In the world of big-box grocers, Costco is known for a few things: its deals on everything from wide-screen televisions to 144 ounces of cinnamon-roasted almonds, its unusually good treatment of employees, and its meat safety. In fact, until recently they boasted that they did more E .coli inspections at their single, 250,000-square-foot beef processing facility in California’s Central Valley than the USDA did at every other meat plant in the country combined.
Obsessive focus on quality is a key entrepreneurial and leadership value, championed in Fast Company by everyone from Aaron Levie  to Steve Jobs.  But is there a line when quality control goes too far?
According to a recent jury verdict , Costco managers crossed that line in the fall of 2010, when 27-year-old meat department supervisor Ruben Calvillo went on a 10-day vacation. In his absence, his deputy, like the magician’s apprentice, ordered too much meat. Like, way too much meat. This particular Costco sold to restaurants and other businesses. So we’re talking 90-pound packages of unsold chicken, beef, and pork parts.
Calvillo, who had worked at the company since graduating high school, was desperate to unload the unsold meat. He called around to other Costcos, begging them to take it off his hands. But when he finally got a taker, a few packages in the delivery were found to be expired, which triggered an internal investigation that uncovered a total of $10,000 worth of expired meat.
A screwup, deserving of a reprimand and maybe a dismissal. But Calvillo’s supervisors did not believe this error had been a simple oversight. They wanted him to sign a confession--a meat culpa, if you will--copping to a deliberate conspiracy to foist ancient cuts of meat on the public. Two of them, both 6'4", around 240 lbs, shut the slight, 5'9’" man into an office and interrogated him for hours, making him believe he was locked inside. “You’re not fucking going nowhere,” they told him. “You’re staying here until you confess.” The interrogation didn’t end until Calvillo developed stroke-like symptoms and was rushed to the hospital. A jury awarded him $102,000 in November for emotional distress and false imprisonment.
Costco hasn’t commented publicly on the case, and it’s not yet known whether they will appeal the verdict. But what’s unusual to Calvillo’s lawyer, Brent Buchsbaum, is that they went to trial at all. “Issues were being raised about the integrity of their meat handling,” he told Fast Company, “and they decided to draw the line because they wanted to make a statement.”
Again, Costco's determination to preserve its own reputation for integrity ended up costing them a piece of that same integrity. Buchsbaum’s deposition of everyone from store managers to stockboys revealed widespread internal confusion about Costco’s own regulations on sell-by dates. “Chicken, meat, pork, boneless pork rib, ground round versus New York steak--they all have different shelf lives,” says Buchsbaum. “Nobody at Costco knew them. It was a comedy of errors.”
When an employee makes mistakes that go to the core of your reputation, there must be consequences. But if leaders refuse to share accountability, the whole company is missing a learning opportunity--one that in Costco's case turned out to be costly.
Calvillo, Buchsbaum reports, has found a new job and is in good health.
[Image: Flickr user Sean Rogers ]