Employees second. Vendors third. Shareholders fourth. That is Costco’s business model, somewhat, but not overly simplified. Even in a State like California, where many of it’s employees are unionized, they continue to beat Sam’s Club in profitability. Costco pays even non-union employees nearly twice as much as any of their competitors, even during lean years. As a result, their employee retention rate is the best of any retail business. More productivity, more sales per square foot. Jim Sinegal, CEO of Costco, pays himself a whopping 350,000 dollars a year. Care to know what Walmart pays theirs? Around 5.3 million. Costco pays nearly 94% of their employees health care costs, even part-time employees.
“Wall Street is in the business of making money between now and next tuesday, we are in the business of building an organization, an institution that we hope will be here 50 years from now. And paying good wages and keeping your people working with you is very good business.” (Jim Sinegal)
I posted this partly of of frustration at not being able to succinctly write down my thoughts about business ethics, and the future of Americanized capitalism. So, it occurred to me to just highlight some people and companies that actually serve as possible models to save us from this dangerous race to the bottom.
I’ll talk about Publix on Wednesday…