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Costco Organizational Culture Characteristics

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  • Category: Costco

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Introduction to Organizational Theory

The culture at Costco is known as a collaborative business culture. Costco builds this collaborative company culture by having cross-training across all levels of the organization, and all of the bottom line employees are encouraged to move up in the organization. This collaborative type of culture is particularly highlighted by the fact that employees actually care about the organization and all of its leadership, whereas employees from competitors aren’t really comfortable and have little faith in the leadership at their organization. Costco is all about working together through thick and thin no matter what. It is critical to create an organization and culture where people are willing to share and work together. This is defined by its value of the people they employ and the consumers who visit recognize the company’s culture by continually supporting the corporation by renewing their memberships each and every year. This allows the Costco organization to remain top in its industry.

How does Costco motivate it employees?

Costco takes a very kind approach to the management of motivating its employees, starting with the extremely competitive wages that are better than the industry average. Whereas competitors treat bottom line employees as if they are expendable and pay the absolute minimum amount of money to who they deem to be unskilled. Costco however, values its employees very much and they educate and encourage all of their employees to move up in the organization. Costco values its bottom line employees so much that it is shown by the big difference in the starting pay. A competitor may pay their employees a starting pay of around $11 an hour. Costco however averages wages of $21 along with offering some really good employee benefit packages. By showing the consumer and employees that everyone should be treated with the same respect, Costco effectively motivates and rewards its employees for choosing to stay employed at the organization, this in turn decreases their turnover rate, saves them money, and keeps them ahead of their competition.

What environmental issues, internal and external, does Costco face?

The human resources sector of Costco’s external environment has faced issues stemming from the lack of notifications received from managerial openings. Other problems in the human resources sector that Costco must address it the accusations of a glass ceiling, preventing women from achieving managerial positions within the corporation. The company has since tried to resolve these issues by posting online job posting for such managerial positions, and using an outside vendor for the hiring. As for the international sector, Costco attempted to expand business into Mexico without conducting research on the culture, leading to instances of cultural insensitivity accusations from the local population. Costco spent millions in upholding the cultural and artistic significance of the area as a response. Additionally, the threat of unionization occurring in the human resources sector of the external environment will always reveal themselves over companies within this industry, but Costco means to address this threat by providing great wages and generous employee benefit packages, keeping employees happy and satisfied with the company so they never feel the need to form unions.

How is Costco a socially responsible company?

Social responsibility is the idea that businesses should balance profit-making activities with activities that benefit society. It involves developing businesses with a positive relationship to the society in which they operate. Costco’s development and strict adherence to their five-point code of ethics are as follows. Lawful decision-making, servitude to the interests of consumer and employee, respectful negotiations to suppliers, and rewards for shareholders. This code of ethics is the foundation of their corporate behavior. By following these guidelines, Costco creates initiatives within the local communities where their stores are located in, offering their services to both suburban and urban areas in a manner that best fits the lifestyle choice the potential customers living within that specific area want the most.

What ethical issues have occurred and how should the company address the issues?

Costco’s ethical issues in the form of external environment threats include what I stated previously. The glass ceiling accusations of the corporation, and the lack of notifications that come with managerial job openings. To answer the glass ceiling accusations, Costco stresses that they will commit to a higher standard of ethical behavior. As an equal opportunity employer, giving women the avenue to rise in the corporation as higher-ranking managers should have been their mission from the start. As for the hiring process failures, as I previously mentioned, Costco has implemented online job applications and the improving the process of hiring by working with third party vendors. Implementing both of these solutions to big issues in the company should improve the organization overall.

What can you infer from the Costco’s Organizational Design, or in other words, what does the organizational design tell you about Costco?

The organizational design of Costco is as stated in the case a “flat, fast, and flexible” organization. This means that the company has a value of knowledge that is shared throughout the organization, and that the concept of power is shared across all levels of employment. Both of these ideas are taught and encouraged in their training programs. It is also known that Costco places high priority in the training of their employees to offer upward mobility and ensure employee satisfaction is the best within the industry. This results in a lower turnover rate and the costs associated with the training being eliminated almost entirely. The spread of knowledge is encouraged by all employees of Costco because it aids in their development, utilizing this type of training as a part of the process for advancement within the company.

Command and control within the training plans play to the idea of empowerment across the organization, where individuals who hold power in the company such as supervisors or managers understand the struggles the bottom line employees face because they more often than not have experienced the same struggles working in the industry. Costco provides the tools, training, resources, opportunity, encouragement, and motivation to all of their employees. This allows all of their employees want to perform at peak efficiency. Empowered employees will have a great job satisfaction with the company will be able to solve problems and provide solutions at a much more rapid pace than an employee with little to no empowerment.

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