Starbucks Hrm Paper

An Analysis of Actual Personnel Policies for the Starbucks Coffee

Starbucks is one of the most renowned coffee companies in the world today. Starbucks is known for its great customer service, inviting atmosphere, and excellent coffee. It all began in 1971 in Seattle Washington when they opened their first store located in Pikes Place Market. Starbucks progressed over many years and now Starbucks is one of the lead coffee stores in the world. They do not only offer coffee but the stores offer a place to work, study, think, and even meet new people, which is widely known as the Starbucks experience.

Starbucks is more than just coffee. The aim of this paper is to examine and evaluate the most important aspects and policies regarding the human resources management of Starbucks by addressing key issues and influencing factors.

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Mission Statement

As part of the strategy, CEO Howard Shultz has taken steps to invigorate the staff and ensure the best customer experience. These measures include retraining the staff and holding conferences called leadership labs to inspire its managers who he considers the “ambassadors of the brand, merchants of romance, and disciples of delight”.

Starbucks has also changed its mission statement. Starbucks’ first mission was drafted in 1990 and reflected its goal of being the number one provider of the best coffee you can find in the world (Stanley, 2002). Their new mission statement, as stated on their website is “to inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time. ” Starbucks has announced plans to change its leadership structure in order to accelerate global growth. The company will be divided into 3 regions, The Americas, Europe, and Asia.

Each region will be led by a president that reports to the CEO. The company is also expanding into the tea market as part of its goal to become a $1 billion dollar business.

Organizational Structure

Since its establishment in 1971, Starbucks has seen many changes to its external & internal environment. As a result, Starbucks has made changes to its human resource management policies with regard to its mission, strategy, and organizational structure. Since Starbucks opened 42 years ago, coffee consumption in the US has steadily increased.

The 2012 National Coffee Association's National Coffee Drinking Trend Survey that coffee consumption has increased in all categories since 2010. The largest increase has been observed in gourmet coffee beverages which increased by 8% since 2010. This upward trend is in line with the center’s other surveys that show a continual increase in coffee, which is the leading non-alcoholic beverage in the U. S. over soft drink consumption and other beverages. Starbucks is a massive company with numerous departments. All of the operations are managed from the headquarters in Seattle.

District managers oversee the regional clusters of Starbucks stores and they report to the headquarters. Regional managers report to district managers. Store managers oversee the store operations and report to regional managers. Within the store organization, one can descend to lower levels of positions from store manager to assistant store manager to shift supervisor to the barista. One can say that Starbucks has a divided and diversified organizational structure. The structure can be examined in two places.

The first part is the retail stores, where physical contact is made with the customers. Since this part of the company solely works on satisfying the customer needs, contains high involvement of employees, and has relatively lesser layers of management, the organizational process resembles a flat organizational structure. . When moving to the corporate sector, one could say that this part resembles a bureaucratic organizational structure as employees are more specialized and there is a top-to-down approach among the ladders.

External Environment

These demographic changes for coffee have prompted new entrants into the consumer coffee market. The quick-service restaurant sector, including Mcdonald's, Wendy’s, Krispy Kreme Doughnuts, and Jamba Juice have started lines of premium coffee. In addition, Starbucks faces new competitors in the grocery aisles since technology has made single-serve coffee makers more popular for home use (National Coffee, 2012). In the global environment, the coffee industry is also seeing an expansion. Coffee is already the world’s most popular beverage and has consistently ranked in the top five most-traded commodities since the 1990s.

Internal Environment

The internal environment is based on Starbucks’ mission to create a third place between home and work. As Starbucks has grown and expanded it has attempted to control quality by not franchising. As Starbuck’s environment has changed, the company has made several adjustments to Starbucks' Human Resource policies. CEO Howard Shultz retook the helm of the company in 2008 with the goal of returning to the core values of producing the best cup of coffee.

Personnel Needs

The personnel that comprises the retail department are the Baristas and Shift Supervisors. Baristas prepare coffee and serve customers. Shift Supervisors assist the store manager with store operations. The Shift Supervisor is also a team leader responsible for delegating tasks and assisting with staff member training. Starbucks has about 18,000 stores worldwide, with 72% of them in North America. Although the coffee giant has over 200,000 employees, each store's retail staff averages less than 9 members.

The company recently demonstrated its procedure for handling personnel needs relative to demand. Between 2009 and the end of 2012, 39,000 employees were laid off as the global giant closed more than 600 stores. This downsizing was a result of a restructuring effort during the recession which brought economic uncertainty. Now that the company is experiencing recovery, CEO Gary Shultz has announced plans to hire 3,500 baristas by the end of 2013. The expansion is a result of increased demand due to Starbucks' new product launches which include a new line of coffee and the venture into the tea market. The company’s growth is also aided by continuous high sales in China.

