Costco is upping its minimum pay to $16 an hour because “paying employees good wages makes sense,” W. Craig Jelinek told the Senate Budget Committee.


This article from highlights an interesting discussion.  Whatever your view on minimum wage legislation and government intervention are, the point that employees who are paid a comfortable living wage will have the ability to perform better seems very valid.


The increase “isn’t altruism,” Jelinek said at a hearing of the Senate Budget Committee. “At Costco, we know that paying employees good wages … makes sense for our business and constitutes a significant competitive advantage for us. It helps us in the long run by minimizing turnover and maximizing employee productivity.”


He added: “We’re certainly not perfect, but we try to take care of our employees because they play such a significant role in our success.”


The debate between W. Craig Jelinek and Sen. Lindsey Graham is interesting as it raises a key point. 


Do you see your employees as purely a cost or as an investment into your business?


The point of increased cost for small businesses is valid, however is also a short-term view.  They may save money on the hourly rate, but how much will they lose through absenteeism, staff turnover and an unengaged workforce?


If we take the example of a small restaurant business and consider a team that feels safe, valued and who earn enough money to live comfortably, then it makes sense that this team is going to be in a better place to deliver high levels of customer service. 


A stable, engaged team is going to create loyalty amongst their customer base, which in turn is going to have a positive impact on the bottom line.


Businesses seem happy to spend royally on new customer attraction, however, increasing customer retention levels through better staff engagement seems like a better investment into your business. 


Costco is famous for its non-existent advertising budget.  Instead, they focus on creating an environment that customers want to come back to.  With highly paid, happy employees, Costco is able to deliver a consistently good shopping experience and through this have posted some solid figures over the years.


The moral of the story is, that if you invest in your people, not only will you have a more positive environment to work in, but you’ll also make more money.


Remember: People drive profit!


Post by The HR Guys