Is being generous good for business? (Costco gets bashed, yet again...)

[6th Borough]

July 16, 2005, 6:15PM

Is being generous good for business?
Costco CEO profits as he offers top pay, benefits

By STEVEN GREENHOUSE
New York Times

ISSAQUAH, WASH. - Jim Sinegal, the chief executive of Costco Wholesale, the nation's fifth-largest retailer, crows about Costco's private-label pinpoint cotton dress shirts...But not everyone is happy with Costco's business strategy. Some Wall Street analysts assert that Sinegal is overly generous not only to Costco's customers but to its workers as well. Costco's average pay, for example, is $17 an hour, 42 percent higher than its fiercest rival, Wal-Mart's Sam's Club. And Costco's health plan makes those at many other retailers look Scroogish. One analyst, Bill Dreher of Deutsche Bank, complained last year that at Costco "it's better to be an employee or a customer than a shareholder."

Sinegal, whose father was a coal miner and steelworker, gave a simple explanation."On Wall Street, they're in the business of making money between now and next Thursday," he said. "I don't say that with any bitterness, but we can't take that view. We want to build a company that will still be here 50 and 60 years from now."

If shareholders mind Sinegal's philosophy, it is not obvious: Costco's stock price has risen more than 10 percent in the last 12 months, while Wal-Mart's has slipped 5 percent. Emme Kozloff, an analyst at Sanford C. Bernstein & Co., faulted Sinegal as being too generous to employees, noting that when analysts complained that Costco's workers were paying just 4 percent toward their health costs, he raised that percentage only to 8 percent, when the retail average is 25 percent. "He has been too benevolent," she said. "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."

(by the way, Sinegal makes 300k a year...)

more at http://www.chron.com/cs/CDA/ssistory.mpl/business/3268811

[neuvocat]

1. Well if the pukes wanna get all moralistic...

they can look up the verses in the bible that dictate that a business owner pay his workers first before spending whatever money was made on anything else (I'll look up the verses when I get the chance).

[getmeouttahere]

2. Here's my "Well, Duh!" for the week....

"it's better to be an employee or a customer than a shareholder."

[silverweb]

3. Hey, Kozloff...

What the fuck business is it of yours? CostCo's happy, customers are happy, stockholders are happy, and employees are happy. So what's the problem?

Go mind your own fucking business!

[MissMarple]

4. Poor Wall Street, if more companies were like Costo, we would be

much better off as a people and stronger as a country.

[CrispyQ]

23. Isn't that the truth!

And Costco should be advertising that they treat & pay their employees well. I've gotten three friends to switch from Sam's Club to Costco when I told them of Sam's/Walmart practices compared to Costco.

Most significant shareholders are rich to ultra-rich and don't give a crap about employees, only how much more money they will make. Stingy, stingy, stingy! These people don't give a crap about anyone but themselves.

[SmokingJacket]

5. WOW, I didn't know Costco pays so well.

Perhaps I should lobby to get one in my town... we have an f-ing walmart now.

I **love** patronizing businesses that treat their employees well.

[Pystoff]

30. Oh yes they are

Costco came here about 5 years ago and over 10k applied for about 400 jobs in 3 days. And this was when times were better.

[ikojo]

6. So, if WORKERS are given a living wage and

good benefits a company is said to be too generous...but a CEO can be given millions in stock options and more in pay but that's good business, because after all a business must pay it's top talent well if they are to retain them.

Grrrr......

I hate short term capitalist thinking!

[Fenris]

7. "he could force employees to pick up a little more of the burden."

Too generous? Too generous? God I love capitalism! :rofl:

[Initech]

8. Shit, I could make more money working at Costco!

*considers applying*

[1932]

9. New York Times had a long article about COSTCO over weekend. Said that...

they have low rates of employee attrition, sick days (IIRC), and very low employee theft rates. In other words, treating their workers well pays off in other ways.