Job Description

Starbucks as a big entity with over 200000 employees is a massive global company employing people within a wide variety of positions. They have baristas who are the public face of the company, both interacting with the customers and preparing their coffee and lattes. They have shift supervisors who are veteran baristas overseeing the overall Starbucks store experience for customers. Starbucks hires a big number of people, mostly for their retail stores.

These retail jobs have a more general description. When looking at the job description on the Starbucks career page, one can see that this position might not be a technical one but is explained in great detail. Because this position requires focusing on multiple tasks with light focus, one could define it as a general position. In the upper levels of careers, there are many kinds of management positions from store managers to district managers to regional managers. Job descriptions at Starbucks tend o get more specific towards the upper ladders as the company starts to resemble a bureaucratic organizational structure. For example, Critical positions such as managers are described in much greater detail when compared to retail store positions. A product manager has many tasks and duties but the responsibilities stay focused. The job description for the product manager is comprised of

1. a title,
2. a location,
3. a job summary
4. key responsibilities,
5. qualifications
6. required knowledge, skills; abilities and
7. core competencies.

This job description matches and even exceeds the content of the ones described in the textbook as the textbook suggests that a job description should include a summary, of duties and responsibilities, requirements, and qualifications. One can say that Starbucks has executed the creation of job descriptions very professionally in accordance with today’s standards. Two job descriptions, one for a barista and one for a product manager, are provided in the Appendix section, where one can picture the differences between a general job description and a specific job description.

The barista has many duties in a great variety. They should provide customer service, be in constant communication with their supervisors and maintain the cleanliness of the place. A product manager has greater responsibilities such as marketing, management, and product innovation but the duties and tasks are described with greater precision when compared to the barista’s job description. One reason for this difference might be the fact that the baristas are focused and that’s a dynamic task subject to change at all times.

Recruiting and Selection

Recruitment is the gathering of capable people who might be fit for the position and selection is a process where the decision-makers use specific tools and methods to choose the better candidates within that pool. Recruiting and selection of employees are important milestones in hiring a candidate for a position. It is usually conducted by a member of HR or a manager. Starbucks obviously utilizes job design and job analysis methods for positions from all levels because their job descriptions on the career website are very well structured.

Starbucks HR uses both internal and external recruitment. In the case of internal recruitment, there are a few ways to lead this process. Candidates can be selected in the intranet on the website which only the staff and the employees have access. Additionally, candidates can be selected through staff meetings or recommendations from other employees (usually the ones in higher positions on the ladder). In the case of external recruitment, Starbucks utilizes conventional recruitment methods and accepts only online applications: To attract candidates Starbucks uses ads, word of mouth, and the internet to reach out to people.

Even though Starbucks uses methods besides the internet to reach out to potential candidates, they select candidates from the pool that receives applications from the career website. First, they eliminate the ones who do not have the qualifications. After that, they do phone interviews to select the ones who are interested in the position. The ones who pass phone interviews undergo a face-to-face interviews with district and regional managers. Their sources of the recruitment process provide all the aspects of traditional and non-traditional methods described in the textbook. Starbucks had some out-of-the-box thinking and has incorporated social media very nicely into its recruiting and selection process. Positions and applications can be reached through Twitter and LinkedIn. This way Starbucks increases the chances of interactive conversations and encourages more potential candidates to apply for positions to increase the size of the recruitment pool.

Employee Training

Starbucks has a unique and successful approach to the training the company offers to employees, new and tenured. The training regimen of a Starbucks Employee consists of a multitude of strategies including but not limited to Customer service training, Cross-functional training, team training, and On-the-job training (OJT) (Reese, 1996). Training/lessons are creatively named so as to keep with Corporate Cultures i. e. “Brewing the perfect cup”, “coffee knowledge”. These different methods of training are systematically set in place and usually take about 24 hours, of which the majority is to be completed within the first two weeks of employment. Once an employee has “cleared” all different levels of training, the employee should be well-rounded, educated, and skilled to service customers/clientele.

Tuition Reimbursement

Starbucks offers tuition reimbursement based on the employee's eligibility, position, and length of continuous service from the beginning of each calendar year. Taking into consideration that 85% of Starbucks “Partners” have education beyond high school and the average age is approx. 26, the benefit of tuition reimbursement is as lucrative as the wages themselves.

The idea of getting a degree and having your “employer” pay for it fits as a strategic benefit/lure for the principal demographics of Starbucks employees. (Life at Starbucks, 2006) The eligible expenses consist of tuition fees, books, the class requires supplies and required fees. Another eligibility criterion is that the education the employee wishes to get must aid the employee in his/her career path at Starbucks. Many degrees are supported in the program such as Associate’s, Bachelor’s, Master, Doctoral, and Certificate degrees. Employees can apply through the internet, fax or e-mail. There is also a limit to this tuition reimbursement amount. In the Appendix, a tuition reimbursement application sample form is attached.

