Costco may be the happiest company on Earth
The retailer is generous with its rank-and-file employees and frugal with executives. Is this why no one leaves?
Reporter Brad Stone makes a pretty good case, too. Here are the reasons he gives to back up his claim:
1. Employees have great perks. One 59-year-old worker who has been there for 26 years makes $52,700 a year, gets five weeks of vacation and has a nice 401k that Costco fills in with matching funds. About 88% of employees have health insurance from the company, and the medical plans offer great coverage.
"I just think people need to make a living wage with health benefits," the company's CEO, Craig Jelinek, told Stone. "It also puts more money back into the economy and creates a healthier country. It's really that simple."
2. Employees are paid well. Hourly workers make an average of $20.89 an hour. Compare that with Wal-Mart (WMT), which pays an average of $12.67 an hour, Stone reports.
3. Sales keep soaring. They have grown by 39% since 2009, even while other retailers have struggled in the economic downturn.
4. Costco is extremely frugal. It's generous with employees, but the executive offices in Washington have faded blue carpet, faux-wood tables and cheap art prints on the walls, Stone reports. The previous CEO made only $325,000 a year, though the current one makes more than twice as much. Still, other retail bosses make millions.
5. It doesn't hire business school graduates. Instead, it promotes employees from below and even pays for workers to attend graduate school. As a result, 70% of its warehouse managers started at the bottom, Stone reports.
6. No one leaves. Certainly the low employee turnover says something is going right. The turnover rate is only 5% for employees who have been there for more than a year, Stone reports. Among executives, the rate falls to less than 1%.
7. The stock price is on fire, soaring nearly 40% over the past two years. For any employee holding stock or options, that share price run-up is one more reason to stay with the job.
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Kinda makes me think of the way businesses seemed to work in the 1940's - 1970's before greedy upper management and stockholders began sucking the life out of companies and the people.
The stockholders are happy because their shares are going up.
The CEO makes over $700,000 per year. They're rich and happy.
The workers make money and benefits to put them solidly into the middle class. They're happy.
Wonder what's stopping other companies from trying to model?
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