In 1971, three coffee fanatics – Gerald Baldwin, Gordon Bowker and Ziev Siegel founded Starbucks in Seattle, Washington (Moon & Quelch, 2006). Howard Schultz, who is now the CEO, joined the marketing team. He made a trip to Italy and became obsessed with the idea of how people were drinking coffee in the cafes. A few years later Howard Schultz bought Starbucks from the three founders and started to expand the coffee brand. Starbucks is the leader in the coffee industry and is one of the most recognized brands in the world. Now let us take a deeper look into the Starbucks organization.
The 21st century has brought new trends in the labor force composition that surely affects human resource management (HRM). Starbucks has to deal with these changes in order to make their employees happy and to run their business successfully. One of the examples of a trend that affects HRM is an aging workforce. By now the worker age range of 45 to 64 has grown dramatically and continues to grow (Noe, Hollenbeck, Gerhart & Wright, 2010, p. 32). Starbucks is following the trend. For instance, the company has recently purchased the workshop that is called Aging Workforce (PR Newswire, 2010).
Another example of a trend that puts a big impact on the workforce is an increased diversity level. Starbucks understands the importance of a diverse workforce for the company future and “reflects a comparable dedication to diversity as an essential component” in the way they conduct business (Starbucks, 2010). Starbucks states that they hire people regardless to the applicants’ race, national origin, gender, and any other bias (Starbucks, 2010). For example, 28% of Senior Officers (Senior Vice President and above) are female and 22% are people of color (Starbucks Annual Report, 2010).
The next change affecting the workforce is that companies have begun empowering their employees. Employees are given “responsibility and authority to make decisions regarding of all aspects of products development or customer service” (Noe et al. , 2010, p. 40). Starbucks workers are encouraged to make their own decisions, be enthusiastic and initiative, do everything possible to make Starbucks customers happy, and make the Starbucks experience worth coming back to (Starbucks, 2010). All Starbucks employees are encouraged to work as a team and this is the next trend that influences HRM.
Starbucks managers are trying to get every employee to feel part of the team. Company employees are encouraged to support each other and work together to reach the goals of Starbucks while providing delightful customer value. That is the reason why the company says that working at Starbucks is more like working with friends (Starbucks, 2010). Nowadays, the role of HRM at a company has increased a lot. Organizations look at HRM “as a means to support a company strategy” and managers treat HR professionals as “strategic partners” (Noe et al. , 2010, p. 42).
The HR managers at Starbucks support the company’s business strategy. At Starbucks HRM supports strategies that involve Total Quality Management (TQM), International Expansion and Downsizing. TQM is “a companywide effort to continuously improve the way people, machines, and systems accomplish work” (Noe et al. , 2010, p. 43). In order to promote quality HRM at Starbucks, the HR managers support creativity, individual decision-making, and the communication within the organization. For instance, workers such as baristas can always communicate with their supervisors and managers.
Starbucks HRM has always supported the company’s strategy that involved international expansion. Starbucks currently operates in 47 countries with over 4500 coffeehouses. In the future, Starbucks has an intention of expanding into new countries since their passion is transcending language and culture” (Starbucks, 2010). However, due to the world economic crisis, Starbucks’s strategy of global expansion has changed to downsizing. For instance on July 1, 2008 Starbucks closed 600 stores in the U. S and by August 3, 2008 they closed 61 stores in Australia (Starbucks, 2010).
Starbucks HRM supports the downsizing strategy of the company and tries to do everything possible for the workers who have been laid-off and for those workers who are threatened by losing their jobs. As a company hiring and managing a large number of employees across thousands of Starbucks locations, it is necessary to establish and enforce company policies and procedures. Policies and procedures are important in an organization because it is essentially the backbone of the company. Expectations are set and are expected to be met and followed.
This will help to eliminate any discrimination, sexual harassment, or any other case of unfair treatment. According to the text by Noe et al. , the “Equal Employment Opportunity Commission is the government commission to ensure that all individuals have an equal employment, regardless of race, color, religion, sex, age, disability, or national origin (p. 116). Therefore, the EEOC investigates and resolves such cases. To establish expectations, every employee at Starbucks is given a twenty-seven-page manual, which contains the business ethics and compliance guidelines. This is the bible of any organization.
All workers are required to read, understand, and adhere to company policies and procedures. In order to ensure that every employee cooperates, Starbucks is very strict on monitoring and making sure these guidelines are followed correctly. Any employee that breaks these guidelines will be immediately terminated. Even though guidelines have been set, there have been several cases filed against Starbucks for either discrimination and/or harassment. Lawsuits can be very expensive and often times require the organization to pay the victim hundreds of thousands of dollars.
