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Tale of two stores: There is Costco and then there is Walmart.

Tale of two stores: There is Costco and then there is Walmart. (
8:21 PM Jun 11 2013

Stashed in: Founders, Business Facts, Hiring, Management, Walmart, Costco

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Pat Callans, vice president of human resources and risk management at Costco (COST), doesn't fit the normal HR profile. A lawyer by training, he's held various roles at the company including one in operations before taking on his current position six months ago.

A combined human resources and risk management title is highly unusual. But it makes sense: People are both a company's biggest risk and strongest asset.

Callans says Costco pays starting hourly workers $11.50 to $12 per hour with increases in pay after just 800 hours of work. 

"It's the philosophy that the founders [Sol Price and Jim Sinegal] brought that if you pay competitive wages and great benefits, you'll attract great employees," he says.

At Costco, "the average hourly wage in the U.S. is a little over $21 [this includes wages and overtime pay but not extra "bonus" checks], Callans wrote me. Both full- and part-time hourly workers receive bonus checks of around $5,000 annually starting around the five-year mark.

Callans says paying well ultimately saves Costco money. The company gets tons of applications and can afford to hire selectively. And it also doesn't incur the high costs of turnover that other companies must deal with. In fact, turnover at the company runs just 10% overall for hourly workers and 6% if they stay longer than one year, he told me.

Those figures are miniscule compared to overall turnover rates of 67% for part-time staffers and 24% for full-timers, according to statistics from the Hay Group.

Low turnover "allows us to pay good wages because we are not spending time, money, and resources filling positions," Costco's Callans told me.


"Costco is a leader in the retail space and wants to be seen as the leader in paying competitive wages and benefits."

Everyone who works hard wants to be self-sufficient, but until companies pay a living wage "your tax dollars are subsidizing McDonald's, Wal-Mart, and Macy's," Crawford told me.


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