Total Compensation

Starbucks hires around 200 people per day and has one of the lowest turnover rates in the industry. Starbucks aims to imbed its values in the company culture. Starbucks uses these values to give employees a sense of meaning to their work even if it is just pouring a cup of coffee. The firm belief has been that if you take care of your employees, employees will take care of customers and be engaged in their work. They offer a comprehensive benefits package including healthcare coverage, stock options, and discounted stock purchase programs.

Their benefits package is branded “Your Special Blend” and is available to employees in its full capacity after only ninety days of employment. To go a step further, Starbucks implemented a plan called Partner Connection to help the workforce with health and fitness and to link employees with shared interests and hobbies. This program is funded by sales of logo merchandise to partners. They also have a program called the CUP Fund that helps employees with financial assistance during times of crisis or hardship and a Total Pay package that offers discretionary bonuses.

Finally, Starbucks offers its employees a program called Mission Review which allows the employees to communicate thoughts and feelings to management and receive answers to their questions. The formal rewards are certainly not very attractive. Most of the so-called partners are paid less than what primary school private tutors get per hour. Starbucks is a challenge for its employees, learning something new, and a good way of earning some extra money. The partners make work fun, and employees like to mess around with coffee. One could say that informal rewards would play a larger part than in these intrinsically driven motivations.

Employees are free to take any drink from Starbucks sand they do it very openly. When a former employee turned up to visit everybody, they were given a warm welcome, not to mention helping with a free drink. It does seem that working in Starbucks made the employees and former employees feel good as they were able to drink free coffee which other consumers pay. Starbucks, as a popular culture icon, also made it cool and hip to work in. A certain amount of social status is conferred thus, and this is another hidden reward. It makes sense why these people were so intensely motivated in their work behavior.

A 20% discount would be available for any employee when he visits another branch, even when he or she is off duty. All that the employee has to do is to key in his or her Identification Card Number. The interesting thing is that this attractive discount also applies if the employee orders on behalf of accompanying friends. The privileges of working for Starbucks Coffee extend beyond normal working times. Only the employees are able to understand the benefits and such small benefits add up to actually becoming quite substantial.

Union vs. Nonunion

The employee-employer relationship is complicated at Starbucks. Starbucks was unionized in the 80s and provided health care even to the baristas besides a share of the profit. In 1992 Starbucks became union-free with the worker’s own will because CEO Howard Schultz claimed that he really cared about the workers, calling them "partners" and he would listen to their problems. There are contradictory comments about the issue. Even though baristas still receive health benefits as much as higher-level management employees, they are not happy about the payrolls.

For example, baristas in New York City complain that the wage they get is not enough to make a living. There have been disputes between managers and baristas in public (International Labor, 2008). There are also neutral commentators who believe that the truth lies in between as some think that Starbucks is treating their employees still better than many other restaurants. Starbucks is already unionized since 2006, founded by a previously fired employee, Daniel Gross. Facts point out that Starbucks should stay unionized.

Even though when research indicates that Starbucks treats its employees with more dignity than many other restaurants by calling them partners, it does not necessarily prove that they are treating their employees fairly. The management claims that they have been treating the employees fairly and providing them with benefits, good wages, and stock options but the company has been accused of union bashing and a National Labor Relations Board Judge ruled that Starbucks violated federal labor law by trying to stop union activities at four Manhattan locations in New York. Wagner Act states that management should not interfere with, restrain, or coerce employees from exercising their rights to form unions. The Taft-Hartley Act and the Landrum-Griffin Act were amended in order to balance the power distribution but one can say that Starbucks unions are not overpowered at all.

Work Life

The quality of work life for Starbucks employees actually is really good for them. Starbucks has a great outlook on employee relationships, and they offer such benefits that it does keep the employees happy. The benefits offered help relieve normal everyday stresses so you can focus more on working at your best. Starbucks creates a happy environment with the help of happy employees. The Quality of work life is related to high job satisfaction it is known to have less “absenteeism and turnover”. Employees feel satisfied in a job when a few different needs are met. There is the environment in which they work the other employees around them, and the benefits that come from the company that all help employees to want to feel as if they are a part of the company and are appreciated.

Benefits

Starbucks offers the usual benefits most companies give out and then some. They have competitive pay, and insurance for Medical, prescription drug, dental, vision, life, and disabilities. Starbucks also offers employees Bonuses, paid time off, and retirement savings, which is very valuable because everyone is worried about getting older, and having a retirement plan, helps you look to the future with fewer worries. The list continues with equity in the form of Starbucks stock and discounted stock purchase plan, and employees like to be a part of the company they are working for especially if they do feel happy with the company.

