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Motivation at Costco Company: Theory and Practices Research Paper

Background of Costco, its Founder, and CEO

Costco started as a store in California in 1976 and made enormous losses during its initial years in operation. However, the company grew significantly developing in five states by 1984. Nowadays, Costco has grown to be one of the largest and profitable stores in the U.S. It is known for the provision of regional and national brands that are of high quality at remarkably low prices compared to other wholesale and retail outlets in the United States of America.

Much of Costco’s success is attributable to its founder and former CEO Jim Sinegal, its current CEO Craig Jelinek, as well as the company’s top executives. Jim Sinegal has been successful as the CEO of Costco by ensuring that the company has competitive advantage over other outlets based on its sale of merchandise at low prices (Edmans 621). In addition, Sinegal has been focused on ensuring that the employees are treated with dignity. Craig Jelinek follows the footsteps of Sinegal by ensuring that the company’s overhead is as low as possible, keeping the employees happy, as well as ensuring the rotation of products.

On the other hand, the company’s top executives have been instrumental in the success of Costco in that they ensure effective training and development of the employees and address any issues that might affect the productivity of the employees.

Motivation Theories Applied in Costco

Costco has been ranked as one of the most successful, cheap and well-paying outlets in the U.S. However, the company’s success has been attributed to a number of strategic approaches adopted by its executive including several motivation theories (Cascio 27). For example, Costco makes the use of Maslow’s motivational theory that focuses on the hierarchy of needs. According to this theory, the behaviors of various individuals in an organization is influenced by their physiological needs, safety needs, belongingness needs, esteem needs, as well as the self-actualization need. As evident in Costco, the company focuses on the welfare of the employees and hence, ensures high retention rate and low turnover.

Secondly, the company applies the dual-factor theory where the content of the job plays a significant role in the motivation of the employees. Based on the postulates of this theory, improving the nature of the job is very instrumental in the stimulation of motivation among employees within any organization (Dhiman and Marques 816). In the case of Costco, a lot of focus is given on the enrichment of the job by ensuring that the operations and activities within the company have a great depth and scope in terms of employees’ control, responsibility, as well as variety.

Current issues of motivation in Costco’s daily operations

There are a number of motivation issues in Costco’s daily operations, which occur due to the fact that motivation is an important element of the company’s success. The executive focuses majorly on the productivity and level of job satisfaction of the employees. The lack of motivation in the job leads to low commitment of the employees on the tasks assigned to them (Guthrie 344). As such, to ensure that the employees are highly committed to their duties and responsibility the management adopts various approaches to encourage them. For example, offering work-related bonuses and other benefits works well in ensuring that the operations of the company continue as expected.

High turnover affects most organizations nowadays, as they have to incur high costs of recruitment and selection, training and development whenever some employees leave any organization (Dhiman and Marques 816). The leaders at Costco understand the significance of having a motivated workforce as far as reducing turnover is concerned (Cascio 26). For this reason, Costco ensures that the employees receive efficient training and development, as well as support to build their career. Such approaches are implemented for the purpose of ensuring that the employees remain motivated.

According to the hierarchy theory of needs, the satisfaction of employees’ numerous needs is an issue of concern in most organizations (Guthrie 344). In the case of Costco, the employees are motivated to work by ensuring that their various needs are catered for. For example, Costco is known for providing better pay to its employees, as well as ensuring that they receive other benefits such as healthcare.

Costco leaders’ ability to motivate their employees

A review of the motivation levels that is accorded to the employees at Costco reveals that its leaders are focused on the motivation and development of the employees. Such an approach is beneficial to the organization in that, having motivated employees in an organization plays a significant role in the improvement of the organization’s productivity. In addition, motivating the employees lowers turnover by increasing the retention rate. As evident in the approaches used by Jenelik and Sinegal, the leaders of Costco have the ability to motivate their employees.

The leaders have used various approaches in the past to motivate the company’s employees such as emphasizing on the growth and development of the organizational culture and values (Ahn et al. 112). This is achieved through better pay as well as other benefits. For example, the leaders ensure that the majority of the employees have better healthcare and other benefits despite 50% of them being on part-time basis. In addition, the company provides better platforms to enhance employee job satisfaction, which has seen now layoffs at Costco during the last recession period.

Works Cited

Ahn, Mark et al. “Values v. Traits-Based approaches to Leadership: Insights From an Analysis of the Aeneid.” Leadership & Organization Development Journal, vol. 33, no. 2, 2012, pp. 112-130.

Cascio, Wayne. “Decency Means more Than “Always Low Prices”: A Comparison of Costco to Wal-Mart’s Sam’s club.” The Academy of Management Perspectives, vol. 20, no. 3, 2006, pp. 26-37.

Dhiman, Satinder, and Joan Marques. “The Role and Need of Offering Workshops and Courses On Workplace Spirituality.” Journal of Management Development, vol. 30, no. 9, 2011, pp. 816-835.

Edmans, Alex. “Does the Stock Market Fully Value Intangibles? Employee Satisfaction and Equity Prices.” Journal of Financial Economics, vol. 101, no. 3, 2011, pp. 621-640.

Greenhouse, Steven. “How Costco Became the Anti-Wal-Mart.” The New York Times, vol. 17, 2005, p. 1.

Guthrie, James. “Remuneration: Pay Effects at Work.” Oxford Handbook of Human Resource Management, vol. 1, no. 2, 2007, p. 344.

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"Motivation at Costco Company: Theory and Practices." IvyPanda, 3 Sept. 2020, ivypanda.com/essays/motivation-at-costco-company-theory-and-practices/.

1. IvyPanda. "Motivation at Costco Company: Theory and Practices." September 3, 2020. https://ivypanda.com/essays/motivation-at-costco-company-theory-and-practices/.


IvyPanda. "Motivation at Costco Company: Theory and Practices." September 3, 2020. https://ivypanda.com/essays/motivation-at-costco-company-theory-and-practices/.


IvyPanda. 2020. "Motivation at Costco Company: Theory and Practices." September 3, 2020. https://ivypanda.com/essays/motivation-at-costco-company-theory-and-practices/.


IvyPanda. (2020) 'Motivation at Costco Company: Theory and Practices'. 3 September.

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