At first blush, Costco and Liberty Mutual seem to have little in common. A big-box retailer and an insurance company provide two very different settings that would, intuitively, appeal to distinct sets of employees. With Costco, you think about workers driving a forklift, packaging giant rotisserie chickens, and hoisting 50-pound bags of heirloom rice. At Liberty Mutual, work involves arranging policies, comforting frazzled drivers, and managing claims.
But dig a little deeper and common threads begin to emerge. Both companies are built on a philosophy of exposing employees to linear and tangential career pathways, encouraging growth, and fostering a culture where the progression to the ranks of leadership from entry-level positions is common enough to seem unexpected.
Costco and Liberty Mutual also have something else in common. They’re among the 50 best workplaces within the Growing Talent category on the 2022 American Opportunity Index, which measures how well the 250 largest U.S. public companies are doing at creating economic mobility for their workers. The Index draws on the real-world outcomes of employees in roles open to non-college graduates.
At Liberty Mutual, more than 80 percent of managerial positions are filled by internal employees.
The Growing Talent category assesses the frequency at which a company fills open roles by promoting employees from lower-paying occupations within the company, as well as the percentage of senior management (director and above) who were promoted from within the company.
At Liberty Mutual, more than 80 percent of managerial positions are filled by internal employees. The statistic reflects the 110-year-old company’s strong culture of internal mobility, says Shawn Tubman, Liberty Mutual’s head of talent acquisition. “People progress through finance and claims operations, but we also see employees move into different or new career opportunities,” he says. “It comes down to providing an environment where everybody has the space to be successful, and the support and tools to grow their careers.”
It’s readily apparent to any long-term Costco member that employees rise through the ranks. Months turn into years, years turn into decades, and employees advance from shagging carts in the parking lot to checking receipts at the door to then running teams and departments. Along the way, they develop not only a sense of belonging but also a pride of ownership.
“We are promoting from within almost to a fault. We are giving people an opportunity to advance from being an hourly worker to supervisor, area manager, assistant general manager, and general manager.” – Pat Callans, executive vice president of administration at Costco
The company’s progressive pay policies are designed to make for a stickier environment. “We’ve always prided ourselves on paying a good starting wage by retail standards,” says Pat Callans, executive vice president of administration at Costco. “But I think one of the things that keeps people around in the early stages is that they’re getting regular increases.”
Costco workers who are working full-time hours typically receive two pay increases per year, and the raises continue with service time—creating the sense that there’s always another carrot around the corner. After a few years on the job, employees receive annual bonuses, which start around $5,500 and can climb to $10,000. At the same time, Costco works to provide opportunities for growth. “We want to make sure you never feel like you’re stagnating. And if people want opportunity, they see opportunity,” Callans says. “We are promoting from within almost to a fault. We are giving people an opportunity to advance from being an hourly worker to supervisor, area manager, assistant general manager, and general manager.”
According to Callans, the vast majority of the company’s general managers—the top dog at a warehouse location—began their careers as hourly employees, and nearly all were promoted to their GM positions from within the company. The GM post is a huge job with a lot of responsibility, moving parts, logistical headaches, and stress. But for those with the ambition and perseverance to rise to that level, the potential gains are significant. “The current average salary for a GM is about $142,000,” Callans says. “Including bonus and stock compensation, a GM can earn triple that amount.”
As impressive as that figure is, good wages and the prospect of vertical growth aren’t enough to keep quality talent. Other large retailers are competing for talented employees, too, with starting wages and benefits. This trend makes it all the more important for the big-box retailer to stay a step ahead. One way Costco does that is to expose employees to non-obvious opportunities. For most floor workers, the thought of someday working at the company’s Seattle headquarters is completely out of mind. But as the company continues its forays into e-commerce, for example, it needs more talent with those skills at headquarters – and it considers warehouse employees to be a rich resource. “We want and need people to still matriculate through the operations positions. Those are our most important jobs,” Callans says. “But whether it’s e-commerce or buying or logistics or accounting or IT, we want people to know about those opportunities and the training programs that exist to help them advance their career.”
Liberty Mutual takes a similar tack when mapping out multiple paths to leadership. It has an apprenticeship program that’s designed to lure entry-level employees into new roles, especially those related to digital innovation. Hiring for these roles has far more to do with attitude and ambition than education or training in a specific skill set. “We’re a culture of innovation and continuous improvement,” Tubman says. “All of those dynamics have contributed to us looking beyond college education. In fact, if you look at our available jobs, even the ones that require a college degree, it now typically says ‘college degree or equivalent.’”
While Callans is competing primarily with retailers for talent, Tubman feels like he’s competing with everyone, noting that many employers still have more job openings than qualified applicants. “The last five to seven years has just been such a robust market for job seekers, and that has changed our approach,” he says.
“But it’s also about making it so people don’t have to change companies to change careers,” he adds, “especially in 2022, when switching jobs is as easy as pushing a button.”