I was browsing reddit recently and came across a posting about Costco that demonstrates exactly why you should take care of your employees first.
This is an extension of the blog on the employee engagement value chain where I discussed the importance of taking care of your employees first.
reddit is view by millions of people a day, and a popular post can easily be seen by hundreds of thousands of people around the world. So if something is big on reddit, it is truly big. This post in the politics section of reddit generated a tonne of attention and is currently 4th highest ranking this month.
The comments are so positive and make Costco look like a saint in the retail world. The top comment by reddit user celtic1888 is shown below:
My wife has worked at Costco since 1994.
She was promoted to manager in 2000.
Matching 401k, mid 60k salary, health benefits for both of us that is under $100 month
After 25 years they get a nice stock bonus.
They work hard but are paid a living wage and promote from within. One of the few companies that you could work a lifetime for.
Edit: She also gets about 5 weeks paid vacation per year if you add in the floating holidays.
wow…a year and half on Reddit and a posting about my wife’s job nets me the most karma…Is there anything Costco can’t do ? :)
Can a company get any better marketing or advertising than this? It’s almost guaranteed that just based on the positive comments from this thread, Costco’s brand was immensely improved.
Lower down in the thread, there are some other comments on competing retailers and more support for Costco’s business model:
TheBlumpKing discusses the business case for Costco, insults Walmart and posts some interesting notes from Costco’s CEO:
I’m gonna go ahead and respectfully disagree with both of you. While you’re right, companies are after profits, that doesn’t mean that cutting employee costs is the best way to increase profits. In fact, I think that’s why Costco pays its employees so well - because it actually increases their profits in the long-run. It gives themselves a better competitive advantage. They can’t directly compete against Walmart in terms of prices, so they compete against them in terms of Goodwill.
Why do people hate Walmart/Sam’s Club? People say “I will never shop there”. People in small-towns lobby local governments to stop people from building Walmarts in their area. So why all the animosity against Walmart? Why all the love for Costco? One of the reasons is because Walmart treats their employees like shit. So, what is one reason to shop at Costco rather than Walmart? Because Costco treats their employees better.
The CEO himself has said as much. He’s not trying to be generous or charitable or anything of the like. He just thinks it’s good business to treat your employees better.
- Question: You’ve always ignored analysts who suggest you pull back on things like employee benefits. Could that change under a new CEO?
- Answer: Not a chance.
- Q: Why not?
- A: Because it’s part of the DNA of our company. It’s the culture. … It’s not altruistic. This is good business, hiring good people and paying them good wages and providing good jobs for them and opportunities for a career. If you accept the premise that we pay the highest wages in our industry [hourly workers average more than $20 an hour, including bonuses] and have the richest health care and benefit plan in our industry and the lowest price on merchandise and run the lowest-cost operation, then it must follow we’re getting better productivity.”and the new person helped cause one of the greatest economic collapses in living memory.
The thread essentially rips on Target and Walmart while promoting Costco. Hundreds of thousands of people have seen it and have been influenced by it, and it cost Costco nothing at all. Free marketing, free incredibly effective marketing! Brand advocates are 70% more reliable than direct marketing from the company.
I write a lot about this topic on my blog because I believe it fundamental to the success of an organization. Check out my post on the #1 reason executives fail at creating high functioning workplace.
It’s an absolute shame and it frustrates me to no end that shareholders with limited, short-term interests are able to dictate how an organization is run. The concept of a professional CEO is horrible, the leader of a company needs to care about the company and/or be an owner. I hope the tides shift with the rise in social media and transparent communication, because employers can no longer hide their true colors. They have to work hard at protecting their brand, and that is directly tied to how they treat their employees.