Wal-Mart’s Sam’s Club? or Costco?

I wonder how it would be to work at both and then be able to compare their organizations. We read a excerpt from a book where a journalist tried to work at Wal-Mart but could not make it not only because of the wages but because of the mindless job she was asked to perform over and over, looking at the job descriptions at the Costco web site, the jobs are much similar (www.costco.com). The description of her job matches one of the definitions of the rational organization model where “individuals can behave rationally because their alternatives are limited and their choices circumscribed (page 57).

Furthermore JD Thompson says that “structure is a fundamental vehicle by which organizations achieve bounded rationality”; but do people can really adapt to this model? If we analyze from a turnover stand of point Costco with a turnover rate of 17% does better than Wal-Mart’s 44% (Academy of Mgmt Perspectives), even so those are high turnover rates, but why is Costco’s lower, if the job is essentially the same? Could that be because of the difference in wages or the work environment?

How many of us have been at Sam’s early in the morning to hear them cheer? I was there numerous times (I found that shopping before your household is up is more productive, how about that for formal rationality??!!), do the workers seem to be happy and excited to be there? Maybe some of them are, maybe some of them are not, and we found both examples in the book (Nickel and Dime). So, how does Costco weighs differently on its employees? If we use the annual report from both companies published on 2005, Costco wages were 40% higher than Sam’s club, on top of that the benefits, such as health care, at the first company are much better than in the later, giving Costco a higher sales per square foot (Academy of Management Perspectives pg 34,35).

So, do people really work harder for better pay? If we take Taylor for instance, pay would not matter, just the ‘pride’ in achieving maximum productivity would. On the other hand, Costco is a thriving example that rewarding people for their performance and taking care of its employees is a win-win situation. Now, what do the shareholders think about that? That’s a story for another blog…

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5 Responses

  1. This is interesting. After reading the latest chapter it seems that Costco’s approach of using incentives and rewards for performance is consistent to organizations of the Natural System.

  2. I cannot see higher benefits be the sole reason for a higher employee moral at a company like Wal-Mart. Looking at Barbara from her book “Nikel and Dimed”, She was making minimum wage. She could barely afford the an apartment for several hundreds of dollars a week on her low salary. But what if her pay check was $2 higher, making it from roughly $7 to $9. In all likelihood, she would still need to work long shifts, she would still live in a run down apartment, and eat the same types of foods. Her only positive would be that fact that she may not have to worry about every penny when buying groceries or indulging every once in a while. But would that really make someone that much more happy.

  3. I cannot see higher benefits be the sole reason for a higher employee moral at a company like Wal-Mart. Looking at Barbara from her book “Nickel and Dimed”, She was making minimum wage. She could barely afford the an apartment for several hundreds of dollars a week on her low salary. But what if her pay check was $2 higher, making it from roughly $7 to $9. In all likelihood, she would still need to work long shifts, she would still live in a run down apartment, and eat the same types of foods. Her only positive would be that fact that she may not have to worry about every penny when buying groceries or indulging every once in a while. But would that really make someone that much more happy.

  4. One thing I think you are overlooking is how much $2 can help a person in the lower class financially. An extra $2 is $480 dollars a month more (in a 30 day month, 8 hour work day before taxes). I know I’m not in the lower class, but I am a college student, and like many of us I don’t have much money to throw around, so an extra 480 bucks a month wouldn’t hurt. I actually recently just picked up a job on campus for that very reason. Now I’ll most likely spend the money on beer, food, and entertainment, but if I was living like Barbara, that would mean and extra months rent, or a hell of a lot of food from Costco.

  5. I think it’s also important to look at external benefits as more than just money. How many times in N & D did a manager come to Barb or her fellow workers and tell me how good they were doing. There’s a big difference for having pride in your own work just because you’re proud, and having pride in your work because someone else gave you a compliment or encouragement. That’s the idea with Sam’s clubs cheer and other such tactics – let the workers know you appreciate them and the work they are doing. Oh yeah – I’m sure another $2 an hour wouldn’t hurt either.

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