HR Strange But True!
March 31, 2004

We all know that HR is never dull, but sometimes it can get downright strange...

Bad marks for being a good employer

The Costco Wholesale Corp. is often held up as a retailer that does right by its employees, paying them well and offering generous benefits.

But The Wall Street Journal reports that Costco's kindhearted philosophy toward its 100,000 cashiers, shelf-stockers and other workers is drawing criticism from Wall Street. Some analysts and investors contend that the Issaquah, Wash., warehouse-club operator is too good to employees. Costco shareholders, they say, are paying the price.

"From the perspective of investors, Costco's benefits are overly generous," says Bill Dreher, retailing analyst with Deutsche Bank Securities Inc. "Public companies need to care for shareholders first. Costco runs its business like it is a private company."

Costco President and CEO Jim Sinegal sees things differently. "The last thing I want people to believe is that I don't care about the shareholder," he told the Journal. "But I happen to believe that in order to reward the shareholder in the long term, you have to please your customers and workers."

Worker pay, benefits, and job quality have become an especially contentious issue in the retail industry, thanks in no small part to the growing dominance of Wal-Mart, which the Journal describes as "parsimonious" when it comes to employee compensation.

Source: The Wall Street Journal

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