Presentation on theme: "HRM and Organization Culture at Costco: A Case Study"— Presentation transcript:
1 HRM and Organization Culture at Costco: A Case Study Stephen Andrews5/05/2014
2 Human Resource Management function in organizations designed to maximize employee performance in service of their employer’s strategic objectivesHR is primarily concerned with how people are managed within organizations, focusing on policies and systemsResponsible for a number of activitiesRecruitmentTraining and developingRewarding (managing pay and benefit systems)
3 Costco Wholesalethe second-largest retailer in the U.S. behind WalmartCostco’s sales have grown 39 percent and its stock price has doubled since 2009Reputation of treating its employees very wellHigh pay relative to competitorsCompany sponsored insuranceVacation timeHappy work environmentPromotes from withinAfter 4.5 years with company, employees receive $2,000 bonus every 6 months
4 Costco’s Employees Costco pays its hourly workers an average of $20.89 Walmart’s average wage for full-time employees in the U.S. is $12.67 an hourEighty-eight percent of Costco employees have company- sponsored health insuranceWalmart says that only about half of their employees have company sponsored health insurance
5 Why?Costco treats its employees well in the belief that a happier work environment will result in a more profitable companyCEO, Craig Jelinek says:“I just think people need to make a living wage with health benefits”“It also puts more money back into the economy and creates a healthier country. It’s really that simple.”“We know it’s a lot more profitable in the long term to minimize employee turnover and maximize employee productivity, commitment and loyalty,”Many other retail companies, such as Walmart and Amazon, have had employee strikes. Costco has never had a real strike in its 30 year history.
6 Case of Joe Carcello Costco Employee for 26 years 59 years old $52,700 annual salary5 weeks of vacation401(k) Retirement fundReceived a raise during the 2009 economic crisis“I’m just grateful to come here to work every day.”
7 What does this mean for the company? Only a 12% employee turnover rate of 30 years of doing businessEmployees don’t want to leave the companyRarely have to worry about training new employees
8 “Good Jobs” are good for retailers Common thought is that many companies have no choice but to offer bad jobs—especially retailers whose business models entail competing on low prices.Easiest way to cut expensesLabor is the largest controllable expense for retailersretailers see labor as a cost driver rather than a sales driver and therefore focus on minimizing its costs
9 “Good Jobs” are good for retailers (cont.) But…Highly successful retail chains— such as Trader Joe’s, and Costco—not only invest heavily in store employees but also have the lowest prices in their industries, solid financial performance, and better customer service than their competitors.“Good jobs” will attract higher caliber employees to give you the results you wantLow paid, unskilled, and uninspired workers are not the right people you need to thriveThey have demonstrated that, even in the lowest-price segment of retail, bad jobs are not a cost-driven necessity but a choice. And they have proven that the key to breaking the trade-off is a combination of investment in the workforce and operational practices that benefit employees, customers, and the company
11 ReferencesJohnson, P. (2009). HRM in changing organizational contexts. In D. G. Collings & G. Wood (Eds.), Human resource management: A critical approach (pp ). London: Routledge.Paauwe, J., & Boon, C. (2009). Strategic HRM: A critical review. In D. G. Collings & G. Wood (Eds.), Human resource management: A critical approach (pp ). London: Routledge.Stone, Brad. "Costco CEO Craig Jelinek Leads the Cheapest, Happiest Company in the World." Bloomberg Business Week. Bloomberg, 06 June Web. 30 AprTon, Zeynep. "Why "Good Jobs" Are Good for Retailers." Harvard Business Review. Harvard Business Review, Jan.-Feb Web. 01 May 2014.Weinmann, Karlee. "What Costco CEO James Sinegal Can Teach You About Management.” OPEN Forum. American Express, 27 Dec Web. 01 May
12 Multiple Choice Questions Which of the following is not a function normally performed by the HR department?Employee RelationsRecruitment and selectionTraining and developmentPay and RewardAccountingWhich of the following is something Costco does not provide its employees?High PayHealth InsuranceFree beer once a week5 weeks of vacationHigh chance of promotion
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