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Starbucks
[2006]
[2006] [While many people have a skewed social perspective of
Starbucks, the organization is actually quite well established when
it comes to social-awareness and societal involvement.]
The Complete
Experience
PLANNING
There are very few businesses that people encounter as frequently as
Starbucks. With a retail store on practically every street corner you would be
hard pressed to not find a convenient location to purchase a premium cup of
coffee. If the management and the powers that be at Starbucks have their way
then Starbucks will be much more then a name synonymous with a premium cup
of coffee.
Starbucks is an entire experience as it comes to coffee as anyone who
has been into one of their stores can tell. From the plush chairs and svelte
music, to their sponsorship of such movies as Akeelah and the Bee, Starbucks is
creating an entire environment for people to experience and enjoy.
THE STARBUCKS ORGANIZATION
Organizational culture is something that is very important to Starbucks and
is something that starts with their upper management. Jim Donald, the current
CEO and president, describes himself as “fanatical about communicating.” He
personally responds to 75% of his e-mails and records things that people say
that he feels are important. He is a very forward thinking person and this is all
evidenced by his constant time management and attention to details as minute
as a fifteen minute period of someone’s day.
By paring down his meetings from one hour to forty-five minutes he has
saved eight hours a week. According to the vice president of the beverage
category, Starbucks could save $12 million if all of the executives performed like
this. Jim Donald is one of the people in the limelight as far as Starbucks is
concerned and he makes each and every individual within the organization feel
like they are necessary. While visiting stores he will speak with his baristas and
even go so far as to put on an apron and get behind the counter to assist them.
Adherence to these policies demonstrate that he is concerned with saving money
and increasing the bottom line but not at the expense of his employees.
GROWTH
Starbucks has always been a company concerned with growth and their
planned ventures for the future will only exacerbate this. While Starbucks is
known for its cup of coffee, they hope to be able to add to that image in the public
eye.
Most recently, Starbucks partnered with Lions Gate films to release
Akeelah and the Bee and co-released Ray Charles “Genius Loves Company”
album in their stores. Starbucks Chairman Howard Schultz has often talked
about making the coffee stores a “third place” –an alternative to home and office
where people can gather to relax or work. Starbucks has even hired Ken
Lombard, one of the creators of the Magic Johnson theater chain as the head of
their new entertainment division. Starbucks is branching out into other industries
and forging ties closer to Hollywood. Lombard does not feel that these ventures
into the entertainment industry will dilute the Starbucks brand. Lombard believes
selling music and movies support the core Starbucks mission and at the end of
the day Starbucks is not a music or movie company; they are a coffee company.
BEING SOCIALLY CONSCIOUS
Starbucks is a $6.4 billion global company with 90,000 employees, 9,700
stores, and 33 million weekly customers. Howard Schultz, the chairman of
Starbucks, comments that “People aren’t interested in how much you know, it’s
how much you care.” This is something that rings true throughout the
organization and especially in regards to Starbucks social consciousness.
In a recent town hall meeting Schultz fielded a questions concerned with the
fact that Starbucks is currently spending more on healthcare than on coffee, and
the workforce is nervous about shrinking benefits. “We are not ever going to turn
our backs on our employees,” he responded reassuringly. Some of the senior
managers were also concerned with the technology department operations being
outsourced. Schultz told the managers he would have an open conversation with
them about the issue. Schultz is a genuine, caring leader who is concerned with
the health and well-being of his employees. Starbucks continues to be one of the
few companies that offers medical benefits to part-time employees, a trend they
helped start in the late 1980’s.
ORGANIZING
Culture & Growth
Starbucks success is mainly based on what is referred to as the “Starbucks
Experience”, which CEO Howard Schultz describes as
“You get more than the finest coffee when you visit a Starbucks-you get great
people, first-rate music and a comfortable and upbeat meeting place. “We
establish the value of buying a product at Starbucks by our uncompromising
quality and by building a personal relationship with each of our customers.
Starbucks is rekindling America’s love affair with coffee, bringing romance and
fresh flavor back to the brew.”
