Costco: Going Above and Beyond Profit Making

Costco: Going Above and Beyond Profit Making

When deciding on a company to choose to study their Code of Ethics policy, I immediately thought of Costco.  I’m personally a recent member of the warehouse giant, and I’ve noticed something different about Costco’s employees that I wanted to learn more about.  Costco has long held a great reputation for being good to their employees, not just by much they are paid and the benefits that they are given, but, more importantly, how they are treated.  I assumed that because of this, Costco probably has a pretty thorough Code of Ethics and resources available for employees to easily report any questionable unethical behavior.  I was interested and satisfied to learn that this is, indeed, true.

I visited Costco’s website and was able to quickly locate a link at the bottom of the page to their “Ethics Hotline for Suppliers”.  This brought me to an outside site where one can file an online report if he/she is a witness to any possible wrongdoing by a Costco employee or vendor.  It spells out many specific reasons that one could file a report, such as:

• Accounting Issues
• Antitrust Activity
• Bullying/Intimidation and Retaliation/Sabotage
• Conflict of Interest
• Discrimination
• Environmental Protections
• Falsification of Reports
• Fraud
• Kickbacks/Bribery        
• Safety
• Sexual Harassment
• Substance Abuse
• Theft
• Wage Issues

Upon locating Costco’s Code of Ethics, I read and analyzed their policy.  I feel that it is a very comprehensive policy that specifically spells out expectations that the company has of its employees.  The Code of Ethics, along with a summary of each main principle, is described below.

Costco Code of Ethics

1. Obey the law.

Costco earned my respect with their mention of not only obeying the laws, but exceeding the required ecological standards in all communities where they do business.  Noted here is that they vow to comply with all wage laws and conduct business in and with foreign countries “in a manner that is legal and proper under United States and foreign laws.”  Meaning they obey the laws in whatever country they do business, but in addition, they also choose to abide by U.S. laws in these countries, which are often stricter.

1. Take care of our members.

Costco vows to be fair to their customers, and Costco acknowledges that their business would be nonexistent without their customers.  For that reason, Costco strives to provide top-quality products at the best market prices.  They vow to sell products that are “ecologically sensitive”, and offer a 100% satisfaction guaranteed warranty on every product and service, including the Costco annual membership fee.

1. Take care of our employees.

Costco recognizes that their employees are “our most important asset.”  Costco is proud to offer competitive wages.  Costco pays its hourly workers an average of $20.89 an hour, not including overtime (vs. the minimum wage of $7.25 an hour). By comparison, Walmart said its average wage for full-time employees in the U.S. is $12.67 an hour. (Stone)

  Taking care of employees has benefits to the company—it saves money in the long run by reducing turnover as well as employee theft, which makes up the majority of theft within a company.  “Good wages and benefits are why Costco has extremely low rates of turnover and theft by employees.” (Greenberg)

In addition, Costco’s benefits are highly desirable.  “…Part-time workers are eligible for health insurance after just six months on the job, compared with two years at Wal-Mart.” (Greenberg)  

“Eighty-eight percent of Costco employees have company-sponsored health insurance; Walmart says that “more than half” of its do.”  The current CEO stated that he believes that people need to make a living wage with health benefits, and that it puts money back into the economy and creates a healthier country. (Stone)

Health insurance is a huge benefit for part-time retail workers in particular, who typically are not eligible for health insurance.  The article noted that most of both part-time and full-time employees’ dental insurance costs are covered as well.

1. Respect our suppliers.

Costco advises that they essentially follow the “Golden Rule” in regards to how they treat suppliers/vendors—they are treated just as Costco employees would expect themselves to be treated when visiting a business that they have a relationship with.  People and property are always respected.  Costco states that they honor their commitments, avoid conflicts of interest, and do not accept gratuities.