The article also said that the CEO's salary is around 300,000 dollars, and last year he got a bonus of 200,000.

[Lorien]

47. So Sinegal doesn't even qualify for the Bush* tax break

at his standard income (you must make a minimum of $400,000 a year to get the Bushco tax break).

[Trillo]

10. Looks like Costco's making the other corps look selfish,

and this article's pundits would like it to stop, no doubt. It is curious that the market itself is rewarding Costco's strategy. This means that shareholders are benefiting from the strategy, so, where is the illogic of "forcing employees to pick up a little more burden" coming from?

[getmeouttahere]

15. There can be only one answer to that question....

pathological greed!

[wildeyed]

33. Bingo!

And that is what they teach in the business schools now. Greed that is so prevalent, so all consuming that it becomes an abomination.

So here is a guy who is successful in head to head competition with the biggest retailer in the world, WalMart, but hasn't sold his soul to do it. And the pundits do not like it. It does not reinforce their paradigm.

[6th Borough]

11. they offer top pay, generate top profits...they MUST BE STOPPED!

:sarcasm:

Oh, and sorry mods for posting this in the wrong location.

[6th Borough]

14. By the way, they have the lowest employee turnover % and theft rate...

in retail. Must be the damned college assisance they offer. This business model can't STAND UP! :wtf:

[MN ChimpH8R]

12. What greedhead tools these WS types are

I just wish there was a Costco here in Minny - I'd go out of my way to patronize them after reading this. "We want to build a company that will still be here 50 and 60 years from now." And the CEO makes a very reasonable $300K?? This country would be far better off with a lot more Jim Sinegals in its executive suites. :applause::applause:


ANAL-ysts show the typical Repuke attitude - "Screw the employees, F*ck 'em, who needs 'em. Pay the bosses more!!" :puke:

[Canuckistanian]

13. What reason do they always give for high CEO salaries

Because they want to hire the best talent and to keep them happy
This is the biggest double standard I've ever heard of.

If you don't pay your employess well:
1. Don't expect them to hang around for long
2. Don't expect the best performance from them
3. Your customers will not be well served by a disgruntled, resentful clerk.
4. Don't expect your employees to be the brightest, most resourceful and valuable people you can find.

[Enraged_Ape]

25. Southwest Airlines has the same business philosophy...

of taking care of the employees. And they...

1.) Have the lowest turnover rate in the airline industry.
2.) Are noted for their customer service.
3.) Have flight attendants that are friendly and tell jokes.
4.) Are extremely difficult to find a position with, as demand is so high.

They were also the only airline that DIDN'T plead poverty in the days after 9/11 (though they got a check from the government anyway).

If you don't have happy employees on the front line of your business, you don't have a business. You've got a mechanism for wealth redistribution to the very top, and that's it.

[Nia Zuri]

16. I try to patronize them because of their business practices

Even though I hate warehouse stores and the crowds and long lines, I have a membership & shop there. They have good merchandise, great prices and treat their employees well.

[wildeyed]

34. When the lines back up at the costco I shop at,

the employees really hustle. Like actually running from place to place hustle.

And you are right about the merchandise. I can buy all the 'fancy' gourmet items I like, for instance they have three or four grades of block Parmesan cheese, and also stock up on everyday stuff like TP and juice boxes.

[applegrove]

17. MBA have been taught for the last twenty years to attack & destroy

anything that gets in their way. Obviously Costco is in their way!

[xmas74]

19. My best friend's stepfather is a professor (business).

He is also highly liberal and has used Costco as an example of a "good" company for the reasons above (good pay and good benefits keeps retention rates high, employees feel that all others are being paid fairly and the benefits of such actions). He has stated that in the past few years the attitudes of his students has really changed for the worse and that the only mentality he nows sees in his classroom is the mentality from Wall Street.
He's said on numerous occasions that he is worried about the future of our country (since he's one of the people who is possibly training our future CEO's) and that he's glad that he's not young and just starting out in the workplace.

