Starbucks, which was founded in 1971 by Gerald Baldwin, Gordon Bowker, and Ziev Siegel (Moon & Quelch, 2006), originated in Seattle, Washington. The current CEO of the company is Howard Schultz who joined the marketing team and developed a deep interest in Italy’s coffee culture. Schultz eventually acquired Starbucks from its original founders and began expanding its presence. Presently, Starbucks holds a prominent position within the coffee industry and enjoys worldwide recognition as one of the leading brands. Now, let us explore Starbucks’ organizational structure.
The labor force composition in the 21st century has introduced new trends that have an impact on human resource management (HRM). Starbucks must address these changes in order to ensure employee satisfaction and the success of their business. An example of a trend that affects HRM is the aging workforce, in which workers aged 45 to 64 have significantly increased and are projected to continue growing (Noe, Hollenbeck, Gerhart & Wright, 2010, p. 32). Starbucks is adapting to this trend by acquiring the workshop known as Aging Workforce (PR Newswire, 2010).
Starbucks acknowledges the significance of the increasing diversity level in the workforce and its substantial impact. The company demonstrates a firm dedication to promoting diversity in their business practices, recognizing its value in shaping their future (Starbucks, 2010). They prioritize hiring individuals based on qualifications rather than factors like race, national origin, or gender bias (Starbucks, 2010). Supporting this claim are statistics from Starbucks Annual Report (2010) indicating that 28% of their Senior Officers are women and 22% are people of color.
Companies have started empowering their employees by giving them responsibility and authority to make decisions about product development and customer service (Noe et al., 2010). Starbucks encourages their workers to make independent decisions, be enthusiastic and take initiative, and strive to satisfy customers and make the Starbucks experience memorable (Starbucks, 2010). The focus on teamwork is another trend influencing HRM in Starbucks and other companies.
Starbucks managers strive for a sense of unity among all employees, with the goal of fostering team spirit. The company encourages its employees to support one another and collaborate to achieve Starbucks’ objectives, all while providing exceptional value to customers. This approach is what leads the company to describe working at Starbucks as akin to working with friends (Starbucks, 2010). In contemporary times, the significance of HRM within an organization has greatly increased. Companies now view HRM as a means of supporting their overall strategy, and managers consider HR professionals as strategic partners (Noe et al., 2010, p. 42).
The HR managers at Starbucks are in line with the company’s business strategy. They support strategies such as Total Quality Management (TQM), International Expansion, and Downsizing. TQM is defined as “a companywide effort to continuously improve the way people, machines, and systems accomplish work” (Noe et al., 2010, p. 43). The HR managers at Starbucks promote quality HRM by fostering creativity, individual decision-making, and communication within the organization. This means that employees like baristas have the ability to communicate with their supervisors and managers.
Starbucks HRM has always been a strong supporter of the company’s global expansion strategy, currently operating in 47 countries with over 4500 coffeehouses (Starbucks, 2010). The drive to transcend language and culture is what motivates Starbucks to enter new markets. However, the global economic crisis forced Starbucks to change its approach from expansion to downsizing. As a result, on July 1, 2008, Starbucks closed down 600 stores in the U.S., followed by the closure of another 61 stores in Australia by August 3, 2008 (Starbucks, 2010).
Starbucks HRM plays a key role in supporting the company’s downsizing strategy and assisting affected employees. It is vital to establish and enforce policies and procedures that set expectations for adherence across the organization, given Starbucks’ widespread workforce.
The promotion of equality in employment and the resolution of issues related to discrimination, sexual harassment, and unfair treatment are crucial in ensuring equal opportunities for all individuals. According to Noe et al.’s (p. 116) text, the Equal Employment Opportunity Commission (EEOC) plays a significant role in guaranteeing equal employment regardless of race, color, religion, sex, age, disability or national origin. The EEOC is responsible for investigating and resolving cases related to these matters.
Starbucks has developed a comprehensive twenty-seven-page manual that offers its employees guidelines on business ethics and compliance. This manual serves as the organization’s guiding principle as it establishes clear expectations.
Starbucks places great emphasis on the significance of employees reading, comprehending, and adhering to the company’s policies and procedures. Strict enforcement is in place to encourage employee collaboration, with any violation leading to immediate termination. Nevertheless, despite the guidelines being put into action, Starbucks has encountered numerous lawsuits alleging discrimination or harassment. Lawsuits can impose significant financial strain on organizations as they often involve substantial compensation for the victims.
A 24-year-old supervisor at Starbucks is being sued by a 16-year-old barista for making sexual demands. This type of lawsuit is not rare in big organizations and can be expensive. Hence, it is vital for organizations to adhere strictly to guidelines and enforce them to prevent such incidents. Furthermore, ensuring the safety of employees and customers is another challenge faced by companies like Starbucks. It should be noted that Starbucks, similar to other businesses, must comply with federal and state regulations.
