How to Retain Great Employees with Costco’s Anna Haaland

Katelin: Welcome to All Hands, a podcast brought to you by Lattice, where people success is business success. I’m your host Katelin Holloway.

People leaders love to talk about recruiting and hiring – and I do too – but I think the sleeper hit of successful people leadership is retaining great employees. 

Average turnover rates in the United States hover around 20 percent. But 60 percent of retail employees leave their job on average, according to the National Retail Federation. 

But… there is one unique retailer that has figured out an employee retention formula for success: Costco.

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‍Anna:

"Unlike a lot of retail organizations, people come into Costco and they see fairly quickly that it is a career. These are living wage jobs with, with a robust benefit package. They have the opportunity to, to find an interest and I go back to my own experience with this. I was the shipping department lead and I went (laughs) from that to human resources."

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Katelin: Costco is the third largest retailer in the world. Generated net dollars over 192 billion dollars last year alone. Most impressive to me, though, is a retention rate of 94 percent after one year’s employment. 

I talk with Anna Haaland, Global Business Director, People Systems, about how this retail giant takes care of and retains their employees on the ground. 

Anna, welcome to All Hands.

‍Anna: Thanks so much.

Katelin: We're so excited to have you on the show today. So before we really get into things, would you please briefly introduce yourself to our audience? So who you are, what you do and, and bonus points for anything else that's important to your identity that you'd like to share?

Anna: Sure. So Anna Haaland, I am the business director for global people systems for Costco Wholesale. And that covers everywhere we have Costcos in 13 countries and counting. The work really entails design and data control. I have an amazing group of folks that I work with. We've got partnerships with all of our operations in fabulous countries.

Uh, and then my bonus points are really that I'm a lifelong learner. Whether it's it's languages that I've studied, you know, learning how to make sourdough bread (laughs) going back to get my degree finally in my '50s.

Katelin: Yes-

Anna: I love to learn.

Katelin: Oh, I love that, I love that. What did you get your degree in?

Anna: Ooh, I'm not done yet.I'm gonna have a degree in it's a bachelor's of science in business administration and IT management.

Katelin: Most excellent. I'm a huge fan of lifelong learning. I talk about it all the time, uh, with my team. So let's go back in time a little bit. You actually started your career on the floor of a Costco warehouse. Is that right?

Anna: I did, in Tumwater, Washington.

Katelin: Tell us about that. So that was, that was how long ago?

Anna: It will be 31 years in October.

Katelin: Wow.

Anna: Yeah. I still have to pause when I (laughs) say that. Because in so many ways it feels like it was yesterday. The first nine years of my time with Costco was at the warehouse and I only worked at one building. I think it was my, my boyfriend's sister's friend who was at a party we went to and she worked at the Costco and she just raved about it. She loved everything there was to love. You get paid really well, the benefits are great, the people are lovely and funny and she just couldn't say enough good things. And when we moved there was this Costco. I was driving around looking for a job 'cause it was 1991 and, you know the internet wasn't so much a thing. (laughs) And so yeah-

Katelin: I remember those days.

Anna: I sort of drove by and went, "Oh, there's that place that that nice lady told me about. So I applied, I got hired and I, I can't really say that I never really looked back. That's not totally accurate. Cause when I was looking to move into HR, I'd done some soul searching in my late 20s and decided that that was the path I wanted to go down. I really was thinking I'd have to leave.

Katelin: Mm-hmm.

‍Anna: And so I started reaching out to people I knew in the community and it turned out that in fact, I didn't need to leave. I got hired into the corporate campus in 2000. So I just shifted from operations over to human resources, and then I didn't really look back.

Katelin: Yeah, yeah, yeah, yeah. I, that is something that I wish more companies understood, is the upskilling and growth opportunities within their own organizations to hire and rehire their own employees and make that visible and known and, and have open applications and all of those wonderful things. So can you tell us a little bit about what that process looked like? Going over to corporate, what did that process look like for you?

Anna: My path was a little different in that I knew the director of personnel because she was my building manager and she left to go take that role. And she knew my work and knew my interests. And so kind of just kept in touch. And then when an entry level role came up, I went through the application process and interviewed and they liked me and there I was. What we ended up doing though since that time is building out an internal job bank that does make that process a little more transparent.

Katelin: Nice.

Anna: A little easier for the people in operations. So all of the positions below a certain level, pretty much, they go out to essentially open bids and so anybody can apply and that goes out to every building, it's on our internal employee site that they can get to. So it made that process a lot, a lot simpler.

Katelin: Yeah. I love that. And so how common is it for folks to go from the floor to corporate?

