Paper Example: The Culture at Costco Wholesale

Published: 2023-04-19
Paper Example: The Culture at Costco Wholesale
Type of paper:  Essay
Categories:  Company Human resources Organizational culture Leadership management
Pages: 7
Wordcount: 1803 words
16 min read

Costco Wholesale is a Fortune 500 American retail company based in Issaquah, Washington. The company was founded in 1976 as Price Club, which later merged to form Costco. Costco deals in general merchandise and superstores; it serves an international market, with more than 590 membership warehouse stores in the UK, Taiwan, South Korea, Puerto Rico, Mexico, Japan, Canada, Australia, and 40 states in America. Costco has more than 10,000 employees, who serve about 64 million cardholders in the countries mentioned earlier. Some club memberships offer products and services such as travel packages, mortgage and real estate services, and insurance for homes and cars. The company boasts a good profit margin and revenue of at least 10 billion US dollars annually. Moreover, it offers a good working environment, with good management. According to Glassdoor, Costco is currently in the 55th position on the global list of the best places to work, and its top CEOs are ranked 46. According to Cain (2018), the employees at Costco love their jobs because the company views them as family, and they are offered considerable pay, benefits, and job security. Costco has an admirable compensation and benefits plan, culture and values, and availability of carrier opportunities. However, according to a report by Cain (2018) and reviews from Glassdoor (2020), the work-life balance for the workforce, and senior management are evidently lagging. While Costco Warehouse is already a large, renowned international business, better employee management can be a tool to optimize worker output, to fuel the company's growth to new heights.

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Problem Statement

Costco Warehouse is popularly praised for its culture, size, and value for employees. In an article to analyze the benefits accrued to Costco workers, Cain (2018) revealed that they enjoy several major vantages, relating to their pay and job security. The workers have a 401k plan, health insurance, and they are during breaks. Also, they are allowed to grow and move; for instance, one can be transferred to a different state if he or she requests the management. Costco allows its employees to interact, work as a group, or work individually, as they want (Cain, 2018). According to an employee with 25 years of experience with Costco, the company has a consistent culture and work ethics (Cain, 2018). While the environment at Costco promotes intrinsic motivation, the company employees, especially the younger ones, lack extrinsic motivation.

Most reviewers at Glassdoor revealed that while the company has an excellent benefits package for its employees, most employees have minimal chances of being upgraded or promoted to a full-time position. Suppose a part-time worker has been allocated 24 hours a week, the company divides the time into four to five-hour shifts, which disadvantages the employees, especially those who have to commute long distances to work. Moreover, the work schedule is inflexible; therefore, the managers might have unrealistic time expectations, which some employees might find hard to meet. Other employees on Glassdoor claimed that new employees rarely get a pay raise; moreover, bonuses are only awarded after working with the company for at least five years (Glassdoor, 2020). Some departments have poor leadership, and show favoritism to some employees, and lack fixed schedule, impose huge repercussion for minor offenses. Most full-time and part-time workers complained about poor micro-management and unsupportive micromanagement. Moreover, the full-time workers lack the appropriate work/life balance due to work stress, with few vacations (Glassdoor, 2020). Therefore, Costco's good public image is tainted by various internal malpractices arising from poor employee management.


Glassdoor reviews by former and current part-time and full-time Costco workers were used to identify the management issues within the company. About five thousand reviews written between 2016 and March 2020 were used to identify the advantages ad disadvantages of working at Costco. The pros were used to affirm the presence of generous benefits and considerable pay that the company claims to offer to its employees. On the other hand, the cons were used to study the major issues facing Costco, and the challenges that the employees face while working for the company.

Both the automated and non-automated content analysis approaches were used to assess online reviews. The filters provided by Glassdoor made it possible to sort the reviews based on their popularity, newness or oldness, and ratings. Moreover, the web application enables users to assess the average ratings (on a scale of 5 stars) for aspects such as work/life balance, culture and values, career opportunities, compensation and benefits, and senior management. Moreover, the system organizes the reviews in labeled pages for easy accessibility. These features facilitated the collection and analysis of reviews that are relevant to this study.

The non-automated approach, whereby the researcher reads through the reviews manually, was used to understand the sentiment in each current or former worker's review. Only reviews from employees with at least one-month experience with Costco were considered. Conversely, negative reviews with no justification were ignored. No case of recurrent criticism was noted from one individual was noted during the study. An analysis of the employee reviews was used to find a pattern in the most common issues affecting both the former and current employees of Costco, and areas that they feel should be changed. While a large percentage of the employees had positive things to say about the company, some were neutral on the pros and cons, while others identified the negative aspects, they were uncomfortable within the company.

