Corporate Simplicity & Employee-Centricity

I was watching 20/20 on Friday night (…when you have an infant, the excitement of a Friday night becomes 20/20 and Scrabble with the wife). The segment was dedicated to "Secrets & Strategies From the New Rich" and featured the CEO of Costco, Jim Sinegal, and his pro-workforce strategy in building Costco.

His workforce profile. in fact, is quite startling…
Turnover is the lowest in the retail industry, some 5x lower than it competitors
The average employee makes $17/hour significantly higher than the industry average and 40% higher than his closest competitor, Sam’s Club
Nearly 100% of promotions are from "within"
Over 90% of the workforce qualifies for healthcare benefits, unheardof in the retail business

From a corporate perspective they are amazing as well. They only carry 4,000 SKUs compared that to the over 100,000 SKUs at Walmart. They focus on mostly the highest quality items which accomplishes exactly what he is looking for in terms of reaching the affluent demographic. They also have no PR staff and the CEO himself only makes only $350,000/year in salary (although he’s got about $150 million in stock options). His employment contract, in fact, is less than one-page long.

Pretty amazing stuff.
August 7th, 2006