# Why most employers aren&#146;t like Starbucks and Costco



## Bowden (Jun 20, 2014)

This article points out the facts as to companies that pay their employees low wages and benefits have poor customer service levels.
You get what you pay for.
Pay employes shit wages and crappy benefits, you employ unmotivated shit employees that provide shitty customer service. 

However...
If those unnmotivated shit employees that provide shitty customer service don't like their shit wages and crappy benefits they can always go to work at some other company that pays employees shit wages and crappy benefits and provide shitty customer service there.
Free market job market forces combined with trickle down economics work well in some cases as to ensuring shitty customer service and high rates of employee turn over.

http://finance.yahoo.com/blogs/dail...en-t-like-starbucks-and-costco-152636634.html

By Rick Newman 

Being a coffee clerk may not be a dream job, but Starbucks (SBUX) has added some kick to its line positions with a new program that covers college tuition for employees who meet certain conditions. And Starbucks, like Costco (COST), Whole Foods (WFM)  and a handful of other enlightened employers, offers starting pay well  above minimum wage, along with other benefits it probably doesn&#146;t have  to.



Firms that  offer employees above-market pay and perks usually contend it makes good  business sense to treat workers well, since it boosts morale,  discourages turnover and improves the company&#146;s image. So why don&#146;t more  companies do it? The answer involves a combination of pragmatism,  short-sightedness and sensitivity to Wall Street concerns.


Companies  basically fall into two categories in terms of the pay and perks they  offer their workers: Those that view their workforce as a cost and those  that consider employees an investment. It won&#146;t be surprising to hear  the overwhelming majority of companies take the cost approach. &#147;The  number of companies who treat employees as an investment is pretty  slim,&#148; says Lee Dyer, a professor at Cornell University&#146;s ILR School.  &#147;When a company like Starbucks invests in its people, the reason it gets  so much attention is because it&#146;s such an anomaly.&#148;


*Common traits*
The  few companies that do make a point of treating workers better than  average have a few things in common. First, they typically distinguish  themselves in the marketplace through quality, service or some attribute  other than low prices. That makes it important to have loyal,  personable employees who make a good impression on customers and  maintain quality control throughout the ranks. Starbucks, for instance,  clearly doesn&#146;t woo customers through discounts. Instead, it emphasizes a  pleasant experience in its stores, which tend to draw businesspeople  and others willing to pay $4 or more for a cup of coffee. &#147;If you&#146;re in  the business of touching customers every day, you want a workforce  that&#146;s loyal and in a positive mood,&#148; says Mike Van Ham, a principal  with Buck Consultants.


Hiring  talented employees, even at the entry level, requires the kind of  fairly sophisticated hiring operation many companies don&#146;t have, either  because they&#146;re too small or they&#146;ve never invested in it. It helps if  the firm has centralized control of all its outlets, which is difficult  at chains such as McDonald&#146;s (MCD)  or Subway, which franchise most of their stores. And most companies  that feel strongly about high-quality employees have a founder who&#146;s  passionate about the issue and remains influential at the firm. That  certainly pertains to Howard Schultz of Starbucks, John Mackey of Whole  Foods and Jeff Brotman and Jim Sinegal, the co-founders of Costco. A  knack for wringing good PR from employee programs &#151; which some have accused Starbucks of doing with its new college benefit &#151; doesn&#146;t hurt, either.
There  have been dozens of studies showing the investment approach to  employees can pay for itself, and then some &#151; but only if it fits with  the company&#146;s culture and is institutionalized among managers at all  levels. For starters, offering better compensation than competitors  draws better job applicants.


&#147;It&#146;s  a way to pick out the best workers from the undifferentiated masses,&#148;  says Mark Pauly, a professor at the University of Pennsylvania&#146;s Wharton  School. &#147;You want to avoid the workers who will shirk and keep the ones  who won&#146;t.&#148; A well-known 2006 study  by Wayne F. Cascio comparing Costco&#146;s business practices to those of  Sam&#146;s Club &#151; which aggressively works to keep wages and labor costs as  low as possible &#151; found &#147;Costco&#146;s productive workforce more than offset  its higher costs.


