The Container Store's 'We Love Our Employees Day' falls on Valentine's Day

At The Container Store, employees are prioritized over customers and shareholders. It’s a core company principle that influences all business decisions. Full-time employees earn an average of $46,000 per year, which is 50-100% higher than the retail store average. They also receive an average o 260 hours of training in their first year, compared to the retail average of 8.5 hours.

But the company’s most ambitious commitment since the economic collapse in 2008 was to retain all of its employees. It’s a striking accomplishment given the atrophy of the retail industry. To compensate for the drop in consumer spending, most businesses cut costs by laying off workers. But Kip Tindell, co-founder and CEO of The Container Store, is a practitioner of conscious capitalism (which rejects the zero-sum view of business, viewing it instead as a web of connected stakeholders). To safeguard jobs, Kip froze salaries and 401(k) matches, brokered better deals with suppliers and worked with employees to help them reach their sales targets. His strategy relied on the company’s core asset–its employees–and drew on the foundation of trust between company and employee. And it worked.

“If you really and truly put the employee first, they’ll take care of the customer better than anybody else and ultimately the shareholders and other stakeholders benefit as well.”

Sales were down just half as much compared to other housewares retailers and the company met its usual 10% profit margin. The salary freeze has since been lifted and matching 401(k) contributions restarted.

REI made a similar promise to forgo lay-offs during the recession, focusing particularly on protecting part-time workers–typically the first to be pink-slipped. Rather than reducing pay, benefits or hours for part-time employees, the company asked all salaried staff to accept a pay freeze, or even reduction. This approach protected the most vulnerable in the company and divided the sacrifice equally among those who could afford it.

I’ve written before about Joie de Vivre (JDV) founder Chip Conley’s approach to business: Take your largest and most expensive asset, your employees, and use it to build your company. Like REI, Chip used salary freezes and pay-cuts for executives and managers to fund the wages for the housekeeping, maintenance and restaurant staff. When I asked Chip how he persuaded management to accept the cuts, he pointed to the strength of JDV’s culture.

”If you have a great culture, it leads to people being willing to do things they might not be willing to do in a different environment.”

In a recent interview with Fortune, Raj Sisodia, who heads the Conscious Capitalism Institute (The Container Store, REI, Joie de Vivre and Whole Foods are supporters) gives a critique-proof explanation of Conscious Capitalism:

“[It provides] a built-in mechanism to make sure that everybody prospers at the same time. Any exploitation of one element for the benefit of others in the long run is not going to work. It’s basic system theory. The system is only as good as its overall ability to function, and to be healthy all the components have to be healthy.”

Three words–easy to understand, easy to share.

This list partially represents the 155 blogs I’ve written this year, but it’s nowhere near complete. Add your triplets in the comments and I’ll be sure to tweet them out.

Stand for something [Tweet]

Make sustainability personal  [Tweet]

Own your mission [Tweet]

Don’t please everyone [Tweet]

Reject your ego [Tweet]

Do not pretend [Tweet]

Inauthenticity will bankrupt [Tweet]

Practice sustainability now [Tweet]

Leverage your strengths [Tweet]

Set big goals… [Tweet]

…But start small [Tweet]

Network before need  [Tweet]

Tap your peers [Tweet]

Fire-up your employees [Tweet]

Recruit internal stakeholders [Tweet]

Launch before perfection [Tweet]

Be obsessively transparent [Tweet]

Form creative partnerships [Tweet]

Build long-term partnerships [Tweet]

Observe what motivates [Tweet]

Make consumers altruistic  [Tweet]

Give consumers details [Tweet]

Recognize all stakeholders  [Tweet]

Beware brand misalignment [Tweet]

Try, fail, try [Tweet]

Become a B-Corp [Tweet]

Internalize your sustainability [Tweet]

Voice your passion [Tweet]

Measure it all [Tweet]

Focus on outcomes [Tweet]

Keep deliverables doable [Tweet]

Evaluate mid-program [Tweet]

Adjust to improve [Tweet]

Report impact constantly  [Tweet]

Support cause long-term [Tweet]

Let mission guide [Tweet]

Don’t mark-up prices [Tweet]

Funding isn’t necessary [Tweet]

Understand funding types [Tweet]

Waste less waste [Tweet]

Safeguard your mission [Tweet]

Prepare for succession [Tweet]

Hat tip to Dharmesh Shah for the addictive exercise of condensing advice into three words. Don’t forget to add your own in the comments–what practice or mindset have you put to use that might help others?

It’s a hard question to answer (for starters, defining and measuring social good is tough) but a fair question to ask in the context of Microsoft’s employee culture of social involvement.

