Friday, September 9, 2011

A Legendary CEO For The Rest Of Us

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 years.

Boss's Bottom Line

Looking for a role model? Jim Sinegal would make a good one.

Thanks to Wally Bock's Three Star Leadership Blog
http://blog.threestarleadership.com/2011/09/08/a-legendary-ceo-for-the-rest-of-us.aspx

 

1 comment:

Z. Khan said...

Peace & Blessings.

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With Best Regards,

Mubarak Ali