i\.'57
Also, the company makes available financialinformation such as profits andrevenues to its employees.Apart from
this, it also shares future plans withits employees. In most companies such information is considered to be highly
sensitive and important as it forms a crucialpart of the company's future strategy. Analysts believe that The
Container Store is taking unnecessary risk by revealing such confidentialinformation toits employeesbecause it
thenbecomes easier for a competitor
s Carlson, Leah 'Storing knowledge: Training distinguishes The Conlalner Store', http:/lvlww.hlghbeam.com!librarydoc3.asp?DOCID=1G1:118103738&num"
4&c!rllnfo=Round19%3AProd%3ASR%3AResul!&ao=&FreePrem!um:BOTH, June 15" 2004
(< lb!d.

s
s
!'I

Corte Madera Is an out-door town center In CaMomia. that holds one of the outlets of The Container S!o;e.
lhe Container Store he!ps people think lnsk!e the box', op.c1t
'Proof that tralning does Improve shelf life', op.cfl

406-036-1
The Container Store's Customer Service...

to get hold of it. However, Amy Carovillano,vice president logistics and distribution atThe Container Store,notes,
"The benefit ofhaving those 3,000 employees have that infomnationso outweigh some competitor getting a snapshot
of where we are. 58
The company also has a relatively flat hierarchical structure. This could lead to limited growth opportunities
for the employees. 'Initially,newemployees are a bit skeptical. They say,'You're telling me to trust this system and
that I don't need to have a defined career path right now,'" said Elizabeth Barrett, vice president of operations
atThe Container Store." Analysts opine that promotions based on manager's recommendation can lead to
conflict. Also sales clerl<s earning more than the managers,due to The Container Store's unique perfomnance
reviewsystem can create problems.
Neveriheless the advantage the company enjoys is its specialisedproducts that needhighly trained sales people
to sell, as Tindell says, "Our niche is to sell the hard stuff.""'

s Drickhamer, David '1nter.1ew: The Conta:ner Store-Th:n ing Outside of the Box", http:IM"lfN.mhmonlfne.com/niD/4066/iiD/20914/MHMMeNS!ory.asp, June 2005 s

"The Right Package', op.cit

Berry, Leonard "DiscaJsring the Soul of Service', page 67

10