Walmart or Costco: Whose Problems?

So I asked this question a lot of my CEOs and of leadership teams and it is whose problems do you want? Do you want Walmart's problems or do you want Costco's problems? So take both these organizations. Take Walmart.

Walmart's EBITDA is about three and a half, almost four times higher potentially than Costco's. Their turnover rate is rumored to be double of Costco's. So think about that for just a second. If you run an average Walmart store as a manager or run the entire organization, what are you mired in constantly?

People problems. You know what I would rather do? I would rather hire fewer people and pay them more. Costco's starting wage, $30 or average wage, excuse me, average wage, $30 an hour.

Walmart's average wage, $18 an hour, $18 and 25 cents, somewhere in that neighborhood, approximately. So again, what they do at Costco, they hire fewer people, better people, put them through a more strict interview process, and they get great outcomes. Now, this has nothing to do with their politics. It's literally, where do you want to spend your time as a leader, regardless of how much money you make, Where do you want to put your time, effort, and energy?

And it's you want to put it in an organization that has fewer people problems. So if we follow that recipe, which is we want to get one great person instead of three average people, we would rather go the Costco route. And gratefully, I'd say most CEOs and leadership team members answer that question correctly. They go, yeah, absolutely.

I want Costco's problems. That's the right answer. I think maybe one person said Walmart because they would take money over anything. It wasn't even the CEO.

It was just another team member years ago. But honestly, I don't think I've heard the Walmart answer since and that is smart. We want to be in organizations with less people issues that are dragging the organization down daily. Now here's the thing, if you don't not have a good hiring process, you are going to be hiring more B and C players.

And that's, you know, that's the path Walmart has chosen. They don't have a good hiring process. They believe people are a cost. They're going to pay the lowest amount for minimum output.

We want to pay the most for the best output. And when we do that, we get into a place that is much more scalable, much more fun to work in on a daily basis. We're focused on what and how instead of worrying about who, not who in a good way, who in a bad way. Meaning we've got the wrong who's in the wrong seat and that's killing our execution and anything else we're trying to do.

We want to have Costco's problems. By the way, also a funny thing, I've interviewed a ton of people from Costco over the years that have ended up taking spots in the organization that I work in and they're excellent. They come from, they are, Very much A players. They are very resourceful, very smart.

Get the A player. Be like Costco.