Ethics Of Walmart And Costco

“Business ethics is defined as the principles and standards that determine acceptable conduct in business” (Ferrell, Ferrell, and Hirt, 2013, 36). Business ethics encompasses a broad spectrum of issues from fairness and honesty to health and environmental concerns. It extends beyond what is legal for an organization, as it entails ensuring that a company acts in a just manner. Employee relations is a common example of a highly relevant issue in business ethics. It deals with “communications” between employees and an organization in all areas, including wages, employee treatment, and other organizational issues (“Employee relations”, n.d.). There is a rather common belief that a company can maximize its profit by attempting to pay its employees minimally, but this is not necessarily true, as employee relations (including compensation) generally has great affects on profits and success. Walmart and Costco, two businesses that offer similar products, have shown greatly different actions regarding …show more content…
However, it is also true that low employee satisfaction can yield a high turnover rate, and finding, hiring, and training new employees is also expensive. Walmart’s turnover rate is about 44% per year, while Costco’s is only about 17% (Cascio, 2006). This gives Costco the benefit of not having to pay to find as many employees, so the company can afford to pay the employees they do have more fairly. Walmart’s average wage lies below $12 per hour, whereas the average Costco wage is about $21 per hour (O’Donnell and McElhaney, 2014). Costco’s wages serve as more than just fair compensation; rather, they serve as investments in the employees of the organization. The company does not spend any money on advertising, but spending on the organization’s employees motivates each individual to be a walking advertisement. Thus, strong employee relations can serve to benefit a company beyond just being