\fSince Then costco now has over 90.3 million members to its stores and as the first company to grow from zero to $3 billion in sales "less than 6 years. Since then it has also grown to have one of the best corporate cultures anywhere. It has even been backs of our employees, because we were going to pay the highest wages in all of retail." For that reason. 70 cents of accused of having an "obsession" with corporate culture. Much every dollar spent by Costco goes to employee wages. This business at 7%, compared to 70% at most other retailers. all parties to fits growth, of course, has come directly from its ability to results in an employee turnover rate that is the lowest in the beneficial to poring on people that love the idea of Costco, allowing for its success to compound further. The Effect on Customers everyone Teamwork: The Key Element While it is important to have a great team of people working for you, without customers it doesn't matter. In Costco's case. of Costco's Culture however, there are always plenty of customers. Despite how one of the first questions the people at Costco had to answer many customers there are or how much demand present. was how they could get customers to move past all the object Costco's mission is to get people anything they want for the tions they would have to shopping there. Costco has plenty of lowest price. Founder Sinegal says this leaves people obsessed quirky things about it , like the fact that you have to have a with passing on savings to the customer instead of absorb- membership and that forklifts are constantly moving around the ing them as profit. He demonstrates further, saying, "We pass the savings on to the customer, every time. Do you know how noor-they had to find a way to make customers not mind that. tempting it is to make another $7 on a pair of jeans if you can? For that reason, Costco tried its best to focus inward. Scholar But once you do it, it's addicting. You can't stop." Practices like he's views fferences Tom Relihan commented , "From the bottom up, Costco is built this gain trust from customers and make them loyal. Costco zealously maintains the image that it will always have the low- en parties on a culture that values passion, pride, integrity, and treating your employees right-one its co-founder spent decades care- est price for any product to save the customer money. Founder fully crafting. The payoff was huge." It felt the best thing for it Jim Sinegal reiterates, "We don't want to just be better, in to do would be to systemize a way to make sure the customer terms of price. We want to be demonstrably better on every single product that we sell." is always satisfied and never feels cheated . For that reason, it began by looking at how it creates culture. Conclusion According to Relihan, it wanted to develop a culture that could Costco believes that culture "is not the most important thing in "ensure a good experience by carrying a generous return policy the world. It is the only thing." It is the thing that drives business on quality products." This would mean doing a handful of things and strategy. Teams are a primary component of Costco's cul- to systemize a good experience. It wanted to pass on any sav- ture. Its reputation and ability to build a team of great employ- ees is what gives it the ability to carry out its goal of low-price ings it could to wholesale customers, keep away from mislead- dominance, something it will maintain for years to come ing advertisements, and offer high wages and great benefits to employees. These are all pieces of its culture, enforced by each Discussion Questions rk toward and every employee. These are things instilled in employees 1. Why did Costco initially spend so much time on culture? ger is only as the way Costco does business. Because Costco employees stay around for so long, their internal promotion rate is sky 2. What evidence suggests that Costco puts emphasis on a team- high, especially compared to elsewhere in retail. This means based approach to getting work done? that those same values learned on the floor get spread all the 3. Why do Costco employees stay? way to the top of the hierarchy as employees work their way up. Another important aspect of Costco's culture is teamwork. Cited Costco believes the key to effectiveness and efficiency is work https://mitsloan.mit.edu/ideas-made-to-matter/how-costcos- to do, it eams that bond to address customer needs and preferences. obsession-culture-drove-success with one https://www.delish.com/food-news/a25475779/costco-best- Keeping Employees company-culture/ https://www.thebalancesmb.com/costco-mission-statement- One thing Costco employees are known for is never leaving merg- Costco. Costco describes its relationship with employees as 2891829 e after "deep seated and mutual appreciation." Team members at https://www.fool.com/investing/general/2013/08/21/costco-lead almart Costco feel they are appreciated thanks to high wages, great er-culture-is-not-the-most-important-th.aspx ware- hours, and generous benefits. One of the main characters of http://panmore.com/costco-wholesale-organizational-culture- d size the Costco story, founder James Sinegal, put it this way: "No characteristics jer an one was going to be able to say we're making money off the oday. Chapter 12: Managing Team Performance 309