An ongoing case involves a 16-year-old barista who is suing Starbucks because a 24-year-old supervisor made demands for sex. Cases like this happen quite frequently in large organizations and can be very costly. That is why it is critical for an organization to closely monitor and enforce guidelines to prevent these situations from occurring. Another problem that organizations are faced with is employee and customer safety. Safety is an important issue in any organization and continues to be a growing concern. Federal and state governments regulate Starbucks, like any organization.
One of the prominent government agencies that oversee the health and safety in organizations is the Occupational Safety and Health Act (OSHA). OSHA is “the law that authorizes the federal government to establish and enforce occupational safety and health standards for all places of employment engaging in interstate commerce” (Noe et al. , 2010, p. 138). It is the responsibility of Starbucks to provide every employee with a safe and clean place of employment. OSHA conducts unannounced inspections to ensure compliance of health and safety standards. There are four main components of the OSHA inspection. First, the compliance officer reviews the employer’s records of deaths, injuries, and illnesses” (Noe et al. , 2010, p. 139). The next component entails the compliance officer to do a walking tour of the organization. Third, the officer may conduct employee interviews. The final component is the compliance officer notifies the employer of any violations found. Violations can result in citations, which can be very expensive depending on the seriousness. In some cases, criminal penalties are enforced. There is a huge responsibility for Starbucks to maintain a healthy and safe working environment. Without safe working onditions, employees at Starbucks could cause harm to themselves, as well as, to Starbucks customers. This could create an expensive disaster for the company. Aside from health and safety issues, one of the major problems that Starbucks was facing in the early 2000s was the workflow analysis. The problem was not the actual product that Starbucks was offering but rather the “output” of customer service they were providing to the customer. The CEO of Starbucks decided to change the organizational structure of the company in 2008 because according to his research, the current organizational structure was lacking communication.
This caused customer satisfaction to decrease (Starbucks, 2010). In order to fix the customer satisfaction problem, Starbucks needed to change the organizational structure from two divisions to four divisions (Starbucks, 2010). The new structure is a geographic structure which consists of four regions: Western/Pacific, Northwest/Mountain, Southeast/Plains and Northeast/Atlantic (Starbucks, 2010). Each division contains individual departments, which consist of the major functions of the company like finance, marketing and human resources.
These are called partner resources and each unit reports to the head of the division, which is the Senior Vice President. In turn each Senior Vice President reports to the President of that division. The President of each division in turn reports directly to the CEO, which is Howard Schultz. This new structure will help focus on the customer and will increase customer satisfaction according to Schultz because it will maximize communication throughout the different channels (Starbucks, 2010). With this new organizational structure, there will be work redesign in the company because Starbucks is going to eliminate or “consolidate” jobs.
There were 600 jobs eliminated because of this new organizational structure that was implemented by Schultz, the CEO. With the elimination of 600 jobs, there was consolidation because the jobs had to be handled by other employees; so the job description became larger for the partners (employees) because they had to pick up the slack from the 600 jobs that were lost. The job description for the barista is to: develop satisfied customers, provide quality drinks consistently to the customers, maintain quality store operations, contribute to store profitability, and to learn all aspects of he barista job (Starbucks, 2010). This is a very demanding job description to ask for all the baristas of the company to perform and then to also pick up the other responsibilities that the lost jobs had as well. The managers have a job description as well. Their job description is not as long, nor as defined as the baristas because the baristas need order; whereas the managers just need to get things done in order to remain profitable. Managers have three responsibilities, which are: financial contribution, develops partners, and maintains quality store operations (Starbucks, 2010).
Starbucks expects the managers to do more than just their job description that they have a great deal of responsibilities, and they must go above and beyond the call of duty, or above the job description. An example of this is when managers give employees their personal phone numbers and they are able to call them for problems at any time. The job design has changed over the years for the baristas at Starbucks. In the 1990s, they were able to make all the drinks offered on the menu in an eight-hour shift, but now that has changed (Moon, 2006).
With a widely expanded menu, baristas now spend sixteen full eight-hour shifts in order to make every single drink that they offer (Moon, 2006). The job design has evolved with the company expansion. Baristas do not have the same tasks today as they did even a few years ago because there are now so many different drinks that they need to know how to efficiently make for the customer. It is fundamental for an organization to execute a human resource planning process to gain a competitive advantage. “The process consists of forecasting, goal setting and strategic planning, and program implementation and evaluation” (Noe et al. 2010, p. 193). The first step in the HR planning process is forecasting, which involves “determining the supply of and demand for various types of human resources 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 the building blocks of HR. A specific quantitative goal should come from the labor supply and demand analysis. This goal “should include a specific figure for what should happen with the job category or skill area and a specific timetable for when results should be achieved” (Noe et al. , 2010, p. 197). Once these goals are established, the firm needs to choose from the many different strategies available for redressing the labor shortages and surpluses” (Noe et al. , 2010, p. 197). In the final stage of the HR planning process, “programs developed in the strategic-choice stage of the process are put into practice in the program implementation stage” and then those results are evaluated to check whether the company has successfully avoided any potential labor shortages or surpluses (Noe et al. , 2010, p. 207). Planning the human resource process ahead of time is crucial for improving the business performance of Starbucks.
