February 2, 2005

With the news of a yet another freaking Walmart being built in Bend comes the inevitable question one has to pose to one-self: Is it really worth saving those couple of bucks, and supporting the Evil Empire of retail? Or should one rather shell out the dough, knowing that one can sleep at night with a sound conscience?

While I can't say that I've never shopped at Walmart, this most interesting article in the Seattle Times shows that you don't have to pay minimum wage and treat your employees like crap in order be a successful big box store.

Quote: Economists will tell you there are at least two reliable, legal ways to make money in America.

One is to fleece the workers, taking not only their wool but their skin. A proven model resulting, the Economic Policy Institute in Washington, D.C., tells us, in CEOs earning in a day and a half what took their beleaguered flock a year to earn in 2003.

Or, there's the Henry Ford model: Pay people well enough that they stick around, cutting both turnover and training costs while boosting efficiency. Better yet, pay them well enough so they can even go out and buy something.

Amen to that!

Very few (too few!) companies indeed are seeing the logic of this reasoning. I used to work for one, before they also turned the corner a few years ago and adapted the Economy of Greed, paying their executives huge salaries, while telling the rest of the employees that raises just weren't an option. During layoffs, they would even reward the execs with bonuses - for having to deal with the stress of this difficult time...

The article continues to cite an example of how to do it right:

And Costco? Its overhead costs were lower, its volume of sales per employee higher, and its total sales bigger in 2003 than its arch rival, Sam's Club, a subsidiary of Wal-Mart.

Yet, Costco's health plan covers a larger percentage of employees than Wal-Mart's does, and workers pay less for it. Costco, in fact, provides among the best wage-and-benefit packages in hourly retail. And it pays the same wage scale everywhere in the country.

A cashier at Costco can make more than $40,000 annually within four years. The average store manager makes $107,000, with a crack at $40,000 in performance bonuses on top. The company also pays hourly workers annual bonuses from $4,000 to $7,000.

No wonder they stick around: Turnover at Costco is less than a third the industry average.

So my question is: Why can't Walmart adopt similar policies? Maybe I will pose this question at the public meeting Walmart is supposed to hold next week ...