Consequently, many of them are part of a union and hold strikes known as “Black Friday Strike”, to fight against their job dissatisfaction. Furthermore, Weissmann (2012) goes on to state that Costco is paying their employees “commendably” better. As demonstrated in figure one, the average wage for a Cost Co cashier, after 5 years of employment is approximately 64% higher than that of an employee at the Wal-Mart Empire (McArdle 2012). Moreover the commentary of Business Week Magazine quotes “At Costco, it’s better to be an employee or a customer than a shareholder,” says Deutsche Bank”.
By showing generosity to employees, they are able to retain them (Commentary:The Costco Way 2004). This is unlike at Wal-Mart where are higher focus is made on shareholder value (Weissmann 2012). Additionally, no Costco employees are part of a union in Washington State (Frey 2004). This only goes to show that employees at Costco are generally satisfied and as such they have no need to join a union, as they have no criticisms on employee treatment.
Despite remarks that Costco has more employee value than shareholder value, figure two demonstrates otherwise.
Where Costco’s market price had risen constantly over the past 5 years, Wal-mart’s market price has been relatively constant (Yahoo Finance 2013). One particular employee was offer a biannual bonus and had been given time off paid after suffering health issues (Frey 2004). Moreover, Costco offers health care and life insurance although it should be noted that most companies, particularly in USA where health care is not free. As depicted in figure one, Cost co pays for 82% of their employee’s medical costs.
However at Wal-Mart, only 50% of health care expenses are paid for, meaning the employee bears 50% of the costs. Additionally, Employees at Cost co can also add family members and de-facto partners to the program and increase their package (Costco 2013). Furthermore, they offer mental care to employees and their families (Costco Wholesale 2011). The 31 December 2012 annual report goes on detail that they do not attempt to minimise wages and benefits but to ensure their satisfaction and reduce employee turnover (Costco 2012).
However Costco also has a share scheme where by employees at Costco are offered shares if they have been employees for a substantial period of time (Costco 2012). Additionally, employees also benefit from “retirement plans” if they complete at least 90 days on the job (Costco 2012). Although it is not offered to employees who are members of the California Union (Costco 2012). One could assume that this retirement scheme was offered to employees to reduce their turnover. Hence Costco will replicate in act of good faith.
DEVELOPMENT AND GROWTH In terms of the development and growth of their employee’s one motivator factor that creates much satisfaction is the fact that Costco promotes internally (Katsarski 2008). The chance of a promotion may motivate employees to perform better and to persevere with their employment. This is reflected by their low turnover rate (Katsarski 2008). In 2009, the turnover rate, for the average employee at Costco, was 12%, which was considerable lower than the industry average (Ruggeri 2009). (REQUIRE MORE STATISTICS)
For instance, Sinegal explains that many managers started out at 19-20 years of age and have been employed by Costco for at least 10 years (Staff 2012). . It appears as though the CEO of Costco understands that employees have needs and desires to grow professionally. For this reason, opportunities for development are not only offered to long-standing employees, but also t. Figure ONE: Comparison Table | Cost Co| Wal-Mart(Including Sam’s Club)| Difference| Employee Starting Rate| $11| $10| $1| Wage after 5 years| $19. 50| $12. 50| $7|
Health Benefit Costs paid for| 82%| 50%| 32%| Profit per Employee| $10,623| $7,428| $3,195| McArdle, M 2012, ‘Why Can’t Walmart Be More Like Costco? ’, The Daily Beast, 26 November, viewed 13 May 2013, Figure TWO: Movements in Market Price (listed share price) Yahoo Finance (2013) Costco Wholesale Corporation share price data 2008-2012, Yahoo Finance, viewed 13 May 2013 Figure THREE: Equity Theory Applied for Costco Ruggeri, A 2009, ‘Jim Sinegal: Costco CEO Focuses on Employees’, US News, 22 October, viewed 20 April 2013, Reference
Costco Wholesale Corporation 2012, Annual Report 2012, Costco Wholesale Corporation, viewed 19 April 2013, Frey, C 2004, ‘Costco’s love of labor: Employees’ well-being key to its success’, Seattlepi, 28 march, viewed 20 April 2013, Weissmann, J 2012, ‘Who’s Really to Blame for the Wal-Mart Strikes? The American Consumer’, The Atlantic, 22 November, viewed 20 April 2013, Costco Wholesale 2013, Costco Employee Benefit Program Annual Open Enrolment 2013, Costco Wholsale, viewed 20 April 2013,
Costco Wholesale 2011, Costco Employee Benefits Program Summary Plan Description, Costco Wholesale, viewed 13 May 2013, Commentary:The Costco Way 2004, accessed 30 April 2013, Ghillyer, A (2010), Management Now, McGraw Hill Higher Education Katsarski, S 2008, ‘Employee Motivation – The Key to Success’, Ezine Articles, 18 September, viewed 20 April 2013, Staff, M 2012, ‘Jim Sinegal on Costco’s “Promote From Within” Strategy and Why It Needs to Think Like a Small Company’, Daily Finance, 21 June, viewed 13 May 2013, Ruggeri, A 2009, ‘Jim Sinegal: Costco CEO Focuses on Employees’, US News, 22 October, viewed 20 April 2013,