In effort to ensure that each and every person who walks into Starbucks has the
same “Starbucks experience” all Starbucks partners receive the best training in
the business. Before training even begins Starbucks starts to recruit. In screening
possible new hires for positions they look for “passionate people who love coffee”
Starbucks HR leaders search for a diverse workforce which represents the
community.
Each barista hired receives at least 24 hours of training in the first two to four
weeks. They are taught many aspects of the Starbucks operation including: The
history of coffee and coffee knowledge, drink preparation, customer service and
retail skills. All baristas were also taught how to properly weigh and label coffee
beans and the proper standby time for each brewed coffee to maintain company
standards. This will ensure that each cup of coffee served by Starbucks would be
the same either in Seattle or Chicago.
Store level managers attend a much longer training session at the Starbucks
Coffee School in San Francisco. The training for managers takes approximately
eight to twelve weeks, it covers not only the above information that baristas are
trained on but also includes details of store operations and procedures. The
major goal of this intense training is to ingrain the principles, values and culture
of Starbucks to the trainee.
To ensure that the “Starbucks Experience” is received by all customers even at
the newest locations hiring and training begins at least eight weeks before the
new store opens. Then a team of experienced managers and baristas is
assembled for existing locations and are brought to the area to assist in the new
store opening and to conduct training on a one on one basis even after the
formal training classes have ended.
Starbucks is also known for it’s ability to have an expansive reach when it comes
to retail location. The reason Starbucks can reach so many outlets is due to it’s
licensed stores. Starbucks receives a license fee and a royalty on sales on these
locations. This has given Starbucks the ability to locate stores where they
normally would not be able to, in places such as: airports, hotels, universities,
hospitals, offices and even airlines. All managers and employees of the licensed
stores receive the same training given to Starbucks partners to ensure company
wide cohesiveness.
Social Responsibility
At the very base of the company’s culture it roots itself within the community.
Howard Shultz’s goal was to “build a company with soul, which included
corporate responsibility. In 1997 the Starbucks Foundation was established. The
foundation was one of the largest contributors to C.A.R.E. which provided health
and education programs to third world countries most of which Starbucks
purchased is coffee beans.
Starbucks is also committed to the environment. It has organized a “Green
Team” of store managers from all regions that assist the community in
environmental efforts to reduce, reuse and recycle waste. The team has
introduced innovative ways to reuse some of the paper, plastic and cardboard
the store uses. They have reused packing materials and have donated these
materials to local schools for art projects.
DIRECTING
Directing, or also known as leading, is the process of attempting to influence
other people to attain organizational objectives (text pg. 26). The job of a manager is to
motivate the people that are responsible for specific tasks to help them achieve their goals
and thus the shared organizational goal. Directing cannot only be applied to individual
situations but as well as in groups and teams.
Directing has been and will continue to be a crucial part in the Starbucks
organization. Starbucks is the #1 coffee retailer in the world with approximately 10,000
coffee shops spread across more than 30 countries. With already so many stores and a
long-term expansion plan to grow to 15,000 US stores and 15,000 international stores,
Starbucks must have a tactical plan to keep the morale consistent across the globe and
motivate their employees to achieve common goals. There are a few key actions that
Starbuck’s is taking to lead the community in social responsibility and the positive
treatment of their employees.
There is a growing concern from people across the nation about health and fitness,
especially for the children of today’s society. Studies show that the average American
weight is increasing and obesity is prominent in this country more than any other. Not
only is it what you eat, but also what you drink. Some Starbuck’s choices are very high
in calories, fat, and caffeine; the Grande-size Bananas & Crème has 550 calories and 15
grams of fat. This beverage and others like Frappuccinos are very sweet and resemble
milkshakes and 7-Eleven Slurpees that make them particularly appealing to children.
Due to the high appeal to children, Starbuck’s reviews all of their marketing
materials to avoid distributing ones that could be “inadvertently appealing to youth”
(ProQuest). This is a longstanding policy of the company, which is becoming more
difficult to stand by when the coffee shops are increasingly becoming popular among
families. Despite the increasing popularity, Starbucks still does not campaign to children.
