Organisational Structure of Costco -
February 4th, 2011
Costco (NASDAQ: COST), is the largest membership warehouse club chain in the United States. As of July 2009 it is the third largest retailer in the United States, where it originated, and the ninth largest in the world. As of October 2007, Costco is the largest retailer of fine wine in the world.
Chairman of the Board
Chief Information Officer
Southwest & Mexico Divisions
Construction, Distribution &...
President & COO
Administration & Legal
E-Commerce & Publishing
Human Resources & Risk Manag...
Merchandising, Foods & Sundr...
Merchandising, Fresh Foods
Industries & Development
Bay Area Region
Los Angeles Region
San Diego Region
Global Operations Distributi...
Eastern & Canadian Divisions
Information System Developme...
Centralized, hierarchial organizations work about as well as the old Soviet Union. Despite all the evidence, I am still appalled by the number of variations on the centralization themes I still keep smacking into. What makes things even worse is how senior managers in these dysfunctional organizations proclaim empowerment, participation, teams, leadership, trust, and the like. Then they take partial measures while expecting total success. They liberate parts of their organizations while limiting other parts. They push hard with one foot on the accelerator while also pushing hard with their other one on the brake. Their words say "you're empowered". Their actions say "you're empowered as long as you get approval first". These dysfunctional organizations end up trying to go in two opposing directions at once. I once halted an executive retreat and everybody went home after the group of seven division presidents and corporate staff vice presidents couldn't agree on whether their values were centralization or decentralization. Trying to do both at once was ripping the organization apart. The CEO never could decide which direction he wanted to commit to. He was eventually fired as frustrations and infighting rose while organization performance fell.
Most centralists don't set out to deceive anybody. In their heads they know that high degrees of involvement, participation, and autonomy are key elements in high organization performance. But in their hearts, they still crave orderliness, predictability, and control. That's why they cling to such anachorisms as strategic planning. It's part of their futile search for a master plan that can regulate and bring a sense of order to our haphazard, unpredictable, and rapidly changing world. Our equally outdated accounting systems give centralists plenty of reinforcement. For example, hard financial measures can clearly show that consolidating and centralizing support services and functions saves money and increases efficiency -- at least on paper. What don't show up are the alienation, helplessness, and lack of connections to customers or organizational purpose that mind-numbing bureaucracy brings. The energy-sapping and passion-destroying effects of efficiencies may save hundreds of thousands of dollars. But traditional accounting systems can't show the hundreds of millions of dollars lost because of lacklustre innovation, mediocre customer service, uninspired internal partners, and unformed external partnerships.