Anna: Oh, my goodness gracious. It is so common. In fact, we have it written into our policy book that if you are going to transfer from operations into the warehouse, you need a year of work in the buildings before you can come to corporate. And, and it is with that intention that you understand our core business, because we've seen that pay huge dividends over the years where technically I sit in accounting right now, but that, that decade I spent in a warehouse still informs the design of the systems, the processes we put in place, the way that we interact with our employees, because I remember how hard it is. (laughs) I have seen that play out where someone who comes from operations, just has that extra leg up on what might need to be tweaked to make it make more sense out in the field or on the floor.

It's enormously helpful, and we encourage it wherever possible.

Katelin: I'm a big, big fan of internal mobility and also open applications. There's mutual benefit across all of the, the industries, when you really focus on developing your employees.

Anna: Mm-hmm.

Katelin: And providing those opportunities. Now the topic I'm really excited to go deep with you today is about re- employee retention. One piece of it provides opportunities. Let's talk about retention more explicitly right now. As I understand it in the retail industry, turnover is insanely high, right? It's like 60% or something.

Anna: It, if not higher in some i- instances, yeah,

Katelin: I believe it is hard, hard, hard work. Now, correct me if I'm wrong on this stat as well, I believe that your turnover rate is under 6%, is that true?

Anna: Depending on the year, we historically have sat after a year of employment between six and 7%.

Katelin: Which is insane compared to the six D, six zero, we have 60% (laughs) or more as the national average. And-

Anna: Exactly.

Katelin: ... and you're saying that Costco has a single digit percentile.

Anna: Yep, yep.

Katelin: What do you attribute that to?

Anna: Unlike a lot of retail organizations, people come into Costco and they see fairly quickly that it is a career. These are living wage jobs with, with a robust enough benefit package that they can, they're not faced with catastrophic illness that essentially destroys every shred of savings they might have had.
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Katelin: Right-

Anna: That they have the opportunity to, to find an interest and I, I go back to my own experience with this. I was interested in human resources and that was, that was feasible and, and in many cases encouraged me to go from working, I was actually in our, I was the shipping department lead and I went (laughs) from that to human resources. So that is absolutely a huge portion of why I think people vest in the company because it is a career in a way that a lot of retailers arent and when a cashier for, for us, if they are hired in it full time after let's say four years, depending on hours worked and things like that they're pulling in essentially $60,000 a year.

Katelin: Wow, Yeah. That's huge-

Anna: ... just amazing to me, right?

Katelin: Yeah, yeah-

Anna: That changes people's lives, like the whole family's trajectories are different because they have that stability. That's the thing that I just find so exciting about the work even three decades later, I still get kind of choked up about it because it's just, I know it happened for me and I know it happens for others and that's just such a lovely thing.

Katelin: That's a beautiful thing. You used exactly the right word, which is stability. So giving an opportunity, uh, not just to make more than a living wage, but the opportunity to grow and develop and to want to stay there. And so for you to still-

Anna: Mm-hmm.

Katelin: ... have those feelings, 31 years into the game almost, and to still-

Anna: Yeah-

Katelin: ... feel that, that commitment to, and that attraction to your mission, your vision, your values as a, as an organization is a really, really powerful thing. You know, I, when I was a people operator, I work in tech and, you know, the average tenure is like 18 months. And so you have people that, that stay at Costco for the life of their career and, and retire out. Is that a wrong assumption here?

Anna: No, you are spot on.

Katelin: That's a powerful thing.

Anna: That is an interesting part of the culture, because we do a lot to honor those years of service. If you could see my name badge, it's a silver name badge because at 25 years you get this fancy, special badge (laughs) and, and so there's-

Katelin: That's awesome.

Anna: and there's lots of things around that, right? At 15 years of service, you get your fifth week of vacation. So-

Katelin: Right-

Anna: ... we have all of these, these processes built out around honoring that commitment that you've made to the company and in turn, you know, sort of making that something to celebrate.

Katelin: In a world that moves so fast in a space where, where people are encouraged to jump from job to job, to make to make more money or to get those development opportunities, to have an organization in today's ecosystem that says, "Hey, when you hit this milestone, you will be celebrated. What is your favorite, uh, milestone celebration?

Anna: So we actually have a gold name badge. We do it at 40 (laughs) and they're also just really sparkly and pretty

Katelin: So the gold name badges are something to behold. To your point. It is so unusual for a company to have the kind of longevity that we tend to enjoy that, yeah...

Anna: Yeah. Getting a gold badge.