[idlisambar]

37. I'm sad to hear that

Although I'm not surprised to here that business students have a Wall Street mentality, it is diaturbing to hear that it has gotten even worse in recent years.

[xmas74]

40. He claims that it is 1000x worse.

Before, he occasionally had students in his classes who pursued their bachelors in order to run a small business (usually their families). Now, they all want to be MBAs, work in corporations, and make as much money as possible. He has stated that most in his classes seem to be void of any morals.
Interestingly enough, one of the classes that he teaches is Business Ethics. He said that he has had more repeat students (read: fail the first time) than he has had in the past 20 years of his teaching experience. It almost makes you sick, especially since he has a small business of his own that some of them joke about to other professors( he scouts out businesses that are willing to train high-risk high school students in a job field and makes referrals for the students to each business on his list, according to the students strengths). The students make fun of his "other job", stating that he should just let them starve since they are too stupid to get the skills on their own.

Sad commentary on so many of the business students today(at least those at a small college in the Midwest).

[idlisambar]

43. Well, he sounds like a good person

They sound like some real brats, but on the upside it (hopefully) can't get much worse.

[xmas74]

45. I hope it doesn't get much worse.

Those brats are the future of our country. It is really frightening what kind of values they have.

[catnhatnh]

24. Ding,Ding,Ding....

We have a winner! The very existence of a business model that offers (relatively) high pay and benifits and that works toward long term job stability proves that the more common hire'm, harrass'm fire'm and fuck'm is a cruel and needless practice. In short it proves that slash and burn corporations are NOT forced to these practices by business survival necessity ,just raw short term greed. So since they can't outcompete and destroy Costco they get "analysts" to badmouth their policies as "shortchanging" the stockholders....

[applegrove]

26. Exactly. Spreading rumors about competitors is fine. They also

include government regulators as enemies. Thus the war on fair taxes and universal medicare models that actually are cheaper ways to give lots of people health care. Consumers are also included as competitors that should be attacked. Why the government has been taken over by the elite. Because they are afraid of the 'average guy' voting his best interests. Thus the creation of myths and patriotism to get people to vote against their own best interests. The last group that are considered competitors? Workers. They were at the start of the 20th century considered things to crush (whose reality needed to be replaced). Now they get outsourced and wages go down. This is good for the rich investors. As - with companies acting in unison to create myths that will help destroy the reality of workers - inflation is not so much a problem. Oil prices can rise - and because wages are going down..the markets stay perpetual and investors live in a "perfect" world where they don't face "downtime". One would think that in a fair and democratic world the investors should face "some risk" at times and go through bad times. Same as anybody else.

Costco is dangerous for not following this model.

[bluestateguy]

18. I'm going to get a Costco membership now

I thank these Wall Street types for their codescending tripe. It helped me to decide to get a membership and do myu big box shopping at Costco now.

[K8-EEE]

20. I LOVE Shopping At Costco!!!

And the employees DEFINITEY seem happier at their jobs too...why not?

People don't take the long view, which is, what kind of society do we want to live in? Let's say you have a small business, a restaurant of something. Don't you want it to be my a CostCo where the employess have a bit of discretionary income--rather than where they pay people dirt and noone can afford even an occasional meal out?

It's GOOD ECONOMICS to shop at places that pay a living wage. CostCo gives great value to the employees AND the community. AND THEY CONTRIBUTE TO DEMS!!

[6th Borough]

22. And they DON'T contribute a single buck to repugs.

Only Dems. Think Wallstreet and..err...the Autobahn (?) might have a slight problem with that? ;)

[pelagius]

29. Jim Sinegal (Costco CEO) contributes regularly...

...to Emily's List, a favorite organization around our house.

Check it out at:

www.emilyslist.org

Check out all of Jim Sinegal's political contributions at:

www.opensecrets.org

He is definitely one of the good guys!

