Costco: Join the Club
1. Describe the culture at Costco.
Organizational culture has been described as shared values and beliefs that underline a company’s identity. A strong culture that encourages employees from the top to the bottom in adaptation and change can increase organizational performance by energizing and motivating employees, shape behaviors, unify personnel in the goals / objectives and align employee’s actions with the priorities of the company (Daft, R., 2013). Creating a constructive culture should be a manager’s top priority because the right culture will propel a company into a top performer in its industry. Costco’s culture is one where the customer and employee come first. Customers enjoy a 15% markup where most retail stores increase by as much as 40%. Costco accepts returns sold items without a receipt and a “no questions” policy on the return. For the employee, Costco offers generous salary and health benefits, which critics pursue Costco to cut in order to reduce labor costs. Costco’s culture is rich and successful because it is supported by five “axioms”, the company’s adopted values, which is the second layer of organizational culture:
• Obey the law
• Value your customers
• Value your employees
• Respect suppliers
• Reward shareholders
There are four categories of culture associated with two dimensions: the competitive environment and an organizations strategic focus and strength. The four categories include adaptability, mission, clan and bureaucratic. These classifications relate to correlation between cultural values, strategy, structure and the environment (Daft, R., 2013).
Adaptability Culture – Characterized by the focus on the external environment through change to meet a customer’s needs. This culture encourages entrepreneurial values, norms and beliefs.
Mission Culture – The idea of serving specific customers in an external environment, but without a need for change. Identifies with an emphasis on clear vision of the company’s purpose
Organizational culture has been described as shared values and beliefs that underline a company’s identity. A strong culture that encourages employees from the top to the bottom in adaptation and change can increase organizational performance by energizing and motivating employees, shape behaviors, unify personnel in the goals / objectives and align employee’s actions with the priorities of the company (Daft, R., 2013). Creating a constructive culture should be a manager’s top priority because the right culture will propel a company into a top performer in its industry. Costco’s culture is one where the customer and employee come first. Customers enjoy a 15% markup where most retail stores increase by as much as 40%. Costco accepts returns sold items without a receipt and a “no questions” policy on the return. For the employee, Costco offers generous salary and health benefits, which critics pursue Costco to cut in order to reduce labor costs. Costco’s culture is rich and successful because it is supported by five “axioms”, the company’s adopted values, which is the second layer of organizational culture:
• Obey the law
• Value your customers
• Value your employees
• Respect suppliers
• Reward shareholders
There are four categories of culture associated with two dimensions: the competitive environment and an organizations strategic focus and strength. The four categories include adaptability, mission, clan and bureaucratic. These classifications relate to correlation between cultural values, strategy, structure and the environment (Daft, R., 2013).
Adaptability Culture – Characterized by the focus on the external environment through change to meet a customer’s needs. This culture encourages entrepreneurial values, norms and beliefs.
Mission Culture – The idea of serving specific customers in an external environment, but without a need for change. Identifies with an emphasis on clear vision of the company’s purpose