They are also responding to the health concerns by offering lighter versions of many
Frappuccinos and also introducing a new line of juice drinks that boasts fewer calories
and no fat; customers can also order drinks without caffeine. By being aware of the
consumers concerns, caring about the health of society, and taking action to protect
consumers, Starbucks is leading the way for other companies to be socially responsible
for the health of society.
Another way in which Starbucks is leading society as well as their employees is
through equal opportunity for people with disabilities. Starbucks is exerting a special
effort in reaching out to people with disabilities both as their customers and as their
employees. “This is a group that most businesses have not addressed…as I look at
changes in demographics, it is one of the groups that are very important” (quote from
May Snowden, the vice president of global diversity; ProQuest). This effort is in its early
stages, but Starbucks is actively recruiting disabled individuals, hiring them, and
encouraging employees to support this change. Starbucks complies with the American
With Disabilities Act, which orders equal access to jobs and services for the disabled.
They have also joined the National Business Disability Council, which is sort of like the
Monster.com for the disabled where Starbucks has access to many resumes for potential
hire.
Some actions that Starbucks has taken and is currently improving upon is that
they (1) changed the labels on tables designated for wheelchairs to “For a customer with
a disability” (2) lowered counters for wheel chair access (3) built handicapped accessible
entrances and (4) train employees to work effectively with someone with a disability.
The goal: to make its store more inviting to customers with disabilities, as well as their
caretakers, family members and friends (ProQuest).
CONTROLLING Controls within organization are established at varying levels. Starbucks’
controls can be examined within the context of its culture, growth and social
responsibility. These controls also provide the stores a competitive advantage.
Organizational Culture/Cultural Controls: Starbucks has a unique company and
customer culture. In order to build and sustain that culture, certain ‘controls’
need to be put in place. Culture maybe defined as employee behaviors, norms,
attitudes, language, and traditions of an organization. Cultural controls can help
build and maintain certain company attributes. Certain companies may adopt
“normative controls” which make customers want to behave in a certain manner
in order to preserve their culture. To use normative controls effectively,
companies need to create an environment in which customers care about the
impact of their behavior on others. This forces employees and customers to
behave in a way the company endorses. Starbucks has its own language,
tradition, and attitude. The charm of Starbucks is how a customer orders a
product. Customers choose among many permutations of sizes, flavors, and
preparation techniques in its beverages. In the interests of filling orders
accurately and efficiently, Starbucks trains its counter clerks to call out orders to
beverage makers in a particular sequence. It is all the better when customers
themselves can do so. Therefore, Starbucks attempts to teach customers its
ordering protocol in at least two ways. It produces a “guide to ordering”
pamphlet for customers to peruse, and it instructs clerks to repeat the order to
the customer not in the way it was presented but in the correct way to control its
culture.
Employees are educated on the nuances of coffee-making, such as aroma, body,
acidity, and flavor. Starbucks rewards employees for completing the program,
but that is not the only benefit. By creating more sophisticated, knowledgeable
employees who are more engaged in the business, Starbucks sets itself apart
from the competition in an increasingly crowded marketplace and maintains
customer loyalty to those famous $5 cups of coffee.
Customers are willing to pay more for the Starbucks brand not only because of
its gourmet appeal but also because of the positive associations and experiences
they have in each retail store. Additionally, Starbucks’ hiring practices also
ensure that the right people are hired and screened appropriately.
Growth/Growth Control: Starbucks has embarked on an aggressive growth
culture. They open 10 new stores every day. Chairman Howard Schultz makes it
his personal responsibility to ensure that the company is nimble, and has
adequate information to grow successfully. He personally visits at least 30 to 40
stores a week, believes that a corporate leader must share unbridled enthusiasm
with his employees. “I need to touch as many people as possible—I want to
spend time with people,” he says. “That’s the single most important thing I’m
doing.” Jim Donald, the CEO of Starbucks says, “I want to grow big and stay
small at the same time. We want to run the company just like we did when we
were one store in Seattle.” This is a form of control. When employees know that
their chairperson and CEO are dedicating personal time, they are inclined to
more productive and ethical.