[Lorien]

42. Me too!

Great products at a good price. The Kirkland products are excellent (private label) and they even carry organic produce :-).At this point, I even know a lot of the employees by name (and they DO seem happy)!

[K8-EEE]

44. My Local Costco Employees Are HEROES!!! LITERALLY!

The employees at my (Glendale, CA) Costco are true heroes -- Costco threw them a block party style fiesta in the parking lot there, these guys literally risked their lives to get people out of commuter trains that crashed on the tracks right outside their store.

Then when help arrived they catered for the rescuers and the family members who came to the site. Costco had muffins, coffee, pizza etc for the rescuers, families, and volunteers all day.

The managers threw employees a party a couple of weeks later and invited the community, they recognized each person at on the P.A., it was really great to be able to applaud them. One guy actually went into a smoldering section of the train after being drenched in gas.

[Lorien]

46. Too cool!

Can anyone imagine Wal-mart doing the same? They'd be ordering employees back to work if such a tragedy had occured outside their store!

[grace0418]

21. All the more reason to shop at Costco

And perhaps buy some stock.

[Mr_Spock]

27. This is why I shop Costco & not BJ's & Walmart. I think I'll buy stock now

Yeah, I'm gonna buy their stock now. Fuck those smarmy business types - they're the same people building factories in China and funneling our technology to our fiercest rival. Company owners are traitors to the flag for the most part and should be treated as the vile criminals that they are...

[pelagius]

28. "Sinegal, whose father was a coal miner and steelworker..."

Here's a working class kid who hasn't forgotten what's it like. My hat's off to him and I'm proud to be a Costco shopper.

I've done a lot better financially than my father, so well, in fact, most of my peers are Republican, but I will never forget it was decent wages and benefits (negotiated and enforced by a union) that kept my grocery clerk dad out of poverty and in the lower-middle class. And it gave this blue-collar kid a chance at a better life. Thank God for decent employers or, at the very lease, unions that make employers behave decently.

No Republican "trickle-down" scheme ever did a damn thing for me or my family! But the union did!

[wildeyed]

35. Tell it, pelagius!

Exactly why it is so important to keep wages livable and education accessible. Because we as a country need to do that to stay competitive, to be certain that the best, smartest and most talented kids get a chance to excel, not just the ones with rich parents.

[bunny planet]

31. Walmart down 5%, just wait until Robert Greenwald's movie about them

comes out in November, 'The High Price of Low Price' I think that's the title. More businesses should treat their workers with respect instead of indentured servants. It's a pleasure to shop at an ethical business like Costco.

[silverweb]

32. You can send an email of support to CostCo.

I just did.

This form probably just sends the email to their customer service department, but you can request that your message be referred to the CEO. :)

http://www.costco.com/CustomerService/EmailUs.aspx?secure=1

[tommcintyre]

36. Thanks for the link, I just sent the following email:

Your efforts are appreciated - please send this message (link) on to Mr. Sinegal.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=103x140889

Thank you,

Tom McIntyre

[wellstone dem]

39. My email

Thank you for treating your employees well. I live in ______ (50 miles away) but I shop at the Costco in _____ whenever I'm in the Twin Cities. I do this because of how the employees of Costco are treated, and because of how I'm treated by the employees of Costco.

Thank you for creating an enviroment which is postive for both shoppers and employees.

[6th Borough]

38. The differencve between Wallmart/Sam's and Costco? just lookie here...

A bit old...circa 2003.

[loudsue]

41. Bookmarked and Recommended. The word needs to spread.

In the 1990's, these things were taken for granted. Now, they are treated as a crime by the media and wall street types.

Fascism has landed on our shores, and we are NOT protected. The mob is running the government...and the government is nothing but a big corporation.

:kick::kick::kick:

[Burma Jones]

48. As of July 22, this is the most e-mailed story of the NYT

I think this is bringing more people to Costco.....