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## Zaphod (Jun 20, 2014)

Where I work they went from offering OEM wages to tier one, and in some cases tier two, supplier wages and benefits.  So they get the talent(?) that those wages and benefits get them.  Which is to say pretty sketchy these days.  The smart ones get their foot in the door by being a co-op or intern, get hired direct, then leave after a year or two to go work for the OEMs.


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## s2h (Jun 20, 2014)

the higher starting wage and improved benefits is a somewhat successful plan...what hinders its results is IF the company is growing at a high rate over the market...then companies are placed in a position were there forced not to be as selective due too the growth...but still end up forking out the larger compensation package....Costco and WF's are expanding but not a near the rate of other grocery chains..


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## raysd21 (Jun 20, 2014)

s2h said:


> the higher starting wage and improved benefits is a somewhat successful plan...what hinders its results is IF the company is growing at a high rate over the market...then companies are placed in a position were there forced not to be as selective due too the growth...but still end up forking out the larger compensation package....Costco and WF's are expanding but not a near the rate of other grocery chains..



I wanna work for S2h....


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## Bowden (Jun 21, 2014)

s2h said:


> the higher starting wage and improved benefits is a somewhat successful plan...what hinders its results is IF the company is growing at a high rate over the market...then companies are placed in a position were there forced not to be as selective due too the growth...but still end up forking out the larger compensation package....Costco and WF's are expanding but not a near the rate of other grocery chains..



Great points as to business models.

When I go into a grocery store and I stand around waiting in lines because of under staffing and the employees that are taking my order at the deli, meat counters ect. have a shit attitude then I don't blame them.
I blame the executives of that company that direct the front line store management to hire low cost part time employees who are usually paid shit wages and crappy benefits.
Those employees tend to be shit employees that provide shitty customer service. 
The companies usually have high rates of employee turnover.
That turnover impacts staffing levels which impacts customer service levels.

I always take my business to the company that provides to me the better customer service.
If I have to pay a higher price on products to get a superior level of customer service due to a higher compensated motivated employee, then I consider it money well spent.


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## s2h (Jun 21, 2014)

^^nothing more frustrating then getting crappy service when your paying for something...in the end it comes down to the companies culture and leadership...WF's has a very good set culture that they stick to from top to bottom...there managers too include store management only work 8 hour days...that's almost unheard of in the grocery business..and it shows in there service and customer interaction...

many grocery store chains are Union...so there pay rates are controlled more by Union contracts then the actual company...what you get there is not much better then a non Union retailer like Wal-Mart except they pay more..in both cases it doesn't allow for someone to be successful and drive for results due too there pay structure or contracts...so what you get are a group of people going thru the paces to get a pay check..there is no incentive to excel and be the best at what you do..and you get shitty service at the end..

there is a report called a Shapiro report...it is the best indicator of who the leaders are in the grocery industry...its based off a few different pieces of data like avg price...price image...customer service...quality..and several more..the top grocery retailers as far as Shapiro scores go are mostly privately owned companies or private/employee owned companies with a strong culture and vision for customer service...


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## Guillotine (Jun 21, 2014)

There is a reason you pay $250 for a 6oz cup of SBUX.  Me, I'd rather hit 7-11 and give Apu $2 for a24oz cup.  I don't care if he is sucking himself off at the register - I'd rather keep my money in my pocket.

as for Whole Paycheck, their employees are worse than Kroger or Safeway, and their products are just as shitty as the local Armenian food mart.

costco is way better, but I don't always need a 5-pack of caskets, so can't buy everything there.


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## s2h (Jun 21, 2014)

I have no interest in WF's ...but they score well above any Kroger or Safeway brand stores....WF's is also a big niche store...it attracts a certain demographic that is in all likely not to score a WF's bad...so there defiantly could be some merit to your feedback...

One thing WF's excel in is the organic image...when in fact there organic selection pales in comparison to other large retailers...with huge gross margins from own brand retailers like WF's and Trader Joes can utilize more manpower to present a better service experience also...


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## s2h (Jun 21, 2014)

Costco is the most feared national chain retailer currently growing...no retailer wants a Costco too plop down next to them..


