For most businesses, higher wages would mean a decrease in total profits, but not for Costco. On average, a Costco employee earns $21 USD per hour and wages start at $11.50 USD. Even with higher wages compared to the industry standard, the company is seeing an increase in their profits annually. The reason for the high wages is to attract the right people for the job. The higher wages and the generous benefits package can be seen as an incentive for employees to work harder since the employees know that they are earning more than the industry standard.
The article about Costco is similar article about Zappos discussed in class 19, people,culture and teams. Both companies invests valuable time and money to find the best employees, rather than cut cost and hire basically anyone who is willing to work for minimal wage. Costco may not go to the extremes that Zappos does, which is to offer potential employees $2,000 to quit on the spot, but Costco does put a heavy emphasis on finding employees who are in it for the long term and not just for the money. The business plan that Costco and Zappos uses is very effective for their business, however, it may not work for all business models. Companies, like Walmart, that put a heavy emphasis on low cost, would not see the same success that Costco does using the same business plan.
Main Article:
Supporting Information:
http://www.nasdaq.com/symbol/cost/financials?query=income-statement
http://www.businessinsider.com/costcos-unorthodox-business-strategy-2013-3?op=1
http://www.ou.edu/russell/UGcomp/Kerr.pdf
Image:
http://www.photoprintprices.com/wp-content/uploads/2014/04/Costco-PhotoPrintPrices.jpg
