Costco, the Genuine Retail CSR Leader?

By Leon Kaye | August 14th, 2012 26 Comments
costco, big box retailers, corporate social responsibility, CSR, Leon Kaye, teamsters, wall street, corporate governance, Leon Kaye, San Joaquin Valley

Costco, the CSR leader amongst retailers

Could Costco possibly be the most genuine leader when it comes to corporate social responsibility (CSR) and governance? Retailers across the country constantly crow about the achievements they have made on a bevy of issues from more sustainable fish (Safeway) to solar installations (Walmart). Other retailers are yanking the chains on pork producers to cease the cruel use of gestation crates and of course just about everyone is on the organic and local produce bandwagon. These shifts in business practices are great news for fish, pigs and of course, the environment and our health.

But what about people who work in these stores, who stack, haul and crate the fish, pork and produce, whether they are free range, cruelty-free, duty free, or not?

While most big box retailers insist on paying low wages with the claim that thin margins require reduced labor costs, Costco for years has been breaking the mold. Wall Street squawks that the membership warehouse giant should push for higher profit margins and reduced labor costs, meanwhile the company, led by its iconoclastic founder and former CEO, Jim Sinegal, constantly flicks his chin at The Street and its yammering analysts. The results: happy employees, enviable stock performance and a brilliant shopping model that, let’s face it, bludgeons consumers into shopping happily for more.

So what makes Costco so successful? Arguably the biggest difference is how the retailer treats its workers. Walk into any Costco and look at the name tags. Chances are you will read the phrases “since 2002,” “since 1999” and “since 1995.” Costco workers get paid very well compared to their counterparts at chains including Walmart. In fact, employees working on the floor can make a salary that reaches the mid-$40,000 range; not bad for someone who starts working for the company out of high school. And while the vast majority of Costco’s employees are not unionized (most of those are legacy employees from Price Club that the Teamsters represent), over 80 percent have competitively priced health insurance plans. The outcome includes more productive workers, lower turnover and for what it’s worth, relatively high job satisfaction.

Meanwhile Sinegal, who stepped down as the company’s CEO on December 31, earned a spartan salary compared to the vast majority of his counterparts. For years his salary, not including bonuses and stock options, hovered at $350,000. Critics lashed out when the company announced that current CEO Craig Jelinek would pull a salary of $650,000, but that is still a tepid amount compared to average CEO salaries, which are still on an upward trend despite the recent surge in “say-on-pay” shareholder votes. Meanwhile the stock has performed well, sliding only when the rest of the economy took a dive during the post 9/11 aftershock and the 2008 fiscal crisis. If you bought Costco stock a decade ago, your investment has roughly tripled in value.

So, along with happier workers come fair prices and a commitment to local companies. Take those famous Calvin Klein jeans that have been a mainstay at Costco over the years. Depending on the price, they could be marked at $29.99, but if the company can snag millions more, they could be $22.99. Wall Street would insist that regardless of the wholesale price, Costco should maximize its profit. But the company’s philosophy has long been that it will pass on savings to its customers. Most products in its warehouses are well-known national brands, but Costco does purchase local products. Karoun Armenian string cheese in Los Feliz, Goldilocks bread in Vallejo, hemp seeds in Santa Cruz and fruit from small San Joaquin Valley farms in Fresno are just a few examples that can be found in Costco’s warehouses.

Not everything at Costco is perfect: some products are well, dubious; Joan Rivers chained herself to a shopping cart after the chain stopped selling her book; and some suppliers have landed Costco into hot water. But in the end, the company treats its employees and shareholders more than decently. And sales continue to trend upwards. If you believe all workers should have the chance to earn a decent wage and be rewarded for hard work, shopping at Costco is an easy choice to make.

Leon Kaye, based in Fresno, California, is a sustainability consultant and the editor of GreenGoPost.com. He also contributes to Guardian Sustainable Business and covers sustainable architecture and design for Inhabitat. You can follow him on Twitter.

Photo courtesy Wikipedia.


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Categorized: Corporate Social Responsibility|


  • shawn_von_socialist

    private corporations will be king.. the markets are too manipulated

    costco is a great place to shop

    • TraderGuy

      Too bad, Costco is a public company

      • Jeff

        Publicly traded company. Biiiig difference pal lol

  • FL Mom

    I’d love to have a Costco here in Pensacola, Florida. Sam’s is so disappointing and I can’t support their business model.

  • heimdal

    I use to work for costco and it was a living hell for most the people
    there. The manager would discriminant against people regularly ignore
    health and safety regulations ignore repairs and threaten employees jobs
    if she though was a risk they would try speak up. When there was a
    inspection coming up (she would always have a advance warning) she would
    have the whole store coming in doing double shifts to get the store
    presentable and then when the inspection happened (they were called
    walks) would have the store double staffed or have people running from
    department to department ahead of the walk to make it look like the
    store was fully staffed. As far as repairs would ignore them to point
    of even being safety concerns. At one point the large freezer had a leak
    and instead of fixing it just let it go for like 6 months till there
    was a foot or 2 of ice built up on 2/3rds of the inside floor and had
    bring in jack hammers to break it up only to then put the merchandise
    frozen on it back on the shelves. Another was the industrial compactors
    they had the safety shutoff literally cut off because it was making the
    compactor not work so they could still use it. Then of course had the
    forklifts with exposed wiring on them that would catch fire because she
    wouldn’t pay to have them fixed. The place had a huge turn over
    specially in middle management who couldn’t stand her and wouldn’t be
    allowed to do their job. The only ones who did tend to stay were the
    ones who acted like her insulting employees and customers while doing
    next to no work. Of course one the best ones of all was when she fired a
    women going out on medical leave for if i remember right cancer
    treatment because the women made the mistake of mentioning that if she
    did recover enough to start working again she might get a job at a
    different company. The one thing Costco has really been great at has
    been keeping up a false face and keeping quiet people who might expose
    that face. Oh and btw from what I understand that manager is now one the
    upper level people at their main office something like the head of
    their public relations division. This was the Delaware store btw

    • Ethan

      No wait, don’t go away yet!
      Tell us all how much happier you are at Sam’s Club.