Due to the current economic downturn, Starbucks has forecasted labor surpluses across its stores, roasting plants and its regional offices (“Starbucks Corporation Fiscal 2008 Annual Report,” 2008). This analysis has led Starbucks to set specific quantitative goals that provide a benchmark for determining the relative success of any programs aimed at redressing a pending labor surplus. Since early 2008, Starbucks has aimed to cut 18,400 jobs and close 975 stores in the US in order to save $300 million in annual operating expenses (Allison, 2009).
The strategy Starbucks performed to reach its quantitative goals in order to reduce the labor surplus is downsizing. “Downsizing is a planned elimination of large number of personnel designed to reduce costs and boost profits”, which was Starbucks’ main objective during this recession (Noe et al. , 2010, p. 198). The downsizing strategy is then implemented and the results are evaluated to confirm that Starbucks has resolved labor surplus issues in 2009 when it closed 975 stores and laid off 18,400 employees in the US; and in 2010 Starbucks had 30,000 fewer employees worldwide.
Once an organization has successfully planned its human resource process, it could initiate a recruitment method if the need to hire personnel arises. “Human resource recruitment is defined as any practice or activity carried on by the organization with primary purpose of identifying and attracting potential employees” (Noe et al. , 2010, p. 210). Recruitment involves personnel policies, recruitment sources used to solicit applicants and the characteristics and behaviors of recruiters (Noe et al. , 2010, p. 211).
Next we will discuss only the first two areas (personnel policies and recruitment sources) of recruiting through Starbuck’s perspective. The third area (recruiter’s characteristics and behaviors) will not be discussed since it is more subjective and less factual. Starbucks must make decisions regarding the three areas of recruitment to enable the company to attract and identify potential employees. The personnel policies that make a job at Starbucks more attractive are the opportunity for internal recruiting and providing all employees both extrinsic and intrinsic rewards.
Internal recruitment is offered to existing employees that want to continue their career at Starbucks (“Partner Career Opportunities,” n. d. ). These candidates must apply for position other than the Barista, Shift Supervisor, Assistant Store Manager, and the Store Manager and are required to have their current job for at least 12 months, perform at a Meets Expectations or better, and have not been on a Performance Improvement Plan within the last 6 months (“Partner Career Opportunities,” n. . ). Starbucks offers extrinsic rewards to all of its employees through a cafeteria-style benefit plan called “Your Special Blend” (“The Partner Experience,” n. d. ). The intrinsic rewards offered at Starbucks are the opportunity to grow within the company and several mingle events where employees can meet vendors who offer discounts, and learn about groups that help employees share interests and find a work/life balance (“The Partner Experience,” n. d. ).
The recruitment sources used at Starbucks to solicit applicants come from external sources, such as electronic recruiting through Starbucks website, direct applicants, referrals, local events like job fairs and from internal resources that was explained above (“Retail Careers,” n. d. ; “Professional Services Careers,” n. d. ; “Roasting Plant Careers,” n. d. ; “Candidate Frequently Asked Questions,” n. d. ). When it comes to the selection process, Starbucks does an excellent job of picking the right candidate for the job.
They are known for their excellent customer service, which would not be possible without the right employees. As we read in chapter 6, “any organization that intends to compete through people must take the utmost care with how it chooses organizational members” (Noe et al. , 2010, p. 232). Starbucks calls their employees “partners” because of the “direct and open relationship they share with them” (Starbucks Corporation, 2010). They want their “partners” to be passionate about what they do.
In a diverse atmosphere where everyone treats each other with respect, Starbucks wants their employees to make personal connections, after all their mission statement is “to inspire and nurture the human spirit one person, one cup, and one neighborhood at a time” (Starbucks Corporations, 2010). The selection process is very critical for Starbucks. They host job and management hiring fairs to seek out qualified and personable employees. Once you submit your resume, two separate people will interview you.
They must recognize certain characteristics that potential employers will need on the job; such as outstanding people skills and friendliness that will make customers feel a sense of belonging. Starbucks conducts situational interviews in which they use an “interview procedure where applicants are confronted with specific issues, questions, or problems that are likely to arise on the job” (Noe et al. , 2010, p. 248). They want their employees to get to know their customers by name and what they order. Making the connection really allows the customer to feel at ease and will motivate them to keep returning for that addicting caffeine.
Starbucks has over 16,000 locations worldwide and must select the most appropriate candidates to fill open positions. When an applicant is looking for a career with the organization, there are three different categories a candidate can select from: Retail careers, Professional Service careers, and Roasting Plant careers. For the Retail career path they hire baristas, shift supervisors, store managers, district managers, and regional directors (Starbucks Corporation, 2010). Starbucks has a long line of Professional Services careers.
