Costco Connection - January 2012

now a Vice President in charge of the company’s business centers, were on their morning trip to get co;ee in the corporate break room. Phil recalls that an employee passed by, greeting them: “Hi, Jim; hi, Phil.” ;ey nodded and continued on their way.

At the co;ee pot, Jim was unhappy, says Phil. “He said, ‘I didn’t know that person’s ;rst name, and that really irritates me because I want to know everybody’s ;rst name who works in this o;ce. He knew my name, and I think I owe it to him to know his, too.’ Classy guy.”

Today, all Costco employees wear name badges with their ;rst name in large type, and the company’s in-house phone directory is organized by ;rst names. Phil says when Jim travels to Costco warehouses around the world (he tries to visit each location at least once a year), he knows the names of an unusual number of employees, from store managers to forkli; drivers. “He is amazingly in tune with the employees who work for him,” says Phil.

FRANCE FREEMAN

gains. Everybody in the company understands that, says Chris Sanchez, who started at Price Club and now is Director of Administration for Warehouse Operations.

It speaks to Jim’s management style: He has always
been an in-the-trenches CEO, acknowledging that em-
ployees are a key part of meeting the company’s goals.
One principle that he continuously stresses to his man-
agers is “If you’re not spending 90 percent of your time
teaching, you’re not doing your job.”
“;e foundation that Jim has brought to the com-
pany as far as his compassion and to really do what is best
and to give back, not just to the employees but to the
community, is something that is instilled in everybody
here,” she says. “Working for Costco, you see how impor-
tant that is and what a di;erence that makes.”
His handprints have been on all aspects of Costco’s
operations, from the company’s ;rst day of operation.
While co-founder Je; Brotman has guided the compa-
ny’s strategic growth and serves as Chairman of the
Board of Directors, Jim has assumed hands-on duties.
No new product or change in operations has gone for-
ward without getting “green ink”—his personal signa-
ture written in green.

;e company philosophy is more than just a business plan, comments Mike Sinegal, Jim’s son, who helped establish Costco in Japan and initiated e;orts to launch operations in Europe. Costco hopes to open a warehouse in France in the near future.

Green-ink decisions have always focused on what’s best for the company’s long-term success over short-term

“Jim knew to treat people well .... If you treat them well, then a lot
of things will ;ow from that.”

—Jim Cramer, host of CNBC’s Mad Money

Looking
ahead

THE NEW top executive at Costco is Craig Jelinek, who, like his predecessor, Jim Sinegal, traces his career back to Fed-Mart in California.

Craig, 59, started at Fed-Mart at age 16 as a box boy and maintenance worker. He worked there through college and eventually became a manager for the company until it closed in 1982.

Jim contacted Craig in early 1984 about a new company called Costco, and Craig came aboard, becoming the manager of the sixth Costco warehouse, in Tukwila, Washington. He then worked on Costco expansion into Nevada and California during a time of rapid growth in the late 1980s and early 1990s.

In nearly 30 years at Costco, Craig has served in every major role related to the company’s business operations and merchandising activities. In 2010, he was named President and COO, and he joined Costco’s Board of Directors. Last August, upon Jim’s retirement announcement, Craig was named President and Chief Executive Officer, effective January 1. C

Jim Sinegal, surrounded by employees at he Issaquah, Washington, warehouse, 2008. “I think my dad’s perspective is that by bringing value to people that we’re actually doing something ood for the community,” says Mike. “Helping people make ends meet, helping business owners run their businesses more e;ectively and supporting business owners so their businesses can succeed—all this is healthy for the community.” Jim, 76, is staying on at Costco for a year as an adviser to help in the transition to new President and CEO Craig Jelinek (see “Looking ahead”), and will continue serving on the company’s Board of Directors. Costco’s nucleus of executives remains intact, and the focus now is on expansion—the company hopes to grow to more than a thousand warehouses over the next decade, with signi;- cant expansion occurring overseas. Jim has been called one of the world’s top retailers, but when asked by Mad Money’s Cramer what his proudest achievement is, he simply responded, “I think the thing we’re most proud of is the fact that Je; Brotman and I built a team that’s capable of running a business this size. ;ere’s a management team that’s in place that is very, very good and that has enabled us to sustain the business for a long time.” C Article developed by David W. Fuller, Tim Talevich and Brenda Shecter.