Costco: Defying Perception that Warehouse Stores Pay Poorly
A recent article in the New York Times (free registration required) discusses how Costco has become the Anti-Walmart. The article discussed how Costco has given Sam's Club a run for its money. What's really interesting about the article (and perhaps more important) is the discussion of how Costco treats its employees, much to the dismay of Wall Street. Specifically:
1. Costco benefits for employees are not just a little bit better than average, they are substantially better than their competitors.
2. The average Costco employee earns $17/hour, 42% more than employees at Sam's Club.
3. Turnover is virtually non-existent.
4. Jim Sinegal's (president of Costco) salary is 10% of what CEO's earn at comparable organizations.
5. 401(k) matching contributions range between 3% and 9% depending upon length of service.
The lesson here is that when an organization takes care of its people, it can be wildly successful. Although some on Wall street argue, according to the article, that it's better to be an employee of Costco than a shareholder or customer, it's performance over the years has been quite good. But, I think the question for Wall Street is how good is good enough, and is the balance of stakeholder interests appropriate? As many organizations whittle away salaries and benefits it's refreshing to see a demonstrated commitment to employees.