How CarMax cares

March 21, 2013, 11:04 AM UTC
CarMax CEO Tom Folliard (right) and general manager Richard Buscher at a store in Chattanooga
Photo: Angela Lewis/Chattanooga Times Free Press

A couple of years ago, an employee of used-car retailer CarMax told CEO Tom Folliard the company should siphon gas.

That may sound more like a teenage prank or petty crime than C-suite strategy, but Folliard decided to adopt the employee’s suggestion. CarMax now sucks tens of thousands of gallons of gas from the wholesale cars it buys each year and transfers it to the tanks destined for its retail vehicles. The move has saved the company more than half a million dollars.

Employees are used to having Folliard’s ear. The siphoning suggestion came at one of scores of store town halls the CEO leads across the country each year. They epitomize the small-company culture CarMax has managed to preserve even as it has grown to 119 stores and 18,000 employees in the past 20 years — and even as it operates in an industry better known, at least in movies, for lemons and pushy salespeople. (Car- Max ranks No. 279 on the Fortune 500 and 74 on Fortune’s 2013 Best Companies to Work For list).

It all comes from Folliard, a charismatic 6-foot-3 former guard for Florida Tech who resembles Vince Vaughn and who joined CarMax in 1993 as its first buyer back when the company was a small, scrappy underdog. Most of his senior executive team have been there since the beginning too. “We grew up in the stores,” he says. “We may have a big headquarters in Richmond, but the stores are why we’re there.”

Folliard visited 70 of those stores last year, hosting grand openings, town halls, and steak cookouts for offices that met monthly sales goals (he does the grilling). He and his team use the visits to connect with associates, answer questions, and solicit feedback from the field. “It’s not about diving into the numbers. They try to get to know us on a personal level and to hear our perspective,” says Andy Garza, a purchasing officer in the Houston office.

This sort of vibe permeates the headquarters too. No executive, not even Folliard, gets a reserved parking space (though store champions, recognized quarterly, do).

CarMax also offers employees ample opportunity for development through mentoring, training, and leadership programs (many available online, on demand). Stories of employees’ switching roles — say, from a position in child care to one in regional management — are not uncommon. “We want associates to think of CarMax as a career, not a job,” says Bill Nash, executive vice president of human resources and administration.

How does it help sell more used cars? To Folliard, this is just good business. “I’ve always believed the saying, ‘If you take care of your associates, they’ll take care of your customers, and the rest will take care of itself,'” he says.

This story is from the April 08, 2013 issue of Fortune.