March 30, 2004 10:16 AM

No good deed goes unpunished
Posted by Jason Butlerat 10:16 AM

When I lived in Seattle, I would always shop at Costco, partly because the service workers were always helpful. As it turns out, it may be because they are better paid than most other retail workers.

Of course, on Wall Street, this practice of "be good to your employees and they'll be good to your customers" cannot go unpunished.

Costco's kind-hearted philosophy toward its 100,000 cashiers, shelf-stockers and other workers is drawing criticism from Wall Street. Some analysts and investors contend that the Issaquah, Wash., warehouse-club operator actually is too good to employees, with Costco shareholders suffering as a result.

"From the perspective of investors, Costco's benefits are overly generous," says Bill Dreher, retailing analyst with Deutsche Bank Securities Inc. "Public companies need to care for shareholders first. Costco runs its business like it is a private company."