View Full Version : Costco boss bucks Wall Street by being generous to workers, customers

11-30-2007, 12:53 PM
"Get what you pay for"

Despite his penchant for cutting cost, Sinegal has been known for treating employees like family.
Costco, which raised its hourly wage this year by $1, has an average wage of $17.60, nearly 40 percent higher than the national average in retail. At Sam's Club, the average wage is $10.78 an hour, according to Wal-Mart Stores Inc.
Costco managers, who typically are promoted from within, make six-figure incomes by running warehouses that on average generate $130 million a year in revenues. Costco also covers 90 percent of an employee's health care cost and makes contributions to employees' 401(k) plans.
Wall Street analysts have long criticized the company for being too generous with employees and customers instead of looking out for shareholders.
David Trainer of New Constructs, a Nashville, Tenn.-based independent equity research firm, warns that the stock price, which closed Thursday at $67.09 on the Nasdaq stock market, is too rich because it implies unrealistic expectations for future profit growth and could take a tumble at the first hint of bad news.
Sinegal said treating customers and employees well would result in long-term growth, which rewards shareholders.
The company's stock price has increased 26.9 percent this year while the S&P 500 average has increased 3.6 percent.
"If you buy my premise that we will be the low-cost provider of merchandise and if we have the highest wages, doesn't it make sense to have the most productive employees?" Sinegal asked. "You get what you pay for. Hiring good people and giving them good jobs and careers and wages is simply good business."


11-30-2007, 01:05 PM
The most outstanding thing I have noticed at my local Costco (Burnaby BC) is how happy, freindly and helpfull the employees seem to be. This is very very unusual at "big box" stores; they also make serious effort to get you thru the cash line up as quickly as possible.

Like the man said; "you get what you pays for"

I actualy look forward to my shoping trips to Costco

If several million people have the same experience at Costco as I do; guess what...

it's simply good business

S/V Laura Ellen
11-30-2007, 01:29 PM
It seems that some stores are getting the message.

I was in Home Depot last week, a very different experience from my previous visit.

When I walked in every staff person that I saw said hello and offered to help. This is in stark contrast to the last visit where the staff wouldn't acknowledge my existence and hid or ran away if they thought they had to help a customer. Now if they can get some better quality goods on the shelf, mark the products and prices properly and keep things in stock, I might like going there.

Paul Pless
11-30-2007, 01:29 PM
When they're not, they become the 'lazy slackers' that many conservatives talk about.What's that jab at conservatives for? I 'd like to see some references please.

11-30-2007, 01:32 PM
If several million people have the same experience at Costco as I do; guess what... something which i have also noticed about costco , good people in there, just up the road is a hardware store where i know for a fact the workers are not much valued , high turn over , young inexperienced people

translation : a miserable shopping experience , i rarely go there much anymore

Paul Pless
11-30-2007, 01:40 PM
Hmmmm... do I have to actually dig up all the comments? How 'bout just one comment from a real conservative member of the forum...

11-30-2007, 01:42 PM
Americans are all lazy and thats why we cant keep up with the Chinese.

Hows that?

Paul Pless
11-30-2007, 01:44 PM
You'd have to let me know which bilge rats are 'real conservatives' :DI can understand why that might be tough on ya, there's like only three of us here anymore.;)

George Roberts
11-30-2007, 03:28 PM
I think I am more conservative than I was in the past.

I think there are a lot of hard working people out there. On the other hand there are a lot of lazy slackers. That happens when you have 300 million people with different interests.

Nicholas Carey
11-30-2007, 03:37 PM
It's too bad this attitude is hard to find, in many American businesses.

Last year, I did some work for a high-tech startup here in Mass, created by a Chinese immigrant. His attitude was that all of his employees (especially his professional staff) were slackers, didn't deserve any respect or compliments, weren't allowed to take the vacation that the company rules provided for, etc.... some of these people, in the spirit of entrepenuership, worked 60-70 hour weeks, weekends, nights, in an effort to help the company succeed... but the employees were never treated reciprocally. This guy has now lost virtually every competent professional employee that was there while I was contracting there. He blames it all on the 'lousy American work ethic'.

I think Americans have an outstanding work ethic... when they're treated fairly and actually valued. When they're not, they become the 'lazy slackers' that many conservatives talk about.The massize downsizings, and slavish devotion to short-term stock prices and short-term bottom line over the last 20 years have led a lot of US workers to realize that the social contract between management and labor -- you commit to us for the long haul and we'll commit to you for the long haul -- that existed since the industrial revolution is irrevocably broken[1].

Once management started treating their employees like disposable office supplies, slashing benefits and increasing required working hours while all the while keeping wages flat in inflation-normalized dollars and keeping the profits from increased worker productivity to themselves, the jig was up: if you treat your employees like McWorkers(tm), you're likely to get yourself a McWorker(tm) who realized that all he or she's got is a McJob(tm).

[1] Assuming of course that such social contracts ever did exist in reality. I think a lot of workers thought -- mistakenly -- that management actually gave a rat's a** [the workers don't suffer from that illusion any more :D]

Bill R
11-30-2007, 04:06 PM
I can understand why that might be tough on ya, there's like only three of us here anymore.;)

[raising my hand] I'll stand up as a conservative. Just whatever you do PLEASE do not accuse me of being a Republican.

I used to work for a major publiclly traded radio company that shall remain nameless. When I left (semi-involuntarily), local management was brutal- cutting pay, demeaning and belittling longtime staff, "discouraging" vacations, etc. Just a miserable place to work. Ratings for all 6 of their stationsin the major market I was in all tanked- the staff just stopped giving a damn.

I now work for the exact opposite- a smaller, privately owned company who understands their employees are the most valuable asset. Bad attitudes are just not tolerated. As a manager, I try to do everything I can to keep my immediate staff happy. Much better results. We have taken som moderately performing stations and turned them into revenue generating powerhouses.

It is all how you treat the staff...