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## Guillotine (Jun 21, 2014)

s2h said:


> Costco is the most feared national chain retailer currently growing...no retailer wants a Costco too plop down next to them..



Good product, good service, good prices... What is not for a patron to love and competitor to hate.


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## Swiper (Jun 21, 2014)

Starbucks to Raise Prices for Packaged Coffee, Other Products

http://m.us.wsj.com/articles/starbu...ged-coffee-other-products-1403280002?mobile=y



Costco Wholesale Corp. said it is raising membership fees for about 22 million customers, as the largest U.S. warehouse club operator seeks to offset rising costs.

http://m.us.wsj.com/articles/SB10001424052970203388804576612460858510574?mobile=y


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## Zaphod (Jun 22, 2014)

http://www.fool.com/investing/general/2014/02/21/why-half-of-wal-marts-groceries-are-banned-by-whol.aspx


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## Guillotine (Jun 22, 2014)

Zaphod said:


> http://www.fool.com/investing/gener...f-wal-marts-groceries-are-banned-by-whol.aspx



I seriously don't understand how people can shop at WHole Paycheck.  I make decent money and can't afford to walk into the place.  I splurged last holiday season and bought an organic whole chicken from there for $28.  Frikking $28!!! That is almost half my monthly food budget for one gawddamn chicken!!


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## s2h (Jun 22, 2014)

WF's has a lot of expenses to supply the experience they do...there labor % is double most grocery stores....they have to make up for all the olive bars..dining...food samples and extra labor they use to bring the WF's experience ..some people like it that way....but $4.99 for a organic red bell pepper is a bit much....


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## Dale Mabry (Jun 23, 2014)

Swiper said:


> Costco Wholesale Corp. said it is raising membership fees for about 22 million customers, as the largest U.S. warehouse club operator seeks to offset rising costs.
> 
> http://m.us.wsj.com/articles/SB10001424052970203388804576612460858510574?mobile=y



I assume you are implying they are raising their fees due to the way they treat their employees.  First off, that article was from 2011 and even if it were true so what????  I save enough money on shit tickets alone every year to offset my Costco membership.  They could raise it 50% and I'd still be making out, and I have the added gratification of knowing I'm not footing the bill so their employees can go on welfare just so one of the execs can have another beach house.  Besides, companies raise rates and fees all of the time, to assume they are doing it because they treat their employees well and pay them a liveable wage is a bit cynical, don't you think?


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## Swiper (Jun 23, 2014)

Dale Mabry said:


> I assume you are implying they are raising their fees due to the way they treat their employees.  First off, that article was from 2011 and even if it were true so what????  I save enough money on shit tickets alone every year to offset my Costco membership.  They could raise it 50% and I'd still be making out, and I have the added gratification of knowing I'm not footing the bill so their employees can go on welfare just so one of the execs can have another beach house.  Besides, companies raise rates and fees all of the time, to assume they are doing it because they treat their employees well and pay them a liveable wage is a bit cynical, don't you think?




their membership fees and large quantities of products Costco sells I'm sure helps them pay their employees a better wage than Walmart for example. if Walmart had the same business model then they probably could pay their employes a higher wage, but then the poor would get hammered with fees and buying large quantities of products which they can't afforded. Walmart caters to the poor while Costco caters to mainly the middle class.  they're two different business models.  
Walmart can't afford to pay their employes more unless they raise prices, which will hurt the poor even more.


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## Zaphod (Jun 23, 2014)

Walmart can afford to pay their employees more without raising prices.  But it would mean the company wouldn't be able to artificially inflate their stock price by buying back stock.  It would also mean that Walmart employees wouldn't need government assistance.  Less corporate and social welfare just by being ethical.  Think they will do it?  I don't.


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## s2h (Jun 23, 2014)

Wal-Mart has everyone fooled with theres price image...well not really...Wal-Mart is working on its 3rd QT loss currently..Wal-Mart/Sams club is getting it handed to them by Costco and several other large grocery chains...pretty much Wal-Mart has been exposed as the fraud they are...


