Costco turns heads with its unexpected response to its workers' union win: 'A failure on our part'

When employees don't feel the need to join forces to fulfill their demands, it generally is a sign of good management. It means the management is already paying heed to its employees' grievances and taking necessary actions. But, many organizations have a very low tolerance for labor unions. Instead of understanding what went wrong with the organization's culture or policies, some leaders react aggressively when workers decide to unionize. Unlike such inconsiderate companies, Costco gave a wholesome response to the victory of its worker union. As per CNN, when the employees of Costco in Norfolk, Virginia made a collective decision to become a part of Teamsters, the management took it sportively.

In December 2023, 238 employees from Norfolk's Costco won representation with Teamsters Local 822, the labor union of the Virginia city. This union win was the first organizing victory at Costco in two decades. Posting about this on Facebook, Teamsters Local 822 wrote, "The 238 worker group seeks strong representation to address years of concerns and improve working conditions." Damion Thomas, a front-end cashier at Costco who served on the organizing committee said, "This campaign was all about standing together as a group and taking control over our well-being in our workplace. We can’t wait to be covered under a strong Teamster contract that will give us a real voice and bring real change to the job." Thomas and his colleagues are set to join over 18,000 Teamsters at Costco all over the United States.

The employees were inspired by the Teamsters' first-ever national master agreement for Costco workers, in October 2022 that favored workplace improvements like boosting wages, pension contributions, higher semi-annual bonuses and flexible attendance policies. It might be usual for employees to unionize and get their demands addressed but an organization being humble about this is quite unusual. On December 29, Craig Jelinek, Costco’s former CEO and Ron Vachris, the current CEO, concertedly released a memo to all U.S. Costco employees in response to the union win. "We're not disappointed in our employees. We’re disappointed in ourselves as managers and leaders," read a statement in the memo. "The fact that a majority of Norfolk employees felt that they wanted or needed a union constitutes a failure on our part."

This memo caused a stir on the internet as the management's way of handling this union win was unlike some villainous employers. Post releasing this humble statement, Jelinek stepped down as Costco's CEO on 1 January 2024 after 11 years of serving in the role. The current CEO, Vachris started his journey at the wholesale retail chain as a forklift driver and had significantly climbed up the hierarchy in his 40 years of service. As per the media channel, Costco has been recognized as a substantially worker-friendly organization with its high hourly wages during the start of employment and good healthcare benefits. In fact, among its competitors in the retail industry, Costco is known to have the lowest employee turnover rates. While major businesses like Starbucks and Amazon turned their backs on acknowledging their workers' unions, Costco not only accepted the employees' decision with open hands but also felt remorseful for causing it.