Here at Talent Management, we often write about the invaluable importance of employee engagement. Engaged employees go above and beyond the call of duty and produce work that is exceptional compared to the work of employees simply looking to cash a paycheck.
Engagement is even more important, sources have often told me, when it comes to workers who commonly interact with customers — most notably retail, fast food or call center workers. If you make efforts to improve the work environment and create a culture to promote high levels of engagement — thus making frontline workers happier — that satisfaction will result in happier customers and increased sales.
For its part, The Container Store has discovered an innovative way to boost the engagement of its retail staff: Pay them more money. Amid the debate about the pros and cons of raising the federal minimum wage, The Container Store isn't messing around — it pays its frontline retail staff nearly $50,000 annually.
A novel idea, I know. But that's the strategy CEO and founder Kip Tindell is sticking with, as he outlined in this interview with The Wall Street Journal last week.
Why pay retail workers so much?
"One of our foundational principles is one equals three: one great person can easily do the business productivity of three good people," Tindell told the Journal. "If you really believe that they can do three times the productivity then you can pay them 50 percent to 100 percent above industry average. The average salesperson makes $48,000 per year. [According to Bureau of Labor Statistics, median weekly earnings for retail sales people in 2013 was $598 or $31,096 per year.] We give big annual increases each year because we believe in keeping people mildly tickled about their rate of increase. We really and truly believe in paying according to contribution. So we want the 17th greatest contributor to get the 17th largest piece of the pie."
This is certainly an interesting position — especial coming from a company that sits in the center of an incredibly volatile industry in retail. The company's stock price, the Journal reports, dipped 25 percent this month after it lowered its sales forecast for the second time this year.
Talent managers love to talk about how engagement doesn't necessarily equal more pay. Creating a positive work environment and providing employees with opportunities to learn and grow are other non-monetary forms of compensation that employees value. And to a point, I agree.
But ultimately money is a major engagement booster. People don't work for fun (though some may find their work fun and enjoyable). They work because they have expenses and a life to provide for themselves and others. People want to feel valued for their work, and paying them is the ultimate sign of value.
Google employees enjoy fantastic perks and a work environment that appears exciting and full of energy. The company's employees also work very long hours. And guess what: They're compensated handsomely for that time and effort.
Now, this doesn't mean all workers — retail or otherwise — should be blindly compensated like Google's employees. But it is worth the reminder that money is still the ultimate way to show value when it comes to compensation.
Companies often talk about the importance of "investing in your people" when citing the significance of learning and development in organizations. Development is important, sure. But don't overlook The Container Store's strategy here. We live in an economy were frontline staff are paid the least, but then we rely on them to provide a lot of the value for customers.
If you want frontline workers to be more productive and if you want your customer-facing people to be more devoted to the company's mission, give them a reason to be excited about their work. Pay them what they're worth.