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## heckler7 (Jun 23, 2014)

people love to hate on walmart but the fact is walmart doesnt hold their employees at gun point and force them to work there. Their employees willfully fill out employment applications and agree to the terms when accepting the job. And you you are unhappy quit.


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## heckler7 (Jun 23, 2014)

s2h said:


> Wal-Mart has everyone fooled with theres price image...well not really...Wal-Mart is working on its 3rd QT loss currently..Wal-Mart/Sams club is getting it handed to them by Costco and several other large grocery chains...pretty much Wal-Mart has been exposed as the fraud they are...


they prices arent the best, but working at night they are sometimes the only place I can find open to buy small shit I need to get work done like tape, glue, primer, contact cleaner and even food when I'm hungry


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## Swiper (Jun 23, 2014)

heckler7 said:


> they prices arent the best, but working at night they are sometimes the only place I can find open to buy small shit I need to get work done like tape, glue, primer, contact cleaner and even food when I'm hungry



you mean to get gloves, duct tape, plastic sheeting, garbage bags and a reciprocating saw?


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## Bowden (Jun 23, 2014)

s2h said:


> Wal-Mart has everyone fooled with theres price image...well not really...Wal-Mart is working on its 3rd QT loss currently..Wal-Mart/Sams club is getting it handed to them by Costco and several other large grocery chains...pretty much Wal-Mart has been exposed as the fraud they are...



The feds reduced Wal-Marts customers taxpayer funded food stamp allotment.
When they did it it impacted Wal-Marts taxpayer subsidized business model.
Wal-Mart can go screw themselves.

The Waltons are sitting on 80 billion dollars+ worth of wealth, some of gained at the expense of the taxpayers who for years have backstopped their wealth generator by providing their shit paid employees with millions of dollars worth of welfare.


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## Dale Mabry (Jun 25, 2014)

Swiper said:


> their membership fees and large quantities of products Costco sells I'm sure helps them pay their employees a better wage than Walmart for example. if Walmart had the same business model then they probably could pay their employes a higher wage, but then the poor would get hammered with fees and buying large quantities of products which they can't afforded. Walmart caters to the poor while Costco caters to mainly the middle class.  they're two different business models.
> Walmart can't afford to pay their employes more unless they raise prices, which will hurt the poor even more.




That's the catch-22 with Walmart and why I don't shop there.  Their entire business model is dependent on market intervention via welfare.  Remove welfare and a large chunk of Walmart's customer base is gone and they can't afford to pay their employees the wages they pay them.  I have no idea how anyone can be pro-free market and pro-walmart at the same time, their business model cannot exist without the welfare state.  At the end of the day, the guy in the middle class gets such good prices because people in the upper class are subsidizing those costs via welfare to the lower class which expands Walmart's customer base, not even taking in to consideration the low pay for workers.


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## Bowden (Jun 25, 2014)

Wal-Marts business model is a great example of the welfare entitlement state in action.
Without  taxpayer funded welfare entitlements provided to Wal-Marts customer base Wal-Mart would be out of business.


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## s2h (Jun 25, 2014)

Not disputing Wal-Marts clear indulgence into subsidized income...deep down one thing allows Wal-Mart to bring profit to the bottom line...and that is Chinese imports...Wal-Mart profits 3 billion dollars a month in the US off Chinese imports..these are direct store delivery contracts that solely supply Wal-Mart...

So the great American retailer not only swallows the welfare system...but passes the vast majority of its internal business off to China...

Thanks Wal-Mart....


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## Swiper (Jun 25, 2014)

Bowden said:


> Wal-Marts business model is a great example of the welfare entitlement state in action.
> Without  taxpayer funded welfare entitlements provided to Wal-Marts customer base Wal-Mart would be out of business.



all the more reason to abolish the entire welfare system. businesses and individuals take advantage of it and all the tax payers are being forced to pay for it.


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## s2h (Jun 25, 2014)

Swiper said:


> all the more reason to abolish the entire welfare system. businesses and individuals take advantage of it and all the tax payers are being forced to pay for it.



not so fast..there is 90,000 illegal teenagers who need that check..and need it now...my wallet shrinks when the news comes on...


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