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Loyal Employees Make Business Profitable

By December 2, 2005

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Here is an article about another of my favorite people in the business world, Jim Sinegal, the CEO of Costco. One of the things I have always admired most about Jim (I have never met him, but everyone at Costco is on first name basis) is his willingness to buck Wall Street to support his belief that taking care of your employees is what's best for the business and the shareholders. Costco has the lowest turnover rate in its industry. That saves a tremendous amount of money in replacement costs. It also generates "120,000 loyal ambassadors out there who are constantly saying good things about Costco." That saves advertising and PR costs.

Today, I discovered another belief to admire in Jim; his salary is "only" $350,000. That is considerably less than the multi-million dollar salaries other CEOs give themselves, but he figures "that if I was making something like 12 times more than the typical person working on the floor, that that was a fair salary."

Business would be a lot better off if we could find a way to clone Jim Sinegal. Until then, I'll keep preaching the value of caring for your employees as a "best practice" in business.

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