72-year-old James Sinegal, as co-founder and CEO of Costco Wholesale, Inc., is arguably the best CEO in highly competitive wholesale industry. Learn from him:

Humility

- Unlike the stereotypical CEO, James Sinegal, doesn't try to distance himself from his employees. He even wears a name tag -- but not one that says "Jim, the CEO" or "Jim, Costco Founder." It just says Jim. He easily could be mistaken for a stock clerk.

- His philosophy is simple, he said. "We have said from the very beginning: 'We're going to be a company that's on a first-name basis with everyone,'" he said.

- That also includes answering his own phone. "If a customer's calling and they have a gripe, don't you think they kind of enjoy the fact that I picked up the phone and talked to them?" he said.

- "The employees know that I want to say hello to them, because I like them," he said.

- "Our code of ethics says we have to obey the law. We have to take care of our customers, take care of our people. And if we do those things, we think that we'll reward our shareholders," Sinegal said.

Simplicity

- Part of Costco's genius is its simplicity. A typical Wal-Mart stocks more than 100,000 items, Costco stocks only 4,000. Stocking only high-quality goods, Costco attracts the most affluent customers in discount retailing -- with an average income of $74,000.

- The secret to Costco's profit is simple, too. Its margin on each item isn't very high -- but Sinegal says they make it up on volume.

Rewarding loyalty

- Costco has the lowest employee turnover rate in retailing. Its turnover is five times lower than its chief rival, Wal-Mart. And Costco pays higher than average wages -- $17 an hour -- 40 percent more than Sam's Club, the warehouse chain owned by Wal-Mart. And it offers better-than-average benefits, including health care coverage to more than 90 percent of its work force.

- Sinegal is the tireless show producer, managing from the road, hopping on the corporate jet, and visiting up to a dozen Costco stores a day.

- "We promote almost 100 percent from within our company. We have guys who started pushing shopping carts out on the parking lot for us who are now vice presidents of our company," Sinegal said.

- "No manager and no staff in any business feels very good if the boss is not interested enough to come and see them," Sinegal said.

- Sinegal's salary -- $350,000 a year, is a fraction of the millions most large corporate CEOs make.

- "We always strive to be the best in the wage package."

- "We've always been in favor of improved wages for workers. When you have a strong middle class, they want to buy more stuff at Costco."

- "We would rather have our employees running our business."

Embrace competition

- "Competition makes us better. Some of our best stores have a Sam's Club next door."

- "It's like heroin: You do a little and you want a little bit more. Raising prices is the easy way." (note: Sinegal does not like to raise price)

Focus on the bottom line

- "If we take care of the business and keep our eye on the goal line, the stock price will take care of itself."

- "It doesn't do Costco any good if nobody can afford to buy anything."

- "We want to turn our inventory faster than our people."

- "When employees are happy, they are your very best ambassadors."

- "You destroy the initiative of the working people if they don't feel they have a fighting chance to be a part of the American Dream."

- "You don't have a very motivated working class, it starts to affect the dynamics of the economy. If workers are disenchanted and disenfranchised, productivity losses will go along with that."

- "You just can't get too focused on worrying about what's going to happen in the next quarter. You have to worry about where the business is headed long-term."

- "In the final analysis, you get what you pay for."

Sources:

SmartMoney: CEO Interview: Costco's James Sinegal (March 27, 2008)

According to SmartMoney: "These days Sinegal is gearing up for another potential tragedy: the American consumer. With unemployment up and home prices down, consumers are getting squeezed. The store that Sinegal cofounded in 1983 caters to the cost-conscious, whose ranks will certainly be growing in the coming year. Costco's goods are priced no more than 15% above cost, which explains why store sales amount to less than 1% of profits. (Costco's profit is largely driven by membership fees.)"

ABC News: Costco CEO Finds Pro-Worker Means Profitability (Aug 6, 2006)

Brainy Quotes: James Sinegal Quotes

"One of the strengths of our nation has always been a strong middle class who could afford their own homes and send their children to school." ~ James Sinegal, Costco's Co-Founder and CEO.