      • Leon

        Touché!

    • llill

      This sounds like the problem is her and not the company. Have you reported her to the higher-ups? She should be fired.

  • heimdal

    Oh and about Unions the first day of orientation one the first things they told you is if you brought up the idea of unions you would be fired on the spot.

  • wcg

    As @31b4b74241dd400c6176d2a2d1793d9e:disqus has noted, not everything is rosy. I know a few folks who work at the local Costco and they are pretty happy but they work in the corporate office not the floor. Costco might lead in retail but I think it’s safe to say, retail isn’t always a pleasant career choice.

    • Will Anderson

      @wcg Yes, but for some of us, jobs like that are the only option. I have a four-year degree, and that is the case for me. Job’s aren’t designed to be pleasant. Very few people have the privilege of truly “enjoying” their work. If that’s the case for you, more power to you I suppose!

  • kd

    I worked at a Costco in Portland Oregon, and loved it! In my experience, their reputation holds true. I got a higher than fair wage, good training, regular breaks, decent workloads, and great coworkers and supervisors. Inspections from upper management, even the CEO, were regular occurrences and were really low key. I would recommend Costco to anyone as a great place to work and shop.

    • Al

      Nice try, Costco PR department. :P

  • Liken

    I worked in a costco in phoenix AZ and it was a great place to work very nice people and good bosses and the break room was nuts a 70′ big screen and leather sofas

    • Brandon

      I would love to have a 70 foot big screen in my break room.

    • Alicia

      North Phoenix right? Me too. Great company to work for which I did for 16 years while working toward my doctorate. Hubby just hit 18 years.

  • Shameel

    I would credit their success with employees to the fact that they arent unionized.

    • http://profile.yahoo.com/BUSYAWMRBZOVHLEA566TYPDBKM D

      Because they don’t have to be…Unions are starting a come back and the big box stores will be some of the first places to change. Meijer and Krogers are both unionized

      • Shameel

        Unions are on the way out. Unions are mostly irrelevant in the 21st century. Union bosses are the 1% ,while ensuring their members stay in the99%

  • bottle

    I currently work at a Costco in Georgia and unlike @31b4b74241dd400c6176d2a2d1793d9e:disqus there’s some bad apples in management and employees but there are so many safe guards against the kinds of things @31b4b74241dd400c6176d2a2d1793d9e:disqus was talking about that I can guarantee there was plenty of embellishment there. Unions are not even mentioned as a part of orientation and they would certainly not threaten to fire new hires over talking about unions. No new hire I’ve ever known would start talking about unions anyway the company takes care of their employees too well for that. Paid vacation, healthcare, 401k and starting at $11 for retail? Yeah I’m yet to see anyone complain about that. With Costco’s open door policy the kind of violations talked about also wouldn’t occur. I’ve seen managers get demoted and put under supervision in another store for much less. Just recently at my store several floor level employees made a complaint about an upper level manager’s attitude and within a few weeks there was a visit from one of the top level managers from another store in the area and that manager suddenly became very nice.
    I guess some people have had problems with the company but in my experience its only been people with entitlement issues and those with a flair for drama. For me Costco has taken care of me fantastically well and been flexible for me to continue attending college. If you’re going to work in a major retail chain Costco is the best. Period.
    Not a PR rep just a well taken care of employee.

  • tylertx

    I wirk at sams this place stinks

  • Andrew

    It seems like their social initiatives are pretty good, but this website is based upon the triple bottom line is it not? What about the environmental problems associated with the fact that CostCo at its core promotes overconsumption of material products?

    • http://twitter.com/LeonKaye Leon Kaye

      Costco doesn’t promote overconsumption–it’s mostly small businesses that shop there. And re-read the article. Let’s give props to companies that treat their employees well.

      • Andrew

        I read the article just fine, and I agree that they appear to do a good job with their employees. My concern is regarding a triple bottom line issue, specifically with relation to their environmental position. When I met with their Director of Corporate Sustainability in Issiquah back in April, it just didn’t seem like they had much of a strategy for their environmental impacts.

  • VLT

    I love Costco. I am so glad I have one just three miles away!!!! Isn’t great that they pay and treat their employees well ? You can feel the positive energy when you walk in the door.

  • http://www.facebook.com/people/Troy-Lange/1477096770 Troy Lange

    have worked for Costco for 18 years and have been in retail for 30 years. I definitely owe my lifestyle to them. There is not a person I can not get along with in our warehouse and I have not worked under a better management team. I see myself working there until retirement, whenever that is, we have employees in their seventies. I feel very grateful that I have the piece of mind knowing they respect and want to keep long term employees. I go out of my way to make sure the customer is taken care of in a personal manor. I this because I am proud of my job and my company. I am a real pain in the ass and they still accept and respect me.