Management in Action Acuity Insurance and the Container Store Focus on Employee

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Management in Action

Acuity Insurance and the Container Store Focus on Employee Motivation

Acuity Insurance and the Container Store were ranked as the 2nd and 14th Best Place to Work by Fortune in 2016. Both companies put a premium on attracting, retaining, and developing great workers, resulting in an engaged and motivated workforce.

Acuity Insurance

Acuity is a property and casualty insurer headquartered in Sheboygan, Wisconsin. The company generated over $2 billion in revenue in 2015 through 1,000 independent agencies in 24 states. There are 1,110 employees in the U.S.161

About 98% of employees reported to Fortune in 2016 that the company has unique benefits, effectively contributes to its local communities, and celebrates special events with employees. These employees in turn noted that facilities contributed to a good working environment.

Acuity employs a variety of programs to motivate employees. They include the following:162

The Magic Happens Gossip Line: The company recognizes 20 to 30 employees each month through the Magic Happens program. The program begins by posting any positive feedback from customers, agents, or colleagues outside the local cafeteria. Next, one employee is drawn from this list and the positive feedback is shared over voice mail to all employees throughout the company. This employee also receives a $100 cash gift card.

Lunch with an Officer: This program is used to foster open communication. Groups of 10 to 15 employees are invited to have lunch with an officer of the executive team every few months. Employees are asked to provide feedback or suggestions for improving any aspect of the company. Employees also spend time getting to know each other.

Wellness programs: The company built a 9,800-square-foot fitness center that offers classes at no cost to employees. The facility is open 24/7 and includes massage therapists on-site three days per week. In addition to providing opportunities to participate in local races or athletic events, Acuity hosts a Weight Watchers at Work program. The company reimburses 25% of the cost when an employee attends 50% of the meetings.

5 Year Club: “All employees who have been with ACUITY for fewer than five years are invited to special social events that range from happy hours and kayaking trips to bean bag tournaments, NCAA March Madness competitions, and other events that encourage our employees to get out and explore the community of Sheboygan.”163

Generous benefits: In addition to perks like free snacks during the day, subsidized daily lunches, dry cleaning service, free beverages during the day, on-site package/mailing service, and banking services, Acuity pays 85% of health coverage for employees and their dependents. The company’s 401(k) “program features an 8% contribution to all employee accounts, regardless of their personal contributions. Employees benefit from a profit-sharing bonus as well. … Employees have received a 10% total contribution to their 401 (k) on behalf of the company.”164

The Container Store

The Container store, founded in 1978, strives to provide “a differentiated shopping experience offering customers innovative, time and space saving solutions coupled with astonishing customer service from happy, well trained, well paid salespeople.” The company has 4,281 employees working at 73 U.S. sites. Worldwide revenues were $781.88 million in 2015.165

Kip Tindell, founder and former CEO, told The Wall Street Journal that the company was grown around the core principle that “one great person can easily do the business productivity of three good people.” This belief has led the company to pay employees 50%–100% above industry average. For example, the average salesperson at The Container Store makes $48,000 per year. In contrast the Bureau of Labor Statistics reports that the average earnings for retail sales people in the U.S. in 2013 was $31,096. He also said that “We give big annual increases each year because we believe in keeping people mildly tickled about their rate of increase. We really and truly believe in paying according to contribution.”166 Annual raises range from 0$ to 8%.

Annual raises are given after an employee and manager follow a two-step process. The first step entails having the focal manager and employee complete a formal written review using the same form. The two then meet for a few hours to review theirPage 432 evaluations and arrive at a final consensus. Managers ultimately rank their employees in terms of contribution and pay. The idea is to ensure that someone’s contribution matches his or her pay in a work unit. For example, if an employee is ranked third in contribution, then the goal is to provide raises that result in the person being number three in pay. This can take a few years to catch up.167

The company also tries to increase employees’ competence and performance by providing over 260 hours of training in the first year of employment. Employees then receive an additional 170 hours of training per year.168

Part-time workers, who represent about 70% of the workforce, also get health benefits. The company matches employees’ contributions to a 401(k) account up to 4% of pay. There have not been any company-wide layoffs.

Over 90% of employees reported to Fortune in 2016 that the company has great atmosphere, rewards, communication, and bosses. Ninety-five percent also noted people care about each other there and they are proud to tell others about working at the company.169 These positive attitudes help explain the low annual turnover rate of 10%: The retail industry averages 100% per year.170

FOR DISCUSSION

1)To what extent are Acuity’s and The Container Store’s approaches toward motivation consistent with need theories of motivation? Discuss.

2) To what extent is The Container Store’s pay and reward system consistent with equity theory? Explain.

3) To what extent is The Container Store’s approach toward rewards consistent with expectancy theory? Explain.

4) How do Acuity and The Container Store use principles associated with the Job Characteristics Model to motivate employees? Specifically describe.

5) What are the key lessons learned from this case?

Explanation / Answer

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