Background
Jeffrey Brotman and James Sinegal established the retail store.
It is among the top ten stores across the globe (seventh largest).
In 1993, it created a merger with Price Club company.
In 1994, the annual sales stood at $ 16 billion.
Before the close of July 2012, Costco was marked as the fifth largest retail stire in the United States of America.
Strategic Vision of Costco
The retail store has put in place the following strategic visions:
- Offering best price and the most attractive value for customers.
- The company strives never to lose its focus in meeting the needs of the market.
- It values the dignity and respect for both its customers and employees.
How the organization handles merits, promotions and adjustments
Promotions are allowed for employees who have worked for the retail store for sometime.
When it come to promotions, employees are promoted from within. Internal employees have the opportunity to access postings for promotions within the retail store.
Selection Process
The hiring process is done both online and through physical means.
Hence, resumes and applications for employment opportunities can be received through the above means.
Application forms are filled out by job seekers as part and parcel of the selection process.
Part-time employees are also promoted to full-time workers on a regular basis especially after they prove to be reliable and efficient workers (Boyle, 2006). During the interview process, both individual and group interviews can be conducted.
The above processes are also structured. Freshly hired employees are supposed to learn about the core operations of the retail store.
Customer service is key during the orientation, training and development of employees.
Hence, workers go through intensive capacity building and training programs.
Salary Administration and Job design
Job design is also a crucial factor at Costco.
Teh rational behind job design is to make effective use of employees based on their individual abilities, professional background and talents.
The human resource department at Costco is charged with the role of aligning job design and various tasks to be performed at the retail store.
The department also plays the role of stabilizing employment portfolio based on the aspects of demand and seasonality.
Evaluation/performance management
Regular evaluation is a major performance management tool at the retail company.
Evaluation aims at appraising the ability of employees.
Performance of workers can only be established if they are evaluated regularly.
Evaluation also assists in enhancing personal growth and future development of employees who are supposed to work for several years at Costco.
Code of Ethics and labor Planning
The following code of ethics have been instrumental in the holistic management of operations at Costco:
- Rewarding shareholders.
- Respecting suppliers.
- Caring for employees.
- Caring for members.
- Obeying the laws and regulations set up by the company.
Code of ethics and labor planning
The performance of employees at Costco is made possible through the process of effective labor planning.
Labor panning at the retail store assists in scheduling employees in regards to different tasks, stabilizing employment and also staffing workers as per the recommended policies.
Compensation of Employees
This is an important areas in the operations of Costco.
According to the stipulated code of ethics, employees are supposed to be rewarded fairly and generously.
Employees who work as cashiers are paid between 10 and 17 dollars for very hour.
This rate is far above other similar retailers in the in the industry.
One of the reasons why employees are paid well at Costco is to eliminate instances of theft.
Workers are also motivated with better pay.
The retail store experiences a lower employee turnover owing to the decent pay package.
For employees who perform beyond the expectation, they are rewarded after every six months with attractive bonuses.
Promotions and merit programs
Promotions are allowed for employees who have worked for the retail store for sometime.
When it come to promotions, employees are promoted from within. Internal employees have the opportunity to access postings for promotions within the retail store.
Part-time employees are also promoted to full-time workers on a regular basis especially after they prove to be reliable and efficient workers (Boyle, 2006).
The company largely concentrates on the “bigger picture” and long term growth prospects.
The stock price of Costco has been rising steadily over the past few years.
Close to 82 percent of workers at Costco enjoy health insurance cover courtsefy of the retail store.
When compared to Wal-Mart, only 48 percent enjoys such a benefit plan.
Working benefits for employees
Sick days for employees are paid for by the company.
Moreover, there are retirement plans for employees.
Holidays and paid vacations are also other interesting variable pay packages enjoyed by workers at Costco.
Variable Pay strategies and programs
Food stamps were never accepted by Costco until 2009. The management of the retail store claimed that they did not have clients using food stamps up to the year 2009 (Katz, 2014).
However, the store changed its operations and started offering food stamps to customers on a trial basis. The program was then expanded beyond New York bearing in mind that other competitor stores were already accepting the food stamps (Stone, 2013).
The regions targeted for food stamps were those that were hard hit.
Costco Memberships
In order to purchase merchandise, Costco shoppers have to pay first. This is done through a membership program whereby customers have to pay upfront (Corona, 2012).
Membership is also part of the loyalty program that the retail store has put in place in order to make sure that it has a steady flow of customers (Stone, 2013).
Capacity building an training
They are expected to clearly understand the rest of the staff members and employer’s position on service delivery
As already hinted out, promotions are carried out internally (Minahan, Huddleston & Bianchi, 2012)
Hence, top or senior positions are not reserved for outsiders. Employees who have worked for the retail store for some time are gradually promoted to senior positions.
