In the News: Costco’s Got a Great Focus on Employees

October 22nd, 2009 · 5 Comments

I ran across this article from US News and World Reports about Jim Sinegal and how his treatment of employees is what has lead Costco to be such a retail star.  There have been lots of articles written about what a great CEO Jim Sinegal is for various reasons that usually have to do with quality products or a great profit for the company, but this article focuses on how his treatment of employees is the real secret behind Costco’s greatness.

This article is all about Jim Sinegal’s belief that if you treat your employees right, they’ll treat the customers well, and that will lead to a successful company.  One of the ways that they treat employee’s well is through decent, fair wages and by giving them the opportunity to have a career, not just a job, if they want it.  The manager at the store that they were touring has been with Costco for over 20 years and worked his way up from associate to location manager; that’s impressive no matter what kind of company you’re talking about. It is that kind of longevity and opportunity for workers that keeps Costco at just a 12% employee turnover rate; remarkably low, as the author points out, for a retail company.  But there are the more obvious, immediate aspects that help keep employees happy too.  Such as an average wage of $19.00 per hour and more than 86% of employees have health insurance and benefits even though half of them are part time.

Other CEOs, and managers, could certainly learn a thing or two from Jim Sinegal about treating people with respect to get much better results for the company.  This quote from the article sums up Jim Sinegal’s beliefs about the importance of treating employees well:

“It’s really pretty simple. It’s good business. When you hire good people, and you provide good jobs and good wages and a career, good things are going to happen,” Sinegal says. “We try to give a message of quality in everything that we do, and we think that that starts with the people. It doesn’t do much good to have a quality image, whether it’s with the facility or whether it’s with the merchandise, if you don’t have real quality people taking care of your customers.”

If only more CEOs would run their companies this way!

To read the article:

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5 Responses so far ↓

  1. 1 Kimberly // 2009.10.30 at 11:07 am

    Miranda, thanks for weighing in on this one. It’s great to get an opinion from someone that actually works at Costco.

  2. 2 Miranda // 2009.10.29 at 11:57 pm

    I work at a Costco in Spokane, Washington. It’s true that the sample folks are a different employer, so I have no idea what their wages are like. However, they all seem to love their jobs and seem to mostly be semi-retired or retired people who want to keep working, but at an easier pace. As for costco itself, there are at least 300 employees per store, with everyone making from $11.00 on up. From what I understand, we have higher wages to keep the employees happy, and some locations are union so they set the standard to mirror the union wages.

  3. 3 Kimberly // 2009.10.23 at 1:47 pm

    Ryan, I think the problem is that Walmart and Sam’s Club just don’t pay that well. From what I’ve read Sam’s Club has lower salaries for associates, which is surely where the bulk of employees are for both companies. From what I have found, Sam’s Club starts associates at a salary that is about $7.50 per hour versus Costco’s $11.00 per hour for an associate. Sam’s Club probably has higher turnover too, so they have more people that are paid the starting salary, rather than long-term employees that are earning more. Though I’m just guessing about their turnover rate since I can’t find that information in any articles online, I also cannot find the number of employees that they have.

  4. 4 Ryan // 2009.10.23 at 1:14 pm

    This is always a bit misleading; there are actually very few employees that work at Costco, and all the people who provide product samples do not work for Costco, and earn much lower wages. This is part of why Costco is able to pay such high wages. Since all Sam’s club’s product sample people work for Sam’s club itself, their average wages are quite a bit lower.

  5. 5 Clue // 2009.10.23 at 4:07 am

    This, above all else, is why I have always chosen to shop at Costco above all others. It is also why Costco is the only individual stock I own.

    Another of my favorite Jim Sinegal quotes is: “The biggest concern to me is that we lose our way and start thinking it doesn’t matter if we charge another dime or another dollar or another hundred dollars. Without that discipline, we don’t have anything.” ~Jim Sinegal, Costco Founder/CEO.

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