Costco: Join the Club

Topics: Costco, James Sinegal, Social responsibility Pages: 6 (1945 words) Published: January 5, 2014
1. Describe the culture at Costco.

Organizational culture has been described as shared values and beliefs that underline a company’s identity. A strong culture that encourages employees from the top to the bottom in adaptation and change can increase organizational performance by energizing and motivating employees, shape behaviors, unify personnel in the goals / objectives and align employee’s actions with the priorities of the company (Daft, R., 2013). Creating a constructive culture should be a manager’s top priority because the right culture will propel a company into a top performer in its industry.

Costco’s culture is one where the customer and employee come first. Customers enjoy a 15% markup where most retail stores increase by as much as 40%. Costco accepts returns sold items without a receipt and a “no questions” policy on the return. For the employee, Costco offers generous salary and health benefits, which critics pursue Costco to cut in order to reduce labor costs. Costco’s culture is rich and successful because it is supported by five “axioms”, the company’s adopted values, which is the second layer of organizational culture: •Obey the law

Value your customers
Value your employees
Respect suppliers
Reward shareholders
There are four categories of culture associated with two dimensions: the competitive environment and an organizations strategic focus and strength. The four categories include adaptability, mission, clan and bureaucratic. These classifications relate to correlation between cultural values, strategy, structure and the environment (Daft, R., 2013). Adaptability Culture – Characterized by the focus on the external environment through change to meet a customer’s needs. This culture encourages entrepreneurial values, norms and beliefs. Mission Culture – The idea of serving specific customers in an external environment, but without a need for change. Identifies with an emphasis on clear vision of the company’s purpose and achievement of goals, such as growth in sales, profitability, or market share. Clan Culture – The primary focus is on involvement and participation of all of the company’s members; rapidly changing expectations from the external environment involving a customer base. This culture looks to meet the needs of employees as a route to high performance and achievement. Bureaucratic Culture – This culture focusses internally on consistency orientation to create a stable environment. It supports a consistent approach to conducting business and to achieve goals there are established policies and practices to reference. Costco is described as a company that values their employees and their customers first in order to reduce turnover of employees and increase their “regular” customer base. They encourage autonomy by local managers so long as the idea or change follows the key guidelines of the culture of the company. In addition, they increase opportunities and pay for employees that think “outside the box” and can implement ideas that save the company money or the amount of regular shoppers that will most likely return. These are all factors that define a clan type culture where taking care of the employees to ensure their productivity is valued. This motivates employees to work towards the company’s goals and objectives and provides for promotional opportunities based on performance.

2. How does Costco motivate its employees?
First, we must ask what motivation is and how it affects employees. I believe that motivation is an inner source of energy that drives an individual to accomplish his/her personal or professional goals. Motivation instills a sense of accomplishment within a person to work towards certain achievements either professionally or personally that satisfy a need within oneself. A culture that is strong and encourages adaptationand change increases organizational performance by energizing and motivating employees, bringing employees together through...
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