Another not so much heard-benefit is Adoption assistance which is an amazing gift for families who are helping homeless children in the world. Domestic partner benefits are also a large helper because they help secure families more. Emergency financial aid can take the stress off your back, and referral and support resources for children and eldercare is another help with stress reliever. On top of all the benefits, you even get a free pound of coffee each week. One method they use to have productivity-enhancing techniques is they offer "Perks for Partners". An example is that while on work breaks any tea, or coffees are free of charge. Being an employee and having free beverages on the break is a nice incentive, and would help enhance productivity because happy employees produce good work productivity.

Performance Appraisal

Policies The performance management system at Starbucks revolves around each employee; it puts the individual as the focus and every person who is in direct interaction with him will evaluate him. All his peers, subordinates, supervisors, and even externally interacting parties such as the customers, and suppliers belong to this group of people.

This is related to the 360-degree concept where employees provide their own evaluation along with their evaluation by those surrounding them. At Starbucks, each employee’s evaluation influences the employee’s future on whether he should be rewarded, promoted or even fired. But at the same time, there is a controversy attached to the 360-degree evaluation system as it has a great tendency to be biased towards an individual, the evaluation can be easily manipulated with a simple understanding between the employees.

But Starbucks believes in the goodness of human beings it is believed that the employees will be honest and evaluate themselves and others with the utmost integrity. The number of orders fulfilled by the employee in a given amount of time, the number of orders that had errors and were given back, the employee’s behavior around customers and others, and the feedback from customers this management system is an all-around technique.

Personnel and Human Resource Policies

Overall Starbuck's human resources have focused on overall wanting to be the most known brand there is in the coffee industry. They have Cultural Diversity by respecting the surrounding local cultures, and they utilize globalization principles at the same time. Starbucks has expanded so much since it first opened in 1971, in Seattle Washington’s Pike Place Market. Choosing this location for their first store was a tiny piece of the success, Pikes Place is already known to be famous because of Starbucks’ reputation. Starbucks used the help of another brand name to get its name out there. Since Starbucks is expanding its growth at all times, it is very important to keep in mind the diversity in order to globalize.

Starbucks would have no success in growing if it did not properly accept the ways of local culture. Customers only keep coming back if you make them feel comfortable and that needs considering and taking all cultures into account at all times. Starbucks has a very important recruitment process when hiring new candidates and this is one of the most effective policies that the human resources put into action. The Development process helps them hire good employees so it is very important probably the most important to the company, and creates good customer service.

They have great targeted training, certification programs, and performance evaluations. The management team gets evaluated by the district managers annually. The baristas have regular evaluations every 6 months after they are hired and they have three outcomes to label these employees; needs improvement meets expectations, and exceeds expectations. Customers First Motto is very important, this helps keep customer loyalty and keeps the door open for new customers from good word of mouth. This is one of the most effective policies there is because with no customers there is no growth, no revenue, and could demolish the brand name.

Starbucks has a competitive advantage and offers its partners many things to keep them enthusiastic towards the Starbucks Company. One of the least effective policies would be the Starbucks rewards program for customers; where you can get a free coffee for your birthday. Even though the benefits from these rewards are small and only exciting for some customers, others just want to feel comfortable where they go or fast pace with good customer service. Starbucks tries to position itself higher than other companies with all the perks and benefits and how the whole company is run. Starbucks creates a good image of the company, and this image will only help them grow and continue to be a great company in the industry.

HR Improvements

If Starbucks could improve anywhere in its human resource policies, it would have to be in the training area and the performance evaluations they perform. These evaluations can help ensure the employees are staying positive and being a part of the company. Too many evaluations would be a waste of money, but they should perform the Barista evaluations at every 3 months until an employee has been with them for one year.

This would help Starbucks make sure they hire the proper employees and can weed through the ones who are not proper for the job. Also with Starbucks becoming so worldwide and opening stores in places such as the United Kingdom and russia, they need to make sure people are properly trained in the cultures around them as to where Starbucks is located. In all the different states and countries Starbucks has offered special products to please the surrounding customers in their own geographic areas. In the United Kingdom, they added an extra shot of espresso to their 12-ounce drink.

Human resource policies should be the same throughout the company no matter what continent they are on but they do need to make sure proper training happens in each culture so that the company can keep expanding.

Conclusion

Starbucks overall has a great company that still to this day is growing and will continue to grow worldwide. The company has its human resources policies planned and organized in a very helpful and successful way. Starbucks understands the important aspects that make a company whole, and the needs of what to accomplish in order to have a growing successful Company.

Starbuck's strategy has proven year after year they are on the right track that a company should be on to generate revenues and a pleasant environment for the employees, employers, and consumers. There are some issues with the employees in terms of wages, benefits, and unions and Starbucks should keep the promises that have been given personally by the CEO, because it has been observed many times that happier employees mean better service, and this results in happier customers.

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