Human resources use some simple guidelines in screening candidates for new
positions: “We want passionate people who love coffee… We are looking for a
diverse workforce, which reflects our community. We want people who enjoy
what they are doing and for who work is an extension of them.” Every barista
hired is given at least 24 hours training in the first two to four weeks. Everyone is
drilled in the Star Skills, three guidelines for on-the-job interpersonal relations:
(1) maintain and enhance self-esteem, (2) listen and acknowledge, and (3) ask for
help. There were rules to be memorized: milk must be steamed at least 150
degrees Fahrenheit but never more than 170 degrees; every espresso shot not
pulled within 23 seconds must be tossed.
Management trainees attend classes for 8 to 12 weeks. Their training is much
deeper, covering not only the information imparted to baristas but also the
details of store operations, practices and procedures as set forth in the company’s
operating manual, information systems, and the basics of managing people.
Social Responsibility/Social Control: The chairperson’s effort to “build a
company with soul” included a broad-based program of corporate responsibility,
orchestrated mainly through the Starbucks Foundation, set up in 1997. Starbucks
was the largest corporate contributor in North America to CARE, a worldwide
relief and development organization that sponsored health, education, and
humanitarian aid programs in most of the Third World countries.
Starbucks had an Environmental Committee that looked for ways to reduce,
reuse, and recycle waste, as well as contribute to local community environmental
efforts. There was also a Green Team, consisting of store managers from all
regions.
The Starbucks Foundation provides governance and direction for the $30 million
that was spent on Community Investments in 2005. Some of the few ways they
spend in are:
� Cash contributions made at the corporate, regional and local level
� In-kind donations of Starbucks products and resources
� Partner volunteer and gift-matching programs
� Adding premiums to some of their coffee contracts to fund social projects
Starbucks responded in a significant way to last year’s massive earthquake and
tsunami and later to Hurricanes Katrina and Rita. Their first step was to ensure
the safety of their partners in the affected areas and to help address their need for
their basic necessities.
When they expanded in China—they established a steering committee
comprising Starbucks executives, representatives of the Chinese Ministry of
Education, the Soong Ching Ling Foundation, the All China Women’s Federation
and local community organizations to launch the Starbucks China Education
Project that supported educational programs in China.
The Starbucks foundation receives the majority of its funding from Starbucks
Corporation as well as some private donations. The foundation is governed by a
board of directors comprised of 14 Starbucks senior executives and is chaired by
retired Starbucks president and CEO, Orin Smith. The foundation and the
committees have structured ways of controlling the funds flow and ensuring its
appropriate distribution.
Starbucks works with several organizations to make credit available to coffee
growers, which enables them to postpone selling their crops until the price is
favorable. Starbucks works with EcoLogic Finance, a nonprofit lender to
sustainable business in environmentally sensitive areas, to provide the financing
needed for COCLA (Center de Cooperativas Agrarias Cafetaleras de Cuzco), a
Fair Trade Certified that provides Starbucks with high-quality coffee, to purchase
coffee from cooperative members. Through its multifaceted network, which
includes extensive support from USAID, EcoLogic Finance bundled resources
from the Calvert Social Investment Foundation and the Rudolf Steiner
Foundation (RSF) to extend $1 million in credit to COCLA in 2005. Known as
“pre-shipment trade credit,” the financing helps COCLA cover expenses during
the six-month “cash gap” between the harvest and their receipt of payment for
the crop. In the four years, since COCLA began receiving financing from
EcoLogic Finance, membership has increased 60 percent and coffee production
has expanded 30 percent. More than 90 percent of its production is now certified.
Certified coffee price premiums enable COCLA to provide training to farmers,
offer a micro-credit program, set-aside forestland for habitat preservation, and
provide a viable alternative to growing cocoa, the basis for cocaine.
Conclusion: The control measures as outlined above are just an example of how
Starbucks operates in order to ensure high levels of compliance and integrity
while maintaining the quality of its products and services.