The Occupational Safety and Health Act (OSHA) is an agency that oversees health and safety in organizations. OSHA establishes and enforces safety standards for all places of employment involved in interstate commerce. Starbucks has the responsibility to provide its employees with a safe and clean working environment. OSHA conducts surprise inspections to ensure compliance with these standards, which consist of reviewing records, conducting tours, performing interviews, and notifying employers of violations found. Violations can result in citations or criminal penalties. It is crucial for Starbucks to maintain a healthy and safe working environment to avoid harm to employees and customers, as this could have severe financial consequences.
In addition to health and safety concerns, another challenge Starbucks faced in the early 2000s was analyzing its workflow. The issue was not related to the product offered but rather the level of customer service provided. In 2008, the CEO decided to restructure the company’s organizational framework based on research findings indicating a lack of communication within the current structure.
Starbucks (2010) mentioned that a decrease in customer satisfaction prompted the need for an organizational structure change. Starbucks addressed this issue by transitioning from a two-division structure to a four-division structure known as the geographic structure. This new structure comprises four regions: Western/Pacific, Northwest/Mountain, Southeast/Plains, and Northeast/Atlantic. Each region has its own finance, marketing, and human resources departments, along with other crucial company functions.
The resources that are referred to as partner resources report to the head of the division, who is the Senior Vice President. Each Senior Vice President then reports to the division’s President. The President of each division directly reports to Howard Schultz, who is the CEO. According to Schultz, this new structure will enhance customer focus and satisfaction by facilitating communication across different channels (Starbucks, 2010). With this updated organizational structure, Starbucks will also be implementing work redesign by eliminating or consolidating jobs.
When Schultz, the CEO, implemented a new organizational structure, 600 jobs were eliminated. As a result, other employees had to take on the responsibilities of the lost jobs, leading to a larger job description for partners (employees). The job description for baristas includes developing satisfied customers, providing consistent quality drinks, maintaining store operations and profitability, and learning all aspects of the barista role (Starbucks, 2010). This demanding job description combined with the added responsibilities of the lost jobs creates a challenge for all baristas in the company. On the other hand, managers have a shorter and less defined job description compared to baristas. Their responsibilities include making financial contributions, developing partners, and maintaining quality store operations (Starbucks, 2010).
Starbucks requires managers to go beyond their job description and take on additional responsibilities. This includes providing their personal phone numbers to employees, making themselves available for problem calls at any time. Over the years, the job design for Starbucks baristas has evolved. In the past, they were able to make all menu drinks within an eight-hour shift, but this has since changed (Moon, 2006).
The baristas now spend a total of 128 hours, equivalent to sixteen eight-hour shifts, to make all the drinks on the expanded menu (Moon, 2006). As the company has grown, their job design has also evolved. Today, their tasks have changed significantly as they are required to efficiently prepare a wide variety of different drinks for customers.
Implementing a human resource planning process is essential for organizations to gain a competitive advantage (Noe et al., 2010, p.193). This process involves forecasting, goal setting and strategic planning, as well as program implementation and evaluation. The first step in HR planning is forecasting. This entails determining the supply of and demand for various types of human resources in order to predict areas within the organization where there will be future labor shortages or surpluses (Noe et al., 2010, p.193).
Goal setting and strategic planning are crucial aspects of HR planning. It is important to derive a specific quantitative goal from analyzing labor supply and demand. This goal should include a specific figure for desired outcomes in job categories or skill areas and have a specific timetable for achieving results (Noe et al., 2010, p.197). Once these goals are established, the organization must choose from various strategies available to address labor shortages and surpluses (Noe et al., 2010, p.197).
Overall, the HR planning process consists of several stages including program implementationDuring the final stage, the programs from the strategic-choice stage are implemented to manage labor shortages or surpluses effectively. Evaluating the results of this implementation is crucial for determining if Starbucks has successfully avoided such issues and improved its business performance (Noe et al., 2010, p.207).
Starbucks has predicted labor surpluses in its stores, roasting plants, and regional offices due to the current economic downturn (“Starbucks Corporation Fiscal 2008 Annual Report,” 2008). As a result, Starbucks has established measurable goals to gauge the effectiveness of programs aimed at addressing the anticipated surplus. Since the beginning of 2008, Starbucks has planned to eliminate 18,400 positions and shut down 975 stores in the US, with the goal of saving $300 million in annual operating costs (Allison, 2009).
The tactic utilized by Starbucks to achieve its quantitative goals and address the labor surplus was downsizing. According to Noe et al. (2010), downsizing refers to a deliberate reduction in personnel on a large scale, with the aim of cutting costs and increasing profits – objectives that Starbucks aimed to fulfill during the recession. The implementation of this downsizing strategy allowed Starbucks to resolve labor surplus problems. In 2009, the company closed 975 stores in the US and laid off 18,400 employees. Additionally, in 2010, Starbucks witnessed a worldwide reduction of 30,000 employees.
