Compensation Strategy Used by Costco
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人力资源代写论文 No doubt exists that a well-formulated compensation strategy is crucial to a company’s success (Sandhya and Kumar, 2011).
Compensation Strategy Used by Costco
Introduction
No doubt exists that a well-formulated compensation strategy is crucial to a company’s success (Sandhya and Kumar, 2011). Employees have the mandate to execute corporate objectives, and compensation initiatives should be modelled to enhance such behaviour, allowing an organisation to execute its strategy effectively. A compensation initiative becomes an ideal recruitment and retention instrument (Bryant and Allen, 2013). Such facts point to the need for a company to consider incorporating compensation policy development into its strategic goal-setting procedures and altering it to meet its dynamic needs and workers. This paper, therefore, seeks to analyse the compensation program adopted by the Costco company and discuss its impact on the company’s shareholders.
Company Overview
Costco, which is in full referred to as the Costco Wholesale Corporation, is an American dealer in discount stores of the form called wholesale clubs, where huge quantities of goods are sold at highly discounted prices to individuals who have to pay annual membership fees (Lewis, 2020). It is among the biggest retailers in the globe, and it is based in Washington. A Costco shop generally holds supermarket products and a dynamic array of other products, for instance, luxury products. The stock is placed in warehouses covering more than 13,000 square meters of space (Lewis, 2020). Regardless of the big space, a Costco shop generally holds only close to 4,000 varied products at any specific period, which is approximately a tenth of what is available in an average supermarket. Lewis (2020) highlights that most Costco shops also provide ancillary services such as chemists and gas points. 人力资源代写论文
As far as the shopping experience in wholesale warehouses goes, there is something unique about Costco’s culture that allows it to be a stand-out entity (Farfan, 2019). There is a rich, caring culture founded on a mission obtained from values and vision at the heart of the company. According to Farfan (2019), Costco’s mission statement is to constantly provide members with quality products and services at the lowest possible prices. To achieve this mission, the company conducts its business with several ethical codes in mind: obeying the legislation, care for employees and members and, respecting its vendors. Farfan (2019) identifies that if the company achieves the four codes, it will meet its ultimate goal: to reward its shareholders. It is pretty straightforward to identify that the company’s mission is attained daily by its employees (Farfan, 2019).
Compensation Strategy and Programs Offered by Costco 人力资源代写论文
According to Martocchio (2004), strategic compensation refers to designing, modelling, and implementing the compensation frameworks to boost the objectives of both Human resource strategies and competitive company strategies. Martocchio (2004) notes that the compensation and benefits managers work together with the human resource leaders and the company’s financial officer to develop a compensation plan. Compensation experts support strategic programs through the designing and adoption of compensation systems. Two significant elements are the foundation for the compensation experts’ work. These elements include the basic building blocks and structural design (Martocchio, 2004). For instance, compensation experts come up with decisions on whether to use and how to model pay-for-performance practices, if to lay pay standards that are highest than usual market pay standards and if to design a pay mix that prefers long-term over brief incentives (Martocchio, 2004).
The Compensation Program 人力资源代写论文
According to Spencer-McDaniel and Anthony (2012), the Costco company has a wage system that depends entirely on the number of hours an employee has worked. The entity’s compensation and benefits programs are among the best not only in the sector but across other sectors (Menvielle and Menvielle, 2015). Currently, the firm uses a market-based compensation program that helps the firm identify employees’ hourly wages (Spencer-McDaniel and Anthony, 2012). However, employees are presented with an opportunity to earn more than the market’s pay through the company’s merit pay initiative.
The firm pays its employees a mean wage of $20.79 in an hour with additional overtime pay of $7.25 hourly (Spencer-McDaniel and Anthony, 2012). The firm offers a mean salary of $12.67 hourly for full-time workers, which is higher than the market value (Spencer-McDaniel and Anthony, 2012). The cost compensation strategy comprises the basic salary pay, overtime, bonuses, and other benefits attributed to a health plan, 401(k) program, and deferred compensation program. The firm provides 401k investments to the employees, funded health insurance retirement programs of $1220 per worker each year, and paid holidays and vacations (Spencer-McDaniel and Anthony, 2012). These compensation programs offered by the Costco company aim at creating a conducive working environment that permits the workers not only to grow individually but also as professionals. 人力资源代写论文
These programs are meant to motivate the workers who actively take part in the growth of the business.
The lucrative and attractive compensation program embraced by the company has been very effective in retaining and attracting quality workers (Spencer-McDaniel and Anthony, 2012). The attractive compensation packages have also helped the firm attain a low employee turnover, and the programs have also contributed to the company’s competitive and financial breakthrough. The company’s compensation program has also helped create a conducive working environment that boosts the employees’ loyalty to the company (Goodwin and Maconachie, 2006).
