“I’m the CFO and my job is to find the best people and pay them as little as I possibly can.”
At least he was honest.
Despite managing $1 Billion in bank assets and outperforming virtually everyone in my high-performing peer group, I was still making only a few thousand more than when I started as a credit analyst just out of college. Add to the fact we were expecting our third child and I felt like it was time to go around the boss (who said he was unable to adjust my compensation) and speak directly to the CFO we all reported through.
I was incredibly nervous. My presentation included 3 years performance against the relevant Lehman indices, the incremental impact of my investment strategies, and a little about the changing responsibilities I was facing at home. I had salary surveys that were readily available for my position and I was making a small fraction versus others who managed the amount of money I had under my responsibility.
When I finished, he said that he almost stopped me before I started, because they had already approved a 50% wage increase for me. He said that I had earned it and it was very well deserved. Unfortunately, it felt incredibly insincere. I asked if we could speak “off the record” and I wondered aloud why it seemed like management always waited until people were at the end of their ropes, frustrated and discouraged, before they stepped up and did the right thing. And then he said it:
“…find the best people and pay them as little as I possibly can.”
I told him I thought that concept was wrong and he told me, that one day I would understand. Well, now I do. After reading an excellent blog post yesterday about the Container Store, I really do understand that he was completely wrong. What we should be doing is finding the best possible, highly productive people and paying them as much as we possibly can.
The CEO of the Container Store says that they pay 50% over the average for retail workers, but get three times the productivity from them. They also experience single digit turnover in an industry where the average is triple digits. He says:
“You’re getting three times the productivity at only 50 to 100 percent higher labor costs. So the employee wins because she’s getting paid 50 percent more than somebody else would likely pay her, the company wins because It’s getting three times the productivity at only 50 percent higher cost, and the customer wins because they’re getting this engaged really great employee.”
In addition to well compensated, they are also:
- Well trained
- Well qualified
- Highly motivated
- Highly engaged
- Very satisfied
The proof is in the pudding as they say, Fortune Magazine has listed the Container Store as one of the 100 best companies to work for... 15 years in a row! Maybe not hiring more for less, but less for more is the answer to many of our frustrations.
- Do you employ above average people?
- Do you pay them an above average wage?
- How do you know?
- What changes do you need to make in how you recruit, hire, compensate, and develop your team members?