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Henry ford figured that out a long time ago. It seems to have taken some businesses a lot longer to catch on.
Costco is a good example of a company that is successful not by exploiting their workers, but by treating them well.
In N out burger is another good example. They typically pay 2-3$ an hour higher than the competition. As a result, they get better employees who will work hard to keep their job because they know that if they lose their job and go elsewhere they will make less. The typical fast food worker has no incentive to work hard because they can just go to the next place if they lose their job. See....that's what a number of companies don't understand. You can be successful AND treat your employees well at the same time.
Actually here's the lesson... from Forbes:
“One lesson that emerges from the experience of low-end retailers is that putting workers in crummy, low-wage jobs tends to yield crummy service as well. McDonald’s earnings have fallen, the Wall Street Journal reports, and a management webcast to franchise owners acknowledged that customer dissatisfaction is rising in part because “service is broken.” Myerson adds, “Some of the most successful retailers follow a different path. As MIT management professor Zeynep Ton argued in Harvard Business Review last year, Costco and Trader Joe’s pay their workers far more than many of their competitors, offer their employees opportunities for promotion and enjoy markedly lower worker turnover and far higher sales per employee than their low-road counterparts. Sales per employee at Costco are nearly double that at Sam’s Club.(emphasis added)”
If paying people better wages makes for a more profitable company someone will do just that and go toe to toe with Walmart and take over their business. That is the beauty of free enterprise, the best business model wins.
Exactly, and it appears that Costco's business model is winning.
I like Trader Joe's too. They have good stuff, and at roughly the same price as discount grocery stores. Some of their store brands are actually better than the name brands. I buy almost all of my breakfast cereal there.
Ever try their store brand beer?
I'm not sure what they pay their employees, but they seem contend and, more importantly, competent.
Right, so the point is that to be able to afford paying employees more money they have to employ fewer people. TA DA!! Vive la revolution!
Edit: Oh, and carry higher end products than they currently do because poor people in the store are bad for business...
VC firm?
I don't know what that stands for, but i sincerely hope you're wrong.
I can see the morale argument... productivity though?.. not so much.
whether I go into Costco or Walmart, the shelves are stocked and people help me find stuff....I doubt you'll find differing levels of productivity.
what I usually find at Walmart, as opposed to Costco, is ...employees.
there's lots of employees running around Walmart... not nearly so many running around Costco.... customer service is not their schtick.( it's a retail versus wholesale difference)
So much for the notion our economy is being destroyed because lazy Americans are overpaid. Not to mention, unlike WalMart, Costco employees don't qualify for food stamps and soak up $2.66 billion in taxpayer subsidies to run their business. Amazing ain't it?
Costco's Profit Soars To $459 Million As Low-Wage Competitors Struggle
A typical Costco worker made $45,000 in 2011, according to Fortune. That’s compared to Sam’s Club workers’ average salary of $17,486 per year, according to salary information site Glassdoor.com. Walmart has also been the target of protests by some of its workers, who are protesting what they say are the company’s low wages.
The big box giant's profit jumped 19 percent to $459 million last quarter, thanks in part to the company’s efforts to offer discounts to lure more members, according to Bloomberg. The company was able to offer those discounts and boost its profits while paying its workers a decent wage, a claim many of Costco’s competitors can’t make.
Nor can Costco's competitors claim growth quite like the wholesale retailer. Walmart’s sales suffered last quarter as shoppers struggled with a delay in their tax refund checks and a payroll tax hike. The company’s Sam’s Club unit, which is comparable to Costco, contended with similar obstacles in 2012.
Target, another Costco competitor, lowered its earnings forecast for the year, after customers cut back, pushing the retailer’s profits down 29 percent.
The starting pay at Trader Joe's for a full-time employee is between $40,000 and $60,000 a year, more than twice what some of its competitors offer.
link...
I haven't tried their beer though. Their veggies are quite nice.
Henry ford figured that out a long time ago. It seems to have taken some businesses a lot longer to catch on.
$459 million is entirely too much profit, they could get by with half that much profit and remove the membership fee that keeps out normal working class people.
Their prices beat Sam's Club. Nevermind that though... you may continue destroying your own strawmen.
The problem with all of this is that there is no proven correlation between the company's performance numbers and its wages. It had an increase in profit WHILE paying people better, not necessarily BECAUSE OF paying people better. There could be any number of other factors involved. I'm not against paying people more and I'm not against Costco. I'm just against a partisan article fitting facts to an ideology.
Well right. Some factors to better pay---less turnover, less retraining, better socialization into the company culture--assuming the company culture is both valid and good for business.
Wal-Mart has a problem within its company culture imo, on a variety of levels.
Actually here's the lesson... from Forbes:
“One lesson that emerges from the experience of low-end retailers is that putting workers in crummy, low-wage jobs tends to yield crummy service as well. McDonald’s earnings have fallen, the Wall Street Journal reports, and a management webcast to franchise owners acknowledged that customer dissatisfaction is rising in part because “service is broken.” Myerson adds, “Some of the most successful retailers follow a different path. As MIT management professor Zeynep Ton argued in Harvard Business Review last year, Costco and Trader Joe’s pay their workers far more than many of their competitors, offer their employees opportunities for promotion and enjoy markedly lower worker turnover and far higher sales per employee than their low-road counterparts. Sales per employee at Costco are nearly double that at Sam’s Club.(emphasis added)”
Comparing Costco to Walmart is comparing apples to oranges it is not a fair comparison and very disengenerious, Walmart does not charge you up to 110 dollars a year to shop there. Second you cant go onto Costco and buy one can of beans unless you want to feed 12. and third Walmart has a store in almost every town in America bigger cities have dozens,
So lets do a fair comparison Sams Club to Costco
fond a site who did it for me
Sam's vs. Costco Verdict
its more expensive to shop at Costco their membership is more expensive and so is their merchandise
so the fact still hold true to pay your employees more your prices will be higher
Ford paid his employees more because the cost of training replacements got to high. He didn't do it out of the goodness of his heart.
Venture Capital. A company that owns companies. Similar to Bain or Colony.
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