Kip Tindell, the CEO and chairman of The Container Store, thinks you should hug your employees more.

At the annual Inc. 5000 conference in Phoenix on Friday, Tindell described his philosophy on business--namely, treat your employees well, and it’ll come back to you in spades.

He might just be on to something. With 6,000 employees, 68 stores and nearing $1 billion in sales, the Coppell, Texas-based retailer is poised for, as Tindell says humbly, “retail-world domination.” In the not too distant future, he anticipates having 300 stores across the U.S., and in the new year, Tindell says the company will realize one of its biggest product expansions to date, an in-home organization service.

“People have been asking us for this for 25 years,” Tindell says. “We’re just giving people what they want.”

The Container Store has certainly come a long way since 1978, when Tindell and his business partner Garrett Boone plowed $35,000 into a 1,600 square foot store in Dallas that just sold empty boxes.

To what does he attribute his success? The company’s employees.

On stage, and in his new book "Uncontainable," which he co-wrote with Inc. contributing writer Paul Keegan, Tindell extolls the virtues of hiring the best workers possible--and paying them 50 percent to 100 percent above the industry average.

“We are big advocates of paying great people well,” he says. “One great person can easily do as well as three good people.” When you treat employees well, it creates a virtuous cycle, he says, adding: “If you put the employee first, she will really take care of the customer better than anyone else.”

The heart of his view on employees stems from his belief in an increasingly popular business philosophy called conscious capitalism, which holds that businesses can be a force both for economic and social good.

“Capitalism has been really good for the world. Today, just 16 percent of people live on less than $1 a day,” he says, adding that the figure has plummeted in modern times. “The power of business is so much bigger than all of the nonprofits in the world. Charity won’t save the world, business will.”

It just so happens that treating employees well also makes great business sense. Raj Sisodia, a business professor who, along with Whole Foods CEO John Mackey, co-authored a book called "Conscious Capitalism," looked at 28 companies he deemed as the most conscious--that is, they offered generous compensation, supported quality of customer service, and invested in their communities, among other things. Eighteen of the 28 firms, which were publicly traded, outperformed the S&P 500 index by a factor of more than 10 from 1996 through 2011.

Since one great person can be just as productive as three good people, Tindell says, The Container Store--despite its higher average pay--is actually saving money because it doesn't need to hire those three good workers. 

“We think making money is a good thing. I think it’s good if you can do that with your team,” he says. “If you’re winning by yourself, it’s not as much fun.”

Published on: Oct 20, 2014