They hire for 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). A third career path is in the Roasting Plant field which has locations in five different domestic regions and one international: Kent, Washington; Portland, Oregon; Minden, Nevada; York, Pennsylvania; Columbia, South Carolina and Amsterdam, Netherlands (Starbucks Corporation, 2010).
Starbucks is very proud of their selection process. CEO Harold Schultz has stated “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 a great deal of effort to select employees with enthusiasm. “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). He is proud to announce that their turnover rate is less than half of the industry’s average. When employees have self-esteem and self-respect they can contribute so much more to their company, to their family, to the world” (Schultz & Yang, 1997). Starbucks takes great pride in their training program it that is offered to all its partners and has been known to actually spend more on partner recruitment and development than it does on advertising; a number that annually tops $50 million (Weber, 2005). This endorsement by senior executives highlights the importance that Starbucks feels its human resources are to attaining the business strategy of the corporation.
It promotes the concept of “if you are going to sell a premium product, you need to offer premium service as well” (Weber, 2005). Careful thought and execution is placed into the training process for each new member of the Starbucks team or partner as they refer to all employees. Training begins immediately with the invitation for employment and is an in-house experience. Starbucks does not use external training, coaching or mentoring companies; rather all training is done by existing members of staff who themselves are store managers (Young, 2005). Every partner/barista hired for a retail job in a Starbucks store receives at least 24 hours training in the first two to four weeks (or first 80 hours of employment for part-time)” (Thompson, 1999). Training includes instruction on coffee history, drink preparation, customer service and retail skills. Drink preparation takes a good majority of the time as great emphasis is placed on consistency, memorization of correct ingredients and proper presentation.
In this way Starbucks utilizes organizational socialization to transform new employees into effective company members by having them learn about their company history, goals, language, people and performance proficiency (Noe et al. , 2010, p. 326). Management trainees receive additional training and typically spend 8-12 weeks of their initial employment learning a much more comprehensive scope of the structure of Starbucks. This training includes “store operations, company practices and procedures, information systems and instruction on the basics of managing people” (Thompson, 1999).
One of the main objectives is to ingrain the company’s values, principles, and culture and to impart their knowledge about coffee and their passion about Starbucks. Training for store managers is very hands on and includes spending time behind the counters of a few different locations to get a real feel for the job requirements needed for their employees. As a global corporation, Starbucks also supports the training of stores in new markets around the world. “Each time a Starbucks opens stores in a new market, 8-10 weeks in advance, a major recruiting and training effort is put in place” (Thompson, 1999).
Experienced managers and baristas from existing stores are engaged in leading the store-opening effort and to conduct one-on-one training formatted after the company’s formal classes. International partners spend up to three months in Seattle learning about coffee, Starbucks culture, values and information about the corporate way to do business. This information is shared internally within the organization when they return to their specific locations. Starbucks encourages continuing education of all employees and actively promotes all partners to advance their learning through ongoing personal and professional development programs.
Taking this to a higher level, the company closed all locations on February 26, 2008 in an unprecedented move designed to “energize partners and transform the customer experience” (Starbucks, 2009). What they accomplished in three and a half hours was to retrain more than 135,000 baristas in approximately 7,100 stores. Even the tenured partners were “impressed by the fact that Starbucks was taking the time to focus on something that is so important to them and to their customers” (Weinstein, 2008).
Additionally, Starbucks does promote cultural immersion, which according to the HR textbook is a “behavior-based diversity program that sends employees into communities where they interact with persons from different cultures, races, and nationalities” (Noe et al. , 2010, p. 322). Employees can visit regional coffee plantations, support philanthropic endeavors and promote diversity in many ways. Diversity is promoted at Starbucks with current employees comprised of 31% minorities and 66% women. So how is Starbucks doing today as a company in this downward trending economy?
Once ranked 11th in the Fortune’s “100 Best Companies to Work for” they slipped in 2009 to 24th and is currently ranked 93rd (Starbucks, 2010). There are 30,000 fewer employees worldwide than last year because of store closings and other cutbacks. Still, baristas love working at Starbucks because of the camaraderie (Fortune, 2010). Last year over 150,000 applications were submitted for employment, but with the economic struggles that even this giant organization faces they expect one-year job growth to be -27%, which equates to over 5,000 fewer jobs.
Yet, the company provides partial health-care coverage even to its part-time employees, a group which currently makes up 90% of the employee population. Work-life balance can be achieved for corporate employees through on-site childcare and a fitness center; job sharing program; compressed workweeks; telecommuting as well as the opportunity to earn a decent salary. The most common hourly job is the machine operator with an average annual pay of $36,769 and the most common salaried job is that of store manager with pay averaging $44,434 (Fortune, 2010).
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