Once an organization has effectively planned its human resource process, it can start a recruitment method if the need to hire personnel arises. “Human resource recruitment is defined as any practice or activity carried out by the organization with the primary purpose of identifying and attracting potential employees” (Noe et al., 2010, p. 210). Recruitment includes personnel policies, recruitment sources used to solicit applicants, and the characteristics and behaviors of recruiters (Noe et al., 2010, p. 211).
The following discussion will focus on the first two aspects (personnel policies and recruitment sources) of recruitment from Starbucks’ point of view. The third aspect (recruiter’s characteristics and behaviors) will not be covered as it is subjective and less based on facts. Starbucks needs to make decisions concerning these three areas of recruitment in order to attract and identify potential employees. The personnel policies at Starbucks that enhance the appeal of a job include opportunities for internal recruitment and offering both extrinsic and intrinsic rewards to all employees.
Internal recruitment is available to current Starbucks employees who are looking to further their careers (“Partner Career Opportunities,” n. d.). These individuals must apply for positions other than Barista, Shift Supervisor, Assistant Store Manager, or Store Manager. They must also have been in their current role for at least 12 months, consistently meet performance expectations or exceed them, and have not been on a Performance Improvement Plan in the past 6 months (“Partner Career Opportunities,” n. d.). Starbucks provides extrinsic rewards to all employees through a benefit plan called “Your Special Blend” (“The Partner Experience,” n. d.). In addition, there are intrinsic rewards such as opportunities for growth within the company and various events where employees can interact with vendors offering discounts and learn about employee interest groups that promote work/life balance (“The Partner Experience,” n. d.).
The recruitment sources at Starbucks for soliciting applicants consist of external sources like electronic recruiting through the Starbucks website, direct applicants, referrals, local events such as job fairs, and internal resources as mentioned previously (“Retail Careers,” n. d.; “Professional Services Careers,” n. d.; “Roasting Plant Careers,” n. d.; “Candidate Frequently Asked Questions,” n. d.). Starbucks excels in selecting the most suitable candidate for the job.
Starbucks acknowledges the significance of having the right employees in order to provide excellent customer service. In chapter 6, it is emphasized the importance of carefully selecting organizational members for any business that aims to compete through its workforce (Noe et al., 2010, p. 232). Starbucks refers to their employees as “partners” due to the direct and open relationship they maintain with them (Starbucks Corporation, 2010). Starbucks desires that their “partners” possess a strong passion for their work.
Starbucks emphasizes the importance of personal connections among their employees in a diverse and respectful environment. Their mission statement, “to inspire and nurture the human spirit one person, one cup, and one neighborhood at a time” (Starbucks Corporations, 2010), reflects this value. The company takes the selection process seriously and conducts job and management hiring fairs to find competent and personable individuals. When applying, your resume will be reviewed by two different interviewers.
Starbucks conducts situational interviews that require applicants to demonstrate certain characteristics essential for the job, such as exceptional people skills and friendliness that create a sense of belonging for customers. These interviews involve addressing specific issues, questions, or problems likely to occur while working at Starbucks (Noe et al., 2010, p. 248). Starbucks values employees who establish personal connections with customers, knowing their names and regular orders. Building this connection helps customers feel comfortable and encourages them to become loyal patrons.
Starbucks, with a global presence of over 16,000 locations, faces the crucial task of choosing suitable candidates to fill job vacancies. When individuals seek a career opportunity within the company, they can opt for three distinct paths: Retail careers, Professional Service careers, and Roasting Plant careers. Retail career options include positions such as baristas, shift supervisors, store managers, district managers, and regional directors (Starbucks Corporation, 2010). Moreover, Starbucks offers a wide range of Professional Services careers.
Starbucks Corporation hires for various positions in administrative and support services, business development, call center, communications, design engineering, facilities development, legal, marketing, operations, procurement, project management, quality, research and development, sales, social responsibility, and supply chain management (Starbucks Corporation, 2010). They also offer career opportunities in the Roasting Plant field, which has locations in Kent, Washington; Portland, Oregon; Minden, Nevada; York, Pennsylvania; Columbia, South Carolina; and Amsterdam, Netherlands (Starbucks Corporation, 2010).
