Generous Benefits? Costco CEO Says They Are “Just Good Business”

In a day and age when all-too-many companies seem to be focused on how much they can cut out of what employees are getting, Costco Wholesale is a notable exception.

Not only is Washington state-based Costco an exceptionally strong company that seems to thrive no matter what the state of the economy, but it does so in large part because of how it treats and values its workforce. It’s management philosophy is to treat employees exceptionally well because they will in turn treat customers in kind.

It’s a simple philosophy that has worked incredibly well, and retiring CEO Jim Sinegal says it probably won’t change because it is part of Costco’s corporate DNA. He talked about this employee-first philosophy this past weekend in a Q&A with the Seattle Times:

Question: You’ve always ignored analysts who suggest you pull back on things like employee benefits. Could that change under a new CEO?

Answer: Not a chance.

Q: Why not?

A: Because it’s part of the DNA of our company. It’s the culture. … It’s not altruistic. This is good business, hiring good people and paying them good wages and providing good jobs for them and opportunities for a career. If you accept the premise that we pay the highest wages in our industry [hourly workers average more than $20 an hour, including bonuses] and have the richest health care and benefit plan in our industry and the lowest price on merchandise and run the lowest-cost operation, then it must follow we’re getting better productivity.”

There’s more in the interview about how Sinegal has turned Costco into a great retail success story, but it is the simple people-first philosophy that is at the heart of it all. Makes you wonder why something so simple — and incredibly successful — hasn’t been emulated by other companies that seem to go through business philosophies the way someone eating barbeque ribs goes through napkins.

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You should read what Jim Sinegal has to say, because there is a lot of wisdom in this smart and simple approach.

For the entire Seattle Times’ interview with Costco’s Jim Sinegal, click here

John Hollon is Editor-at-Large at ERE Media and was the founding Editor of A longtime newspaper, magazine, and business journal editor, John has deep roots in the talent management space. He's the former Editor of Workforce Management magazine and, served as Editor of RecruitingDaily, and was Vice President for Content at HR technology firm Checkster. An award-winning journalist, John has written extensively about HR, talent management, leadership, and smart business practices, including for the popular Fistful of Talent blog. Contact him at, connect with him on LinkedIn, or follow him on Twitter @johnhollon.


4 Comments on “Generous Benefits? Costco CEO Says They Are “Just Good Business”

  1. There is no reason why Costco employees need to be happy.  It’s cash and carry.  They don’t do anything but stock the shelves. All employees should have their wages cut in half and pass that savings on to the customer.  

  2. Satisfied and happy employees do generally equal a great customer experience.  In his comments, Jim also mentions that he believes it typically equals higher productivity. I’m curious if anyone is aware of any additional rewards programs that Costco offers its employees that are tied to metrics that are directly related to productivity (customers cashed out per minute, # of items, etc)?  It’s a very intriguing model that they’ve found success with!

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