Shortly after Steve Jobs announced his resignation as
CEO of Apple, Costco announced James Sinegal’s retirement as CEO. Both men are
founders of their company and they’ve both had a superb run.
If you’re a boss and you want an example to follow, James Sinegal sets a good
one. Not that Steve Jobs wasn’t an effective CEO, he was one of the most
effective in my lifetime. But a big part of Jobs’ effectiveness springs from his
ability to conceive and develop game-changing products. That’s hard to copy.
Jim Sinegal doesn’t seem to do anything that is beyond
the reach of most bosses and he’s delivered astounding results, too. Here’s how
Jena McGregor described it in her Washington Post column titled “The Costco king checks out
“Sinegal founded Costco with Jeff Brotman, the company’s chairman, in 1983
and expanded it in the 1990s when his company combined with Price Club, which
was owned by Sol Price — who pioneered the warehouse concept and had been a
mentor to Sinegal. From those beginnings, he’s created a warehouse behemoth that
pulled in $76 billion in revenues in 2010. Despite the poor economy, customers
kept paying the $50 to $100 annual fees for the privilege of shopping at Costco:
87 percent renewed their memberships in 2010. He laid no one off during the
recession, other than short-term staff for holidays and store openings.”
Sinegal works hard. Costco has 580 stores in nine countries. Sinegal visits
every one, every year. He also keeps things simple, stays with what works, and
acts like he’s a member of the team instead of the king of it.
Costco’s policies are simple. House brands are marked up a maximum of 15
percent over cost. Other products are marked up no more than 14 percent, ever.
That’s what brought the store success and so Sinegal has kept doing it. It’s one
reason that Costco outsells Sam’s Club by s big margin even though Costco has
far fewer stores.
One way that Sinegal acts like part of the team by being paid like it. His
$345,000 salary is far less than the average Fortune 500 CEO and far less likely
to generate resentment. He answers his own phone, which means that other Costco
managers do, too. Even his voicemail message is simple: “This is Jim Sinegal and
here’s the beep.” Go to Costco headquarters to meet him and he’ll come out to
reception to get you.
The man also makes sure that Costco looks out for the people who work there.
Salaries are higher than the competition and Costco pays the lion’s share of the
cost for health benefits for both full and part time workers.
You don’t have to be a genius to do those things, but you do have to be
disciplined. And you have to act like you care about the people who work with
you and the people who shop in your stores. That’s simple, but it’s not easy and
especially not easy to do day after day and month after month for almost thirty
Boss’s Bottom Line
Looking for a role model? Jim Sinegal would make a good one.