Katelin: Yeah. (laughs) I love that. I hope that it gets you into like a little speakeasy in the back of the staff room, right?

Anna: But we don't talk about that.

Katelin: (laughs) Not that we would give the secrets away on air. (laughs) I joke and I kid, but, but let's actually talk about benefits. Costco is notorious for having incredible benefits for their staff. How do you take care of your employees? What's really the formula here? The previous CEO, I know that there was something around compensation. So something to the effect of "We're not gonna make money off the backs of our employees because we're gonna pay the highest wages in all of retail." Statements like that are big and bold. Talk to me about the benefits plan that you have inherited and subsequently rolled out and, and developed over time.

Anna: Yeah. The benefits team does an amazing, ama- i- in all the countries, frankly, where we do business. US being our largest country, the- there's a lot of focus there and that m- that makes perfect sense, right? Out of the 290 ish thousand employees worldwide, 220 of those are here. And so the benefits team does just, just a topnotch job in really delivering excellence in a space that is often, I don't wanna say ignored, but I think that it's, it's another example of the kind of care that we take with our employees. So we contract with big name carriers and almost every single one of those carriers, we have essentially established an internal Costco team. So you call our healthcare provider, but you don't call a generic call center, you call the Costco call center. 'Cause we-

Katelin: That's awesome-

Anna: ... set expectations with them that we are, we want our people treated with a certain degree of exactitude and care. And, and so it's, it's things like that. And the package is very robust with healthcare and dental and vision and prescriptions and alternative healthcare. And we've got honestly, a lovely retirement package so that is, is on top of the wages that we put in place to ensure that our people are paid a healthy living wage.

Katelin: Can you talk a little bit about how often Costco decides to raise the minimum wage for your employees? I hear this is a process.

Anna: We do our employee agreement every three years, in most countries. There are a couple of variations for regulatory purposes, but generally we do it every three years. And that review is comprehensive. We do outreach to the staff out in the field. So we get suggestions thousands and thousands and thousands of suggestions from employees that are collated into, you know, digestible topics that our executives-

Katelin: Mm-hmm.

Anna: ... then review. And always with that process, there is a compensation review, so ...

Katelin: Oh, interesting.

Anna: Almost every round of that agreement review process, we've seen an adjustment to the starting wage. And depending on, on market necessity there's, I guess I would call them maybe off cycle adjustments.

Katelin: Mm-hmm.

Anna: So, but, but not longer than every three years.

Katelin: That's awesome. And that, that experience and knowing that as an employee has gotta give you a huge peace of mind.

Anna: Oh, it does. It, it, it certainly did when I was out in the field. Uh ...

Katelin: Yeah.

Anna: And then coming over to this side and seeing that process play out, it was so fascinating. I did a lot of benchmarking in my, my early days in HR and-

To see what really happened behind the scenes, I was struck again and again, how they would, literally everything would come to a halt and there would be this, this intense discussion and analysis of what's gonna happen to the people, if we make this policy change. Is anybody gonna lose out? Is anybody gonna be negatively impacted-

Katelin: Right.

Anna: And, and that, that attention to detail, again,  just showed. It was so gratifying, maybe that is the right word.

To see that, that they really do care deeply at, at the senior levels about what happens to each and every employee.

I look at, we have a code of ethics, it's five bullet points, but it starts with obeying the law. And, and that alone said so much.

Katelin: Absolutely. If that's not table-

Anna: That, that, isn't the first thing you care about, yes.

Katelin: Yeah. That's a problem.

Anna, can you tell us what, what else is on that list?

Anna: Absolutely. Number two is take care of our members. Three, is to take care of our employees. Four is to respect our suppliers and then if we do all four of those things, we will ultimately do number five, which is to reward our shareholders.

Katelin: That is exactly the stack ranked order in which you need to do those things. You break any one of those top four and, and, and five, certainly-

Anna: Everything else falls apart. (laughs)

Katelin: What the starting wage is now…

Anna: We've got sort of the lowest on scale salary is 1750.

Katelin: Wow.

My goodness. So I could be in, in the middle of the country and I'm gonna pick a random city, Holton, Kansas. I'm sure you don't have a warehouse there, but let's pretend like Holton was big enough for you to have, for them to have a Costco and I could be making over $17 an hour.

Anna: To start, absolutely. I think it's awesome.

Katelin: Yes. Insanely, awesome. And very compelling from a, from a recruitment and retention standpoint that does not happen in the majority of, of our country.

