Do corporations face a trade-off between seeking greater efficiency and higher profits with implementing more employee friendly corporate policy?  Are these actually mutually exclusive goals?  Taking a brief look at two competing big-box retailers may shed a little light on the answer to these questions.

Big-box king Wal-Mart has been much touted for its booming economic success, vast expansion, landmark efficiency, and low prices.  In large part, this success has come from a very competitive business model, state-of-the-art information systems, and innovative approaches to establishing and managing its distribution channels.  However, part of this success has come at a price.  Putting the many complaints of human rights activists, communities, and small businesses aside for a moment (topics to be further explored and discussed another day, in perhaps a different forum), much of the high profits and low prices are a result of corporate human resource policy and an organizational strategy that may fail to fully utilize and value the human capital within the company.  

Wal-Mart has long been criticized for its large part-time workforce, low wages, and broad lack of employee benefits to much of its workforce (i.e. in 2005, the average pay of a Wal-Mart employee was just 60.5% of their average Costco counterpart --2005 Labor Research Association).  It is no wonder that Wal-Mart experiences relatively high employee turnover (Wal-Mart experienced an estimated turnover rate of 50%, as compared to just 24% by Costco in the same year--2005 Labor Research Association).  Furthermore, ample anecdotal evidence would suggest that employee loyalty to the company, job satisfaction, and overall worker morale is low, which will have long-term implications for Wal-Mart's continued efforts to train the next generation of management while promote from within, maintain a sufficient level of customer satisfaction, and ultimately retain its status as a global corporate elite. 

In is interesting to contrast both the corporate success and human resource policies of Wal-Mart with Costco, another very successful big-box corporation.  While few will argue that Costco has had the same level of corporate success as Wal-Mart, particularly internationally, similarly to Wal-Mart, it has also seen broad expansion and high corporate profits, while boasting an innovative business model and providing high quality products for competitively low prices.   Costco upsets some of the same people as Wal-Mart, but is generally seen as doing a better job of valuing and utilizing its human capital.

Additionally, though both Wal-Mart and Costco are big-box retailers who attract a similar segment of the labor force, Costco is known for its more employee-friendly corporate human resource policies, which result in lower employee turnover, provide higher, more competitive living wages, offer more full-time positions, as well as competitive benefits packages.  It is therefore no surprise that amply anecdotal evidence suggests that Costco employees are more loyal, more satisfied with their work, and experience an overall higher worker morale than their Wal-Mart counterparts.  Looking into the crystal ball, I would suspect that these more employee-friendly policies will have direct long-term impacts on continued profitability, management development, customer satisfaction, and overall corporate strategic positioning in an ever-increasing global economy, where the global customer has a very high expectation for both the quality and choices available among product and service alternatives.

The free-market has proven to be an economic system that often results in innovation and progress, often at the lowest, competitive price, where corporations race to become more innovative, while becoming more efficient and profitable.  However, focusing merely on efficiency and profits can lead companies down the dangerous path of employee exploitation, eroding one of its most valuable resources--its employees.  Where both Wal-Mart and Costco are good examples of successful global companies, Costco seems to be doing a better job of valuing its people, and thus seems to be able to do both.  Therefore, I would argue that there need not be a trade-off between efficiency and profitability and the effort to value employees and establish more employee-friendly corporate policy.  These are not, therefore, mutually exclusive goals.  Additionally, in the long-run, investing in the human capital of a company may just be the trick to ensuring continued competitive success in the global free-market for years to come.