Costco has an employee turnover rate of 17%, which is one of the lowest in the retail industry. For employees who have worked there for one year, that number drops to just 6%. If you’re a business owner who can’t seem to keep employees, you’re probably wondering why Costco has low employee turnover rates.
Here are the main reasons Costco is so good at retaining employees to help you replicate their success.
Costco Pays Well
The main reason why Costco has low employee turnover rates is that they pay well. The average hourly wage for Costco workers is $17 an hour, which is much higher than other grocery stores. Reportedly, they even pay their employees time and a half on Sundays.
On the other hand, Sam’s Club only pays their workers $11.52 per hour. Their employee turnover rate is 44%, which is 27% higher than Costco.
Sam’s Club spends a whopping $612 million per year just on replacing employees, whereas Costco only loses about $244 million to employee churn. So it pays to be good to your employees and compensate them well.
Costco Offers Great Benefits
In addition to offering one of the highest hourly wages of any grocery store, Costco has some great benefits.
Over 80% of their workforce has company-provided health insurance. Costco even covers 92% of their employees’ health insurance premiums, which is almost unheard of.
Costco also offers 401K plans with matching. They contribute an average of $1,330 to each employee’s retirement account every year.
But the benefits don’t stop there. Employees get a free Costco membership and can even shop at the store after hours to avoid lines.
During an eight-hour shift, employees get two paid 15-minute breaks plus a paid 30-minute lunch. They even get to eat those delicious free product samples when they’re not busy working.
Costco Promotes From Within
According to a recent survey, the main reason employees leave their jobs is lack of advancement opportunities. Costco doesn’t have that problem because they promote from within.
Seventy-six percent of managers started at the bottom as hourly workers. Since Costco employees can grow with the company and advance their careers, they don’t feel the need to leave.
Vacation Time and Holidays Off
The last reason why Costco has low employee turnover rates is that they give employees lots of vacation days. First-year employees start with two weeks of paid time off.
They also earn more vacation days every year. Long-term employees get up to five weeks of PTO and ten full sick days. Employees say the company is very flexible with scheduling, making it easier to use their vacation time.
Another perk of working at Costco is that they close on major holidays. Stores like Meijer and Walmart stay open on Thanksgiving and Easter. But Costco shuts its doors to give its employees a chance to spend time with their families.
Costco’s low employee turnover rate goes to show that if you treat your employees well, they’ll be loyal to your company. If you want to attract and retain top talent, consider beefing up your employee benefits package. Although it may cost you more now, it will pay off in the long run.
Vicky Monroe is a freelance personal finance and lifestyle writer. When she’s not busy writing about her favorite money saving hacks or tinkering with her budget spreadsheets, she likes to travel, garden, and cook healthy vegetarian meals.