The New York Times has an interesting article about how Costco pays employees (much) more and with better benefits than does competing Sams Club. What's especially interesting is how some Wall Street types are criticizing the company, saying it needs to cut salaries and benefits and raise prices. One analyst said: "He has been too benevolent. He's right that a happy employee is a productive long-term employee, but he could force employees to pick up a little more of the burden."
But here's the deal. The whole thing is a non-issue. Costco is making money and growing, and seeing its stock price increase, too -- so, obviously, its own investors don't see a problem.
And this is what's wrong with stock market-based capitalism today. Even when a business is doing well (and treating both its employees and customers well), there is still the call to cut, cut, cut, cut (and raise, raise, raise prices) to make even more money, if only in the short term.
Here's my favorite quote from the article, talking about Costco's CEO Jim Sinegal:
Good wages and benefits are why Costco has extremely low rates of turnover and theft by employees, he said. And Costco's customers, who are more affluent than other warehouse store shoppers, stay loyal because they like that low prices do not come at the workers' expense. "This is not altruistic," he said. "This is good business."
I like that. Doing the right thing for customers and employees IS good business. Fuck Wall Street. Customers and employees are who matter.
And here's another thing. Costco's CEO Sinegal takes a relatively low salary, compared to other big-company CEOs:
Despite Costco's impressive record, Mr. Sinegal's salary is just $350,000, although he also received a $200,000 bonus last year. That puts him at less than 10 percent of many other chief executives, though Costco ranks 29th in revenue among all American companies.
"I've been very well rewarded," said Mr. Sinegal, who is worth more than $150 million thanks to his Costco stock holdings. "I just think that if you're going to try to run an organization that's very cost-conscious, then you can't have those disparities. Having an individual who is making 100 or 200 or 300 times more than the average person working on the floor is wrong."
I like that. A CEO with a conscience who cares about his employees. He knows that when a CEO makes too much more than his employees it's just wrong. Sometimes, enough is enough.
So where do you want to shop today?