Last year, employee giving and company matched funds totaled nearly $90 million. Volunteer time is matched at $17 per hour; employees can earn up to $12,000 in matched funds from Microsoft every year.  There’s also a growing tradition of social enterprise among Microsoft employees and alumni. Former employees have founded and offered leadership support to more than 150 nonprofit organizations and social ventures, while a crop of current employees balance work with running their own nonprofits, among them Givology, Jolkona and CRY America.

How much of a hand does Microsoft have in influencing this culture of social participation?  My assumption was, a lot. But when I spoke with Akhtar Badshah, Microsoft’s Senior Director of Community Affairs, he painted a more nuanced picture.

Microsoft nurtures a culture and creates incentives that encourage employee giving and volunteering, but the process is organic, says Akhtar.  ”We provide the framework [Microsoft runs a large database of activities and opportunities that all employees can access] and employees decide how they want to engage.”  The $17 per hour match motivates employees to come back and report their work, which Akhtar and his team can then track.

Each October, when Microsoft runs its employee giving campaign, staff and organizations canvas for support on campus. Competitions, speakers and auctions help to engage employees in new organizations and spur donations, but it’s primarily employee-run. Microsoft provides access, incentives and encouragement, and employees leverage this as they want.

When I admitted that the organic nature of this program countered my perception of Microsoft as a supremely structured company, Akhtar said that the type of structure depends on a company’s overarching culture. It works for Microsoft because “we have role models here. We create an atmosphere where people feel they can do this type of thing and make a difference.”

Akhtar shared the following strategies that companies (perhaps with fewer resources) can apply:

1. Match your work to your DNA. For Microsoft, it’s using technology to bring about social change.
2. Start small and focus on one thing. “There’s nothing like success to help drive you.”
3. Look for ways to affect genuine change in the community, but do it with your core competencies.

You can read more from Akhtar on Microsoft’s Unlimited Potential blog and follow him on Twitter at @akhtarbad.

Many CEOs seem to have reversed cause and effect. Brand trust and reputation are the result of a company’s sustainability actions. Are we being set up for a decade of window dressing and cause-washing as companies cobble together sustainability programs to burnish their public image?

These findings were published last week by the United Nations Global Compact and Accenture. Internationally, 766 CEOs were polled on sustainability and business with 72% identifying brand, trust and reputation as their biggest motivator for sustainability, 44% citing revenue growth and cost reduction, 42% personal motivation, 39% consumer demand and 31% employee engagement and retention.

Seven years ago we would have celebrated the fact that 93% of these CEOs see sustainability as critical to their companies’ success. But really, how can that be disputed? Today, sustainability is fundamental. The remaining 7% will be swept along or swept away soon enough.

So the challenge I see is exciting business leaders and employees about the non-public facing side of sustainability. How can we communicate the subjective and financial value of creating a sustainable workplace? Or of reducing waste? Or switching to environmentally preferred materials?  We need more Interfaces–companies that transform their entire system and resource selection, not their advertising and marketing strategies–and less (Product) RED-like campaigns.*

*I have a lot of respect for the (Product) RED campaign for the money and awareness it has raised and for the way it’s allowed diverse companies to get involved. But we’re evolving past the stage of one-off (even long-term) cause marketing campaigns to significant systems change.

During an interview last week with enlightened entrepreneur Chip Conley he mentioned that his company, Joie de Vivre Hotels, focuses its investments in culture rather than marketing.  As I love culture (both the corporate and international strains), this appealed to me and set me to wondering if we’ll someday have Chief Culture Officers.

I did some digging and found a video clip of Chip talking about why his company decided to invest in company culture (specifically employee training) rather than in advertising during the travel industry recession in 2001.

Instead of spending big money to sell customers the comforts and unique delights of Joie de Vivre, the company decided to invest a much smaller sum into staff training.  Chip anticipated that imparting service-level employees with “a sense of calling” for what they’re doing would translate into great service experiences and lead to long-term profitability rather than an advertisement-induced uptick. He was right.

Housekeeping and front desk staff, bartenders, etc., were taken off-site for a day (employees from the nearest JDV hotel covered their shifts). They were given information about the company and asked to create a strategy for the hotel. Bringing all employees into this information and creation process yielded tremendous results for the hotel chain.  During the recession, 2001-2003, employee turnover rate dropped to 24% (the industry standard is 70-100% turnover in one year) and employee satisfaction scores “went off the charts,” says Chip.  Employees felt more connected to their work and its purpose, which reflected clearly in customer satisfaction scores and loyalty.

Like Chip’s approach? You can read more about these service retreats and their impact, as well as other initiatives in PEAK: How Companies Get Their Mojo from Maslow.