Anna: Thank you. It’s just one more thing that gets me up every morning and makes me excited to do what I do. I love that that's the attitude that we take and, and y- you're exactly right. Our original CEO's stance on that is, persists to this day. That was, that was where we landed. 'Cause we just completed that agreement review process honestly, it was from very much on high that, that's what they wanted to, to come in and because that, that's what they felt was the right place to be given our approach to compensation. And, and to ensure that we're getting people in the door that want in and then want, want them to stay. Recruiting is expensive. Onboarding is expensive and to lose someone after a year's worth of work, two years worth of work, you, you are losing money, you are losing money if you don't commit. So I, we, I would argue that’s saving money.

Yeah, oh precisely. It was, we did that analysis. It's been a while, but when we looked at those numbers, I'd say probably at least a decade ago. I mean you're talking thousands and thousands and thousands of dollars-

Katelin: Yeah.

Anna: That you've invested in that new employee. And when they walk out the door two weeks later ... (laughs)

Katelin: Yeah, yeah.

Anna: You just gotta do it all over again, so...

Katelin: So we've talked about total rewards and we've talked a little bit about development. Uh, let's talk a little bit more about your culture. So things that are oftentimes unwritten, the things that make employees say like that woman did at the party to you, "I love my job." The je ne sais quoi parts of, I want to work there and I will recommend to my friends that you should come and work here. How would you describe Costco's culture?

Anna: I would start with fun. It is incredible that the number of times that work is just honestly a laugh out loud funny. And that, that I don't wanna say, maybe a more casual approach to things is something for me that I find really comforting. It's lovely to come to work every day and, and work with these amazing, smart, funny, funny people. We are also innately entrepreneurial and, and I contend that is an outgrowth of the pragmatism with which we do our work. You know, you go into a Costco warehouse, one of our stores, and it's concrete floors and pallets of stuff, and it is no frills and no fuss. And, and that, that approach to keeping things as simple as humanly possible, then also kind of weaves into how we problem solve. So you do get just really out of the box thinking . And we are incredibly open to that sort of creativity. Like I, in my career I've started no less than three departments and they were truly things where I went, "This is a thing. We should do that (laughs) and here's why-" And, you know, you do your business case and all of that stuff but that, that's one of those things that I've never had, I've never had somebody say no when it's a good idea. (laughs)

Katelin: Yeah.

Anna: And sometimes we try those things and they don't work well, and that's fine. And that kind of willingness to fail is something that has ultimately led us to be, I contend better, and we certainly have, have made strides from, you know, our packaging and how we approach things from a sustainability standpoint. It means that we've got sort of inbuilt openness to, to diverse voices and, and ways to problem solve because again, practically speaking with like, we're, we're not really fussed about those extra things. We just wanna get it done

Katelin: Right.

So I will say this. So a lot of our listeners, uh, are, are in the tech world, in the tech industry. And just now because of the pandemic, trying to "reimagine benefits for workers" to know that you all have been doing this for over 30 years, uh, and probably that's probably a, a severe understatement is just really phenomenal. It just goes to show how much we need to look outside of our own industries and take lessons and learnings from other folks that have been doing things in their own way.

And being able to hear your story, Anna, and hear the story of how Costco has done things differently from the beginning because of first principles, because of that differentiated approach to building a company and building culture, I think is really phenomenal. And so let me, let me ask you one more que- one more question, before we jump into rapid-

Anna: Sure.

Katelin: ...fire.Do you ever miss working on the floor of a Costco warehouse?

Anna: Oh, unequivocally yes. I loved it. And I would go back and do it in a heartbeat. It's so much fun. And yes, I mean, retail, you get cranky customers and...

Katelin: Right. (laughs)

Anna: You know, I don't know, snotty babies and just, you know it's a bunch of humans coming in, but -

Katelin: Yeah. (laughs)

Anna: Overwhelmingly, (laughs) it's just fun. You get the customers that will stand in a specific cashier's line because they've been going to this cashier for 20 years ...

Katelin: Aww.

Anna: And that's the one they like, and they'll wait for that one, even though other lines are open and you just get these relationships that blossom over, over time that you are able to invest in because you, you, you are in that building and you just, "Yeah, it's just different." It, it's, it's one of the things that I enjoy doing and I am overdue. I will be the first to admit to just go back. I have gone back and-

Katelin: Yeah.

Anna: Spend, you know, a week here and a week there just working in a warehouse 'cause it's good to remind ourselves what that looks like, but also it's just fun. (laughs)

Katelin: I was out to lunch with my dad today and I told him that I was hopping on the line with you and he got giddy like a, like a little, you know, school boy. And he-

Anna: Oh-

Katelin: He does what you said, you know, he goes and he lines up in the line. There is a mother daughter combo, uh, that has been working at Costco forever.

