A CEO Cut His Pay So His Employees Could Get Paid More

You may not be familiar with Satish Malhotra, but if you live in or around Dallas, Texas, the name should
ring a bell. In recent weeks, he’s been quietly making headlines in the region for taking a step that few
CEOs would even consider.

He volunteered for a pay cut in order to help offset the cost of increasing the pay of his employees.

Malhotra took the helm of The Container Store in early 2021 and guided it through the pandemic, so it’s
safe to say he’s been with the company through ups and downs, and while business was booming earlier
in his tenure, with online sales more than offsetting the collapse of foot traffic during the extended shut
down, things are very definitely trending downward now, as economic headwinds increase.

Two years ago, the company earned a profit of $81.72 million on sales of $1.09 billion and last year, they
recorded a loss of $158.86 million on sales of $1.05 billion.

Some of that is to be expected in an environment where interest rates are increasing, and inflation is
higher than the historical norm. Under those conditions, people tend to cut back on discretionary
spending, which translates into less store traffic and fewer items purchased by the customers who do
shop. Needless to say, those kinds of things have a negative impact on any business, and The Container
Store is no exception.

In this climate, one thing Malhotra is very concerned about is employee retention.

It’s always more cost-effective to retain a good, highly skilled employee than it is to bear the cost of
hiring a replacement and training them. Malhotra seems to understand that and took the highly
unusual step of volunteering to cut his own pay by 10% for a period of six months in order to offset the
costs of giving his employees raises.

Giving raises when sales are down might seem counterintuitive, but study after study has shown that
employee satisfaction and productivity are directly correlated. With inflation running higher than the
historical average, employees are struggling to make ends meet.

A raise given to offset the rising costs people are facing in their daily lives goes a long way toward reducing employee stress levels, giving them one less thing to worry about.

Even better, seeing real, tangible evidence that the company they work for is taking pains to take care of
them, even to the point of their CEO taking a pay cut to make sure they get what they need, employee
job satisfaction, and thus, productivity, soars.

That’s the plan anyway. Malhotra is betting heavily on his employees, and if the past is any guide, it’s a
safe bet that he’ll be rewarded handsomely for in the months and years to come. Our prediction is that
The Container Store will weather this downturn and come through it stronger than ever, which will
allow Malhotra to continue building The Container Store into a two billion