There’s a big debate in the U.S. right now surrounding minimum wage and how much corporations pay employees in general. On one side of this debate are people who believe companies shouldn’t be mandated by the government to pay employees a certain amount because it can lead to inflation and stagnation in one’s career, among the other reasons opponents list.

The other side of the argument points out that employees need to be making a living wage and corporations are instead hoarding profits while the entire economy suffers as a result.

Then, somewhere in between these two factions are the companies that pay their employees extremely well—not because they’re mandated to do so, but because they’ve seen the benefits of having a workforce that feels like it’s appreciated.

One of these companies is The Container Store.

The store’s CEO, Kip Tindell, recently shared his philosophy with the Wall Street Journal—particularly as it pertains to the wages his company pays to its retail employees.

The Container Store’s Story

Tindell began The Container Store in 1978, and while some members of his family were skeptical of how he could possibly make a big business out of selling something as seemingly mundane as containers, it’s turned into a real success story.

According to Fortune, the store sold nearly $750 million in merchandise in 2013 and just earlier this year became a publicly traded company.

It’s one of those stores that many customers are willing to drive hours to visit—just walking into the store can make you feel as if you’re about to change your life, starting with organizing every corner of your home.

It’s developed quite a following, and the store continues to grow and expand offering everything from basic plastic boxes for storing items, to full closet design services and systems.

There’s something else that makes this company stand out—it’s been named on Fortune’s 100 Best Companies to Work For List, for 15 consecutive years.

Tindell’s Unique Ideas

Could it be that the talent management strategy behind The Container Store is driving its tremendous success?

CEO Tindell would probably say yes.

The retailer pays its store employees almost $50,000 per year, and Tindell says the result of his pay structure is better productivity.

Here’s a few takeaways from Tindell’s interview with The Wall Street Journal:

• Tindell believes in quality over quantity when it comes to hiring. He points out that one of the guiding principles behind their hiring and pay tactics is that an employee who’s going to be productive is going to be worth more money. For example, if you find a great employee who you think is going to be able to be two or three times more productive than an average employee then that easily warrants pay that’s 50 or 100 percent higher than the typical industry standard.
• The Container Store really values a concept of paying for performance. They award yearly raises and they give the largest raises to the best performers. This is assessed by looking at contributions made by that employee throughout the year, and Tindell believes if someone is the number 20 performer in the store, that person should have a salary that reflects that standing.
• The review process at The Container Store is formalized, robust and comprehensive. Tindell says employees are given a year written review, and it can take anywhere from 5 to 8 hours on average to write it. Then, after it’s written by the manager the employee will also create one, and both will get together for several more hours to compare. The goal is that managers and employees will come to a consensus on a rate of compensation—if someone’s not going to get that great raise they were expecting, the hope is that they’ll understand why and begin to make the necessary changes.

Tindell has other innovative ideas that extend outside of pay structure—for example, The Container Store doesn’t have an HR department. When it comes to recruiting, they let it happen naturally and rely on things like referrals and word-of-mouth to source great talent.

So what do you think about The Container Store’s approach? Do you think their pay structure works and is something that could get a foothold in the retail sector as a whole, or do you think it’s unrealistic to expect retail employees to be paid so much?

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