The overview of benefits as well as the rules and principles of Costco’s operations are some of the major pointers of the operations of this retail store.
Strategies
The company sells a limited number of goods.
It has a large store volume for its apparel.
For example, Walmart sells close to 60 brands of toothpaste.
However, the retail store sells only 4 brands of toothpaste.
Other competitors handle a large number of variety of goods.
Relying on customers’ purchases in mass quantities.
Costco sells a limited number of items (Baroto, Abdullah & Wan, 2012).
Costco works with Unions
Another motivating factor for employees at Costco is that the company works closely with unions unlike other competitors in the market (Stone, 2013).
There are a lot of benefits associated with unions or employees who are unionized.
About ten percent of employees who work for Costco are unionized (Baroto, Abdullah & Wan, 2012).
As a result, they are guaranteed of at least 25 working hours per week.
The pay strategy is also applicable to the CEO of the company
According to the salary scales and standards adopted by Fortune 500 companies, the current CEO draws the least salary compared to CEOs from other similar retail stores (Kasmir, 2008).
He earns about $650,000 even though the retail store is capable of paying him more than that. When compared to Walmart, a total of $18.1 million was earned by the CEO in 2012 (Carson, 2012).
Such a low pay strategy is also a motivating factor for the lower level employees because it creates a sense of equity across the board.
Programs
Costco travel
Costco travel is yet another program run by the retail store. Members of Costco are offered with leisure travel within the US (Brooks, 2010).
It was incepted at the beginning of the new millennium in order to serve members of Costco.
As part of the motivation process, employees who have been drawn from Costco are hired as part and parcel of the 290 travel professionals (Hollon, 2013).
Costco travel is also a major vacation package offered by the retail store (Hu & Chuang, 2009).
Online shopping
The retail store operates a Business to Business (B2B) platform as part of its online selling strategy. As it stands now, Costco has an online shopping portal. A B2B business strategy has indeed boosted the company’s volume of sales.
Customers who cannot readily access the physical stores can still purchase merchandise through the online channel (Hollon, 2013).
The online channel facilitates easier business shopping.
Since 2005, the company has been offering online photo printing.
The above targets Costco’s members (Courtemanche & Carden, 2014).
Online costco shopping site are spread across the United Kingdom and Mexico among other countries (Melisssa, 2010).
Conclusion
The high productivity of Costco is largely attributed to productive employees who work for several years at the company.
Costco is a successful retail store in the United States and across the globe.
References
Baroto, M. B., Abdullah, M. M. B., & Wan, H. L. (2012). Hybrid strategy: A new strategy for competitive advantage. International Journal of Business and Management, 7(20), 120-133.
Brooks, S. (2010). Battling gray markets through copyright law: Omega, S.A. v. costco wholesale corporation. Brigham Young University Law Review, 2010(1), 19-33.
Boyle, M. (2006). Why Costco is so addictive. Fortune154 (9), 126.
Carson, E. (2012). Costco earnings rise 19%, beating Q1 estimates. Web.
Cascio, W. F. (2006). Decency means more than “always low prices”: A comparison of costco to wal-mart’s sam’s club. The Academy of Management Perspectives, 20(3), 26-37.
Corona, R. (2012). Is Costco Better Than Wal-Mart? A Comparative Analysis Based on Enterprise Marketing Efficiency. Paper presented at the , 7(2) 555-567.
Courtemanche, C., & Carden, A. (2014). Competing with costco and sam’s club: Warehouse club entry and grocery prices. Southern Economic Journal, 80(3), 565-585.
Hollon, J. (2013). Weekly Wrap: What Costco Can Teach About Treating Employees Right. Web.
Hu, F., & Chuang, C. C. (2009). How can different brand strategies lead to retailers’ success? comparing manufacturers brand for coca-cola and private brand for Costco. Journal of Global Business Issues, 3(1), 129-135.
Kasmir, S. (2008). Rival Pay and Benefit Strategies in Mass Market Retail: The “Costco Model” vs. the “Wal-Mart Mode. Web.
Katz, A. (2014). The first sale doctrine and the economics of post-sale restraints. Brigham Young University Law Review, 2(1), 55-142.
Lutz, A. (2013). Costco’s Unorthodox Strategy to Survive the Big Box Apocalypse.
Melissa, A. (2010). Costco bans treatment of veal calves that industry calls typical. Web.
Minahan, S. M., Huddleston, P., & Bianchi, C. (2012). Costco and the aussie shopper: A case study of the market entry of an international retailer. The International Review of Retail, Distribution and Consumer Research, 22(5), 507.
Stone, B. (2013). Costco CEO Craig Jelinek Leads the Cheapest, Happiest Company in the World. Web.