Wal-Mart’s legendary obsession with cost containment shows up in countless ways, including aggressive control of employee benefits and wages. Managing labor costs isn’t a crazy idea, of course. But stingy pay and benefits don’t necessarily translate into lower costs in the long run. Consider Costco and Wal-Mart’s Sam’s Club, which compete fiercely on low-price merchandise. […]
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Summary. Reprint: F0612D As a comparison of Costco and Sam’s Club shows, stingy pay and benefits translate into higher costs in the long run.
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Wal-Mart’s legendary obsession with cost containment shows up in countless ways, including aggressive control of employee benefits and wages. Managing labor costs isn’t a crazy idea, of course. But stingy pay and benefits don’t necessarily translate into lower costs in the long run.
A version of this article appeared in the December 2006 issue of Harvard Business Review.
Read more on Labor or related topics Costing, Compensation and benefits and Competitive strategy
WC Wayne F. Cascio (Wayne.Cascio@cudenver.edu) is the U.S. Bank Term Professor of Management at the University of Colorado at Denver and Health Sciences Center. This article is adapted from his paper “Decency Means More than ‘Always Low Prices’: A Comparison of Costco to Wal-Mart’s Sam’s Club_(Academy of Management Perspectives, August 2006).
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Read more on Labor or related topics Costing, Compensation and benefits and Competitive strategy
