A Corporation That Breaks the Greed Mold

Do big time CEOs -- no matter how compassionate and cuddly they might be personally -- have to be SOBs on the job?

Yes, says the conventional wisdom of greater CorporateWorld. The bottom-line dictates that wages and benefits be slashed and that offshoring be pursued with a vengeance. It's not personal, just business. "Look Ye to Wal-mart," boom the Market Gods, directing CEOs to follow the anti-labor, low-wage, no benefit, 'move it all to China' ethic of this giant. The gods decree that no one can out-compete Wal-Mart, so best to imitate the beast.

Apparently, Jim Sinegal has been going to the wrong church. He's CEO of Costco, the profitable warehouse club retailer that's fast growing across the country. He takes a shockingly heretical view of his job, boasting of his company's fair treatment of employees: "We pay much better than Wal-Mart," Sinegal says. "That's not altruism. It's good business."

Indeed, Costco's pay is much, much, much better -- a full-time Costco clerk or warehouse worker earns more than $41,000 a year, plus getting terrific health-care coverage. Wal-Mart workers get barely a third of that pay, plus a lousy health-care plan. Costco even has unions!

Yet, Costco's labor costs are only about half of Wal-Mart's. How's that possible? One reason is that Costco workers feel valued, which adds enormously to their productivity, and they don't leave -- employee turnover is a tiny fraction of Wal-Mart's rapidly revolving door.

Another thing Sinegal rejects is offshoring: "We could move [some operations] to Bangladesh or somewhere. But what kind of message would that send to our employees? Not a good one, I think."

While Wal-Mart makes twice as much profit as Costco, Sinegal believes its better business to make a nice profit, but not a killing, and to invest more in Costco's 92,000 workers. "I don't see what's wrong with an employee earning enough to be able to buy a house or having a health plan for the family," he says.