Starbucks takes great pride in their selection process. CEO Harold Schultz has emphasized their goal of creating communities and human connection, stating “We’re in the business of human connection and humanity, creating communities in a third place between home and work” (Schorn, 2006). They put in significant effort to select enthusiastic employees. Schultz also mentions the relationship of trust and confidence Starbucks has built with their employees, which he considers one of his proudest accomplishments: “If there’s one accomplishment I’m proudest of Starbucks, it’s the relationship of trust and confidence we’ve built with the people who work at the company” (Schultz & Yang, 1997). Notably, Starbucks has a turnover rate that is less than half the industry average. Schultz believes that when employees have self-esteem and self-respect, they can contribute more to their company, family, and the world (Schultz & Yang, 1997).
In addition to their employee selection process, Starbucks takes great pride in their extensive training program for all partners. In fact, they are known to spend more on partner recruitment and development than on advertising, with an annual investment exceeding $50 million (Weber, 2005). The endorsement of this approach by senior executives highlights how crucial Starbucks views human resources for the achievement of its business strategy.
According to Weber (2005), it is important to provide premium service when selling a premium product. Starbucks understands this concept and puts careful thought and execution into their training process for new employees, referred to as partners. The training starts immediately after offering employment and is conducted in-house. Instead of outsourcing training to external companies, Starbucks relies on its own staff members who are store managers (Young, 2005). Every partner in a Starbucks store, whether full-time or part-time, undergoes a minimum of 24 hours of training within the first two to four weeks of employment (Thompson, 1999). This training covers various aspects including coffee history, drink preparation, customer service, and retail skills. Notably, a significant amount of time is dedicated to drink preparation, with an emphasis on consistency, memorization of ingredients, and proper presentation.
Starbucks utilizes organizational socialization to effectively integrate new employees into the company. This process involves educating them about the company’s history, goals, language, people, and performance proficiency (Noe et al., 2010, p. 326). Management trainees receive an extensive training program that lasts 8-12 weeks during their initial employment. This training covers various aspects of Starbucks’ structure, such as store operations, company practices and procedures, information systems, and basic management skills (Thompson, 1999).
One of the main goals is to embed the company’s values, principles, and culture and to transmit their knowledge about coffee and their passion for Starbucks. The training for store managers is hands-on and involves spending time behind the counters of multiple locations to fully understand the job requirements for their employees. Starbucks also provides support for training new stores in different markets worldwide. According to Thompson (1999), “Whenever Starbucks opens stores in a new market, a significant recruiting and training effort is implemented 8-10 weeks in advance.”
Experienced managers and baristas from existing stores are involved in leading the store-opening process and providing one-on-one training based on the company’s formal classes. International partners spend up to three months in Seattle, where they learn about coffee, Starbucks culture, values, and the corporate approach to business. When they return to their respective locations, they share this information within the organization. Starbucks supports ongoing education for all employees and actively encourages partners to enhance their learning through personal and professional development programs.
In a groundbreaking move aimed at revitalizing employees and improving customer satisfaction, Starbucks temporarily closed all of its locations on February 26, 2008 (Starbucks, 2009). In just three and a half hours, they successfully retrained over 135,000 baristas across approximately 7,100 stores. This dedication to training even impressed long-standing employees, who recognized the company’s commitment to their own growth and the satisfaction of their customers (Weinstein, 2008).
Starbucks promotes cultural immersion by implementing a behavior-based diversity program that allows employees to engage with individuals from diverse cultures, races, and nationalities (Noe et al., 2010, p. 322). This program encourages employees to visit coffee plantations in different regions, support philanthropic efforts, and embrace diversity in various ways. Presently, Starbucks showcases diversity with 31% of its workforce consisting of minorities and 66% comprising women. Considering the current economic downturn, how is Starbucks faring as a company?
In 2009, Starbucks slipped from 11th to 24th place in the Fortune’s “100 Best Companies to Work for” ranking. Currently, they are ranked 93rd (Starbucks, 2010). Due to store closings and other cutbacks, there are 30,000 fewer employees worldwide compared to last year. Nonetheless, baristas still love working at Starbucks because of the camaraderie (Fortune, 2010). Even though they received over 150,000 employment applications last year, the economic struggles of this giant organization are expected to result in a one-year job growth rate of -27%, meaning over 5,000 fewer jobs.
Despite the fact that 90% of the employee population is made up of part-time workers, the company still offers partial health-care coverage for this group. For corporate employees, achieving work-life balance is possible through various benefits, such as on-site childcare, a fitness center, job sharing programs, compressed workweeks, telecommuting, and the opportunity to earn a decent salary. Among the hourly positions, the most common is the machine operator with an average annual pay of $36,769, while the most common salaried position is that of store manager with an average pay of $44,434 (Fortune, 2010).
Starbucks, like any other company, has faced its share of challenges. However, with a strong workforce and culture, the future looks promising. References:
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– Schorn, D. (2006). Howard Schultz: the star of Starbucks. Scott Pelley meets the man behind the coffee empire. CBS, Retrieved from http:www.cbsnews.com/stories/2006/04/21/60minutes/main1532246.html
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