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HRM and Organization Culture at Costco: A Case Study. Stephen Andrews Stephen.andrews299@ myci.csuci.edu 5/05/2014. Human Resource Management. function in organizations designed to maximize employee performance in service of their employer’s strategic objectives - PowerPoint PPT Presentation
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Human Resource Management
function in organizations designed to maximize employee performance in service of their employer’s strategic objectives
HR is primarily concerned with how people are managed within organizations, focusing on policies and systems
Responsible for a number of activities Recruitment Training and developing Rewarding (managing pay and benefit systems)
Costco Wholesale
the second-largest retailer in the U.S. behind Walmart
Costco’s sales have grown 39 percent and its stock price has doubled since 2009
Reputation of treating its employees very well High pay relative to competitors Company sponsored insurance Vacation time Happy work environment Promotes from within After 4.5 years with company, employees receive $2,000 bonus
every 6 months
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 hour
Eighty-eight percent of Costco employees have company-sponsored health insurance
Walmart says that only about half of their employees have company sponsored health insurance
Why?
Costco treats its employees well in the belief that a happier work environment will result in a more profitable company
CEO, 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,”
Case of Joe Carcello
Costco Employee for 26 years
59 years old
$52,700 annual salary
5 weeks of vacation
401(k) Retirement fund
Received a raise during the 2009 economic crisis
“I’m just grateful to come here to work every day.”
What does this mean for the company?
Only a 12% employee turnover rate of 30 years of doing business
Employees don’t want to leave the company
Rarely have to worry about training new employees
“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 expenses Labor is the largest controllable expense for retailers
retailers see labor as a cost driver rather than a sales driver and therefore focus on minimizing its costs
“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 want
Low paid, unskilled, and uninspired workers are not the right people you need to thrive
References
Johnson, P. (2009). HRM in changing organizational contexts. In D. G. Collings & G. Wood (Eds.), Human resource management: A critical approach (pp. 19-37). 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. 38-54). London: Routledge.
Stone, Brad. "Costco CEO Craig Jelinek Leads the Cheapest, Happiest Company in the World." Bloomberg Business Week. Bloomberg, 06 June 2013. Web. 30 Apr. 2014.
Ton, Zeynep. "Why "Good Jobs" Are Good for Retailers." Harvard Business Review. Harvard Business Review, Jan.-Feb. 2012. Web. 01 May 2014.
Weinmann, Karlee. "What Costco CEO James Sinegal Can Teach You About Management.” OPEN Forum. American Express, 27 Dec. 2011. Web. 01 May 2014.
Multiple Choice Questions
1. Which of the following is not a function normally performed by the HR department?
a) Employee Relations
b) Recruitment and selection
c) Training and development
d) Pay and Reward
e) Accounting
2. Which of the following is something Costco does not provide its employees?
a) High Pay
b) Health Insurance
c) Free beer once a week
d) 5 weeks of vacation
e) High chance of promotion