Some of the challenges cited include the years one has to work before being promoted, poor work scheduling and bad management in some departments. The reviews revealed that new employees are largely disadvantaged since they have to work for at least five years before they are upgraded to full-time, they are not allocated bonuses, and their work schedule is unfavorable. The schedules also affect full-time employees, thereby affecting their work/life balance. Several full-time and part-time workers complained about poor micro-management, lack of support from the management, unreasonable punishment for minor mistakes, and favoritism within Costco. Evidently, the problems arise from poor employee management by first and middle management, and the top management fails to notice it.

While the non-automated content analysis approach is appropriate for understanding the sentiment of each sentence of a review, the method is tiresome, considering the size of data analyzed. However, the combination of both automated and non-automated content analysis methods provided more accuracy to the data collected. Therefore, the information gathered from the reviews is adequate for analysis and decision-making.

Theoretical Analysis

While the external image of Costco expresses a good organizational culture for the business, the internal image shows a poor working environment for the employees. Culture does not develop in one day; it is developed through past experiences and repeated exercise of certain behavior. Consequently, the negative aspects of how Costco treats its employees did not develop in a single day, but after continued years of such treatment to workers. According to Schein (1998), culture is a pattern of basic assumptions, created by a certain group as it learns to adapt to its problems, that work well to be considered as valid; therefore, they are taught to new members as the correct approach to a problem. As stated earlier, Costco has had a consistent culture for decades (Cain, 2018). The emergence of management malpractices as the company grew can be explained using Schein's model of organizational culture.

Costco has artifacts, values, and an underlying assumption that define the existing status quo. The first level - the visible part of the culture - in Costco can be seen through language or communication within the company. The company promotes horizontal communication among the workers, and likely, vertical downward; hence, the employees feel free to socialize among themselves, and the management makes them feel that they are like a family. However, the upward vertical communication is unpopular in the company; hence, there is favoritism in Costco, and there are poor micro-management and lack of support for workers. The values - invisible traits that can be inferred from how people act and justify what they do - show that the employees at Costco are committed to their work. However, they are uncomfortable with how they are treated. For instance, the percentage of people who gave positive remarks on Glassdoor are the same who made negative ones. Again, how they respond to their problems through the reviews shows that the management does not listen to them. Assumptions - believes taken for granted and no one challenges them - at Costco show that the management believes that it provides the best working environment for its employees; consequently, it requires them to meet set expectations. Therefore, the culture in the company does not favor upward communication, which results in multiple challenges in employee management.

Research Review

Excellent employee management is a key business driver for the success of an organization. According to Swarnalatha and Prasanna (2013), fostering a culture of engagement that allows work/life balance, empowerment to make decisions, free flow of information, and access to career opportunities helps to attract and retain talent, which is necessary for growth and sustainability. A company that fails to manage its labor force effectively risks the business' competitiveness since the workers are responsible for the quantity and quality of the output.

How employees are handled plays a significant role in how they see the company, and how productive they become. According to an article by Taylor (2020), people are always more keen to notice negativity than positivity. When an employee notices negativity in a business set up and voices his or her opinion, that can adversely affect the group morale (Taylor, 2020). Therefore, businesses should be keen to notice any change of attitude, and to attend to their needs, before negativity sinks in the entire company. However, workers are not the only ones who can notice an undesirable aspect; executives are often afraid of failure, even when the business is performing well. Hence, they might tend to see and punish minor mistakes made by their employees, in fear of the implication they might have on the organization. The same negative bias makes managers reluctant to change, even when there is sufficient evidence that something is going wrong, and might affect the business; hence, they stick to a culture that worked in the past (Taylor, 2020). Similarly, the loss aversion mindset makes people stick to a given culture, because they work not to lose, instead of winning (Taylor, 2020). Costco has had a consistent culture and values for many years, which has enabled it to grow into an international, profitable business. However, the world keeps changing, and businesses should change to adapt and meet the prevailing needs.


Culture can be managed to maximize value and minimize the risk at hand (Groysberg, Lee, Price, & Cheng, 2018). The management at Costco should not only ensure that the employees are well paid; they should involve them in the decision-making process. For instance, they can be involved in communicating the effective ways they can do their work.

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