Organizations are run by people and they have a direct or indirect effect on the society which makes up the environment in which they exist.
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The behavior of a particular organization can be classified as either good or bad depending on some preconceive societal standards. One of the significant retail companies in America is Costco. According to Annual Reports 2008, Costco is the largest warehouse club in the world. The company deals with the selling of a wide range of merchandise and the customers purchase in bulk at greatly discounted rages.
While it may be assumed that the company is good owing to its huge membership and high profitability, this is a wrong assumption since socially irresponsible companies have been known to be successful. This paper sets out to present an unbiased analysis of CostCo by giving a critical discussion of the company’s past and current activities with respect to social responsibility and business ethics. This will enable us to give a knowledgeable take as to whether CostCo is generally a good or a bad organization.
The goodness of an organization can be inferred by the manner in which it treats the people who work for it. The relationship that a company enjoys with its employees can be gauged by looking at the rate of employee turnover.
A report by Goldberg and Ritter reveals that Costco’s turnover is at a mere 24% per annum. Compared to the 50% annual employee turnover of one of the company’s chief rivals Wal-Mart, this reveals that CostCo indeed enjoys a good relationship with its employees. This low rate of turnover is attributed to many factors among which are the relatively high pay that the company offers to its employees and the benefits that they receive.
Employee benefits such as health care benefits which are said to be extended to 82% of the staff show the concern for employee welfare by the organization therefore leading to increased employee loyalty (Priceviewer). The company’s founder and CEO, Jim Sinegal concedes that keeping the work force content is important since the employees are the people on whom the success of the business rides (Goldberg & Ritter).
However, the issue of employee treatment is still controversial as there have been instances where the company has been accused of being insensitive to employee needs especially with regard to leaves and overtime.
The company has been accused of violating wage and working hours laws by locking its employees in the store after hours without paying them for the overtime (Bloomberg News). While Costco insists that this action is for security reasons, the fact that the company refuses to consider the workers complaint on the issue points to a disregard for the welfare of the employees.
Perhaps one of CostCo’s most endearing characteristic is its customer service. While most companies do make attempts at ensuring that customer relations are good, very few organizations can boast of evoking the levels of loyalty and trust that CostCo has created with its customers.
The organization boasts of being among the most consumer sensitive business in the world, an opinion that is reinforced by Bund who cites the company’s 6-month return policy as one of the best (76). This policy among others ensures that Costco’s customers are served satisfactorily. Bund also suggests that the open lines through which one can air their grievances with the company appeal to the customer since they know that the company appreciates their sentiments and emotional well being (77).
Despite this claims of good customer services, Costco requires that the members pay an annual membership fee of $45 so as to enjoy some services. Critics see this as being a ploy by Costco to not only gain more money (an estimated 1billion per annum is accrued in membership fees) but also obligate consumers to purchase their supplies from the Costco stores. In addition to this, the organization is accused of primarily targeting affluent consumers who are said to make up over 50% of its sales (Bund 78)
While Costco does not have a specific charitable organization that it runs, the organizations influence is felt by the hundreds of charitable causes to which it constantly makes donations to. The company specifically focuses its support efforts on children, education and the health sector (Costco).
The company’s website also confirms that most of the organization’s donations are channeled to Children’s Hospital and the Red Cross international organization. Unlike most companies which engage in charitable activities to further their own agendas, Costco insists that its philanthropic efforts are completely devoid of gains to the company and to demonstrate this, the company specifically states that it does not make donations to individuals, political organizations or any professional associations (Costco).
In the recent past, discussions about the environmental have taken a front seat especially with the global warming issue at hand. As such, individual activists and organizations have engaged themselves in various activities aimed at the protection of the environment.
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To elaborate on its active contribution to environmental conservation, Costco has over the years undertaken some environmental conscious actions. To reduce its carbon footprint, the company has invested in solar panels and installation of skylights so as to cut on energy usage.
Another move by the company was the replacement of plastic bags with hybrid packages contained as little plastic as possible. This move was motivated by the realization that plastic is detrimental to the environment and while the hybrid material that the company switched to are not 100% environment friendly, they are made from recycled products and are biodegradable which means that they are safer to the environment (Shelf Impact).
The issue of environment however develops a different twist when you take into consideration the manufacturers of the goods that Costco sells. It is a well known fact that Costco stockpiles its warehouses with relatively cheap wares mostly from China and other Asian countries. These countries are known for their degradation of the environment almost no rules regulating the carbon emissions mostly due to lack of strict legislation of the issue.
Costco boasts of having a diverse workforce and according to the company’s CEO, it is the organizations aim to create a favorable work experience for the entire workforce. The organization states that it does not discriminate on the basis of race of gender and this can be accentuated by the multiracial and almost mixed gender workforce (Costco). Religion is also not an issue with employees at Costco and the religious beliefs of each employee are respected.
However, Costco happens to be one of the companies that have over the years been accused of gender based discrimination. The company has been accused of “glass ceiling” its women employees by limiting their chances of being promoted to high positions in the company. Frazel, an advocate for a class action suit against the organization asserted in a press release that “only one in six Costco managers is a woman” despite the fact that nearly half the company’s staff comprises of women.
While Costco insists that awarding of promotions is on merit and that gender and race play no part, the fact that there is no promotion system in place and it is the prerogative of senior managers to issue out promotions casts a shadow on the objectivity of the promotional efforts since most managers are male to begin with.
This paper set out to perform an in-depth analysis of Costco’s behavior so as to help categorize it as “good” or “bad”. From the discussions presented in this paper, it is clear that despite the organization not being without fault, Costco is an inherently good company that has not only the consumer’s but also its employees and the environment’s good at heart.
Despite the negative publicity that the company has received mostly as a result of the female employee’s discrimination, it can be demonstrated that the company is socially responsible and makes an effort to give back to the community. In a world where the majority of organizations are only interested in profitability, Costco remains the exception to the rule and has proven through the years that a company can be socially responsible and still manage to compete favorably in the business world making huge profits for its stockholders.
AnnualReports. “Costco Wholesale” 2008. Web.
Bund, Barbara. “The Outside-in Corporation: How to Build a Customer-Centric Organization for Breakthrough Results.” McGraw-Hill Professional, 2005.
Bloomberg News. “Costco Accused of Abusing Wage Law.” 2009. Web.
Costco. “Donation and Grand Eligibility Guidelines.” 2010. Web.
Frazel, Trudi. “National Class Action Gender Bias Suit Filed Against Costco.” 2004. Web.
Goldberg, Allan and Ritter, Bill. “Costco CEO Finds Pro-Worker Means Profitability.” 2006. Web.
Priceviewer. “Costco Employment.” 2010. Web.
Shelf Impact. “Costco Packaging goes Eco-friendly.” 2006. Web.