Tag Archives: Costco

The Costco Lesson: Don’t Hire from Business Schools

Why is Costco is not only successful, but also decent?

It is decent to its customers. Almost everything is marked up 14-15 % or less over cost. Most of its profit comes from membership fees, so if you like buying in bulk you save. (I don’t, so I never go to Costco, but I see the attraction.)

And it is decent to its employees. Unlike the retail industry norm, the workers are well paid, with decent benefits. So they have low turnover, good morale, high productivity. Presumably this makes them helpful and cheerful with customers.

What’s the secret? I would nominate this remarkable fact as a clue to Costco: Managers work their way up from the warehouse floor. Costco does not hire business school graduates.

(From a BusinessWeek profile of the company, via The Browser).

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