Good profile of Costco from the NYT. Costco's philosophy of attracting and retaining good employees by paying decent wages and offering good benefits puts it at odds with Wall Street, despite good growth:
Costco's average pay, for example, is $17 an hour, 42 percent higher than its fiercest rival, 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."
[CEO] Sinegal begs to differ. He rejects Wall Street's assumption that to succeed in discount retailing, companies must pay poorly and skimp on benefits, or must ratchet up prices to meet Wall Street's profit demands.
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." ...
"On Wall Street, they're in the business of making money between now and next Thursday," [Sinegal] 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."
I think this approach is right on the mark and benefits both employees and customers, although it's no doubt incredibly hard to pull off in a public company. One can only hope that Mr. Sinegal, who is now 69, is grooming a successor as fiercely protective of this philosophy as he is.