0The compensation program adopted by Costco is ideal due to several reasons. First, it permits the firm to manage the costs of compensation. This management is attained by making sure that the best performers get the highest benefits. Secondly, the company can strike a balance between its goals and the employees’ needs. With the firm’s performance-based compensation strategy, the workers can trade the control of the job security and labour practices with the payments equal to their inputs in the company. Third, the existing compensation program can allow the company to raise workers’ productivity and motivation through the rewards and incentives initiative.
Costco Compensation Strategy
The Costco compensation strategy has remained unaltered over the past years. The compensation initiatives are developed by the compensation committee, which is made up of three independent directors (Costco, 2020). The committee is majorly responsible for the levels of compensation of executive and non-executive directors. The long history of the company’s compensation programs’ success is the crucial internal aspect that explains the reluctance of top management to alter their programs. The compensation program adopted by the Costco company focuses on the company’s ability to design a detailed compensation framework and use it as an instrument to attract and retain quality employees and managers. 人力资源代写论文
The firm’s financial performance allows it to use compensation initiatives to enhance employee loyalty. In separate management positions, the company’s compensation initiative has proved to be ideal. The company’s current compensation approach’s primary strategy is to motivate all its executives and employees to keep feeling as part of the company and take part in the growth of the business (Costco, 2020). While the firm recognises the managers’ role in attaining its goals, the input of lower-rank workers is also taken into consideration. Today, the company motivates its workers with higher pays and more benefits than those given in other retail companies across the industry, as claimed by Costco (2020).
Opinion 人力资源代写论文
The compensation initiatives at Costco indicate that the company values its workers as it does with its customers. The company’s mission clarifies that it wishes to provide its consumers with quality goods at lower prices and be responsible for looking after its employees. To attain this, the company has developed valuable compensation programs and strategies.
Some of them entail good pay to full-time and part-time workers, dental plans, 401(k) program, and several other plans to ensure that employees are satisfied and have a sense of belonging (Menvielle and Menvielle, 2015). Costco has taken a different path as much as discount shops are always attributed to low pays and few benefits for workers. The company believes that an ideal compensation plan is crucial in ensuring Costco’s business strategy’s achievement. Employees who are well-paid work towards the company’s advantage, resulting in lower turnover rates of about 6% to 7% after a year of employment (Bryant and Allen, 2013). 人力资源代写论文
For a corporation that seeks to provide high-quality goods at the lowest prices possible, Costco’s compensation programs are outstanding. With the company rooting for efficiency, a perfect employee compensation program is a problem that Costco has effectively addressed. The company’s strategy of reducing costs by eliminating the need to maintain ebullient shops with costly decor compensates for attractive pay and benefits.
Conclusion
Costco’s existing compensation program is developed with the primary attention given to enhancing employees’ loyalty and keeping its best talent. The compensation program has proved to be effective, and it has been deemed the best across the industry. However, this paper suggests that the company’s compensation program should also consider the organisation’s changing wants and the workers. The retail industry’s competitive nature makes it necessary for the development of such a compensation program that will appreciate a personal contribution to the firm’s growth. The company’s compensation initiatives should also be competitive to retain the best talent and help the organisation attain its goals. In summary, the Costco company’s compensation program and strategies have played a crucial role in its performance, employee turnover, and general motivation of the employees as shareholders in the company.
References 人力资源代写论文
Bryant, P. C., & Allen, D. G. (2013). Compensation, benefits and employee turnover: HR strategies for retaining top talent. Compensation & Benefits Review, 45(3), 171-175.
Costco Wholesale Corp. (2020). Form DEF 14A Costco Wholesale Corp/new Other definitive proxy statements. Retrieved 16 March 2021, from https://sec.report/Document/0000909832-20-000021/
Farfan, B. (2019). The Costco Mission Statement is the Heart of its Culture. Retrieved 16 March 2021, from https://www.thebalancesmb.com/costco-mission-statement-2891829
Goodwin, M., & Maconachie, G. (2006). Wal-Mart or Costco: Australia’s 21st Century Choice?. In 21st Century Work: High Road or Low Road: Proceedings of the 20th AIRAANZ Conference (pp. 209-218). The University of South Australia.
Lewis, R. (2020). Costco History & Facts. Retrieved 16 March 2021, from https://www.britannica.com/topic/Costco 人力资源代写论文
Martocchio, J. J. (2004). Strategic compensation: A human resource management approach. Pearson Education, India.
Menvielle, W., & Menvielle, L. (2015). Costco to the conquest of the French market: a strategic development on a competitive market.
Sandhya, K., & Kumar, D. P. (2011). Employee retention by motivation. Indian Journal of science and technology, 4(12), 1778-1782.
Spencer-McDaniel, Sr, J. A., & Anthony, P. (2012). Sustainable Solutions Paper: Several Strategic Analyses of Costco Wholesale Corporation.