Anna: Ah, awesome.

Katelin: And they've been at it for like, you know, over 10 years at, at his Costco out in Colorado. And, and I think that that is the loyalty that you have built, he could feel, I think every customer could feel, if you pause for two seconds and, and look around, you can feel that the culture of how you treat your employees translates to that translates to that em- customer experience. And so when people walk in, it feels good. And it's not just because they're free samples and you get your buck 50 hot dog. Like-

Anna: That helps.

Katelin: But to have that consistent high quality customer experience, you can see that it is genuine, it is authentic and that the people there are genuinely happy and that absolutely translates to dollars at the end of the day.

Well then we're gonna move into rapid fire. The rules of the game are this, uh, don't think too hard, answer as quickly as you can, and we'll try to keep it as interesting to keep you on your toes. Are you ready?

Anna: I am ready.

Katelin: Okay. Let's go with some Costco standards. When you go to a Costco, what is your favorite food to buy in bulk?

Anna: Cheese.

Katelin: Heck yeah, cheese. (laughs)

Anna: How would you not? It's so good.

Katelin: (laughs) It is yes. (laughs) Okay. So now you bought your cheese and you're checking out, head up to food court. What are you getting?

Anna: Hot dog.

Katelin: Yeah. I knew that was gonna be your answer 'cause how is it not your answer? (laughs)

Anna: Exactly. It's a rule.

Katelin: You have to get the hot dog, yeah. (laughs)

Anna: Still a buck 50. It's amazing.

Katelin: And are y'all ever changing the price? I believe the quote was over my dead body. (laughs)

Anna: Uh, and that is quote unquote. (laughs) They have done some amazing work to keep at it and so far so good.

Katelin: (laughs) Okay. Let's go back to your comment about being a lifelong learner. So you're, you're getting your bachelor's now, which I am so excited for you, uh, miss sophomore-

Anna: Thank you.

Katelin: What is your favorite class that you're taking right now?

Anna: The one I've enjoyed so far and this will come as a big surprise, not at all, was, uh, global business.

Katelin: Nice, nice. Okay. Let's think about your morning. What is the best part of your morning routine?

Anna: Meeting with my team.

Katelin: You meet with your team every morning?

Anna: We do a quick stand-up-

Katelin: Most mornings? Nice-

Anna: Yep, most, every morning it's a quick and a very standard standup, you know, sort of what happened? Do I need to, are you blocked? Can I help you with anything? What's the plan and then go forth.

Katelin: I love that. Some of my favorite, uh, anecdotes from high-performing teams is that they do a standup. Favorite productivity hack?

Anna: We're a Google Shop and so the hack is to use multiple inboxes.

Katelin: Ooh, that's a good one.

Anna: I use the labels to make multiple inboxes.

Katelin: Awesome. I love that.

Anna, one last question. This one is not so easy, but when is the last time you were deeply proud of something you've accomplished?

Anna: Last year. We deployed two new countries onto a modernized, uh, master data system, for employee master data. And that wasn't the intent.

We were rolling Australia and Mexico and similar timelines, but they were still separate and due to some regulatory changes in Mexico, we essentially had to club the two projects together ...

Katelin: Ooh.

Anna: ... and on the fly. So even if we-

Katelin: Yeah, yeah-

Anna: ... planned it that way, but instead and I just, I was so, so, so impressed with the team's willingness and, and just raw ability to problem solve that and safely land, you know, 15,000 employees in their new systems-

Katelin: Wow.

Anna: Without really any major hiccups. So ...

Katelin: Holy hell.

Anna: ... August of last year. (laughs)

Katelin: That's a big one. That's a really beefy one. I, I am proud of you too-

Anna: It was good. (laughs) It was really good. (laughs)

Katelin: Well, Anna, I can't thank you enough for joining us here today on the show. Our audience is going to absolutely love this episode. As much as I enjoyed, uh, sitting on the end of it. So I just will say, thank you so much for doing the work that you do. It is a weird world in which we are living, and I am so grateful to people, leaders like you, who are out there putting in the work and, and sharing with the world, how we can do better. So thank you so very much. And please, please keep leading authentically.

Anna: Wow. Thank you so much. Will do. And I appreciate the chance to chat. It's been great.

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All Hands is produced by Lattice in partnership with Pod People. Special thanks to our production team: Christine Swor, Annette Cardwell, Rachael King, Aimee Machado, Danielle Roth, Jessica Pilot and Carter Woe - gan. 

Until next time, keep leading authentically!

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