The Starbucks Organization: A Model of Success - Essay Example

RUNNING HEAD: THE STARBUCKS ORGANIZATION The Starbucks Organization: A Model of Success MGT 340 “Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow.” -Mission; Starbucks website The Starbucks corporation has quickly become an icon for America’s new café culture. It has been consistently rated on the Fortune top 100 as best employer and, according to Hoover’s company records, has established more than 8,500 stores worldwide and is looking towards expanding to 15,000 stores nationally and to 15,000 stores internationally (2005). After reading the company’s profile and history on various web sites, it is intriguing how a company can be so successful during even the most difficult times where many large corporations are going under; such as WorldComm and Enron. What is the secret to their success? How does an organization prepare its employees for an optimal work environment? In this paper, these questions will be answered by discussing briefly how the Starbucks corporation used communication as a foundation to make it to the top through their ability to successfully change management, create guidelines for decision making, and finally become a pioneer in several beneficial human resource practices. This paper will focus mainly on the initial stages of the organization’s formation. Importance of Communication At the core of any successful organization is effective communication. It is the underlying theme of effective change management, decision making, human resource practices, and this paper. The main reason why starbucks is as successful as it is today is because the top executives created open lines of communication with each other, employees, and especially with customers. It is the belief of any successful manager that the correct establishment of effective communication of an institution will greatly affect the outcome and ability to reach their goals and vision. Change Management From the very beginning, Starbucks coffee had been a small, retail store in Seattle, Washington. It was open for nine years with four profitable stores that exclusively sold the fresh dark-roasted coffee that later became a signature for success. It wasn’t until chairman and co-founder Howard Schultz had been introduced into the picture in 1981 that he envisioned Starbucks as a successful coffee bar similar to the ones he had seen in a business trip to Milan, Italy. At first, the owners were pleased with their business and did not want to change into a beverage-serving establishment. He knew he needed to change the management in order to fulfill the dream he had envisioned. When Schultz became head of marketing for Starbucks, it was then that he took key steps to building a successful empire by using the most powerful tool in change management: creating a vision, having effective communication with key stakeholders, and finally building rapport with employees. Schultz began by communicating his vision to the owners of Starbucks, and how this vision could create a thriving organization. He saw how successful coffee bars were thriving in Italy and wanted to model this by creating many coffee shops where people could meet and conduct business. For any successful change of management, there must be a vision. This vision will act as the foundation for change and the desired goal or outcome. Once the vision is illustrated, the next step is communicating with the key stakeholders. Communicating with key stakeholders ensures that everyone is on board with the vision and shares the desire or passion to see the goal. This is often a very difficult aspect of getting everyone “on board”, and can make or break the outcome of the management change. In this case, Schultz used the common goal that he knew his partners had in common: the passion to make the highest quality coffee. Schultz assured that they would be able to maintain the quality of coffee production regardless of how many stores they opened. This was the turning point for the effective management change. Finally, Schultz began to use his role as head of marketing to build rapport with the employees by questioning them about their work environments and asking customers about their reaction to the coffees. He used an open line of communication with all employees and used their feedback constructively. He took excessive notes and even began to use an informal dress code to become more familiar with the employees and build credibility and trust (Thompson & Strickland, 1999). This began the positive foundation on which Starbucks was built. Decision Making At the heart of any successful organization is the mission and values. It is through these key building blocks that decisions are to be made to ensure that the organization is taking steps towards their goals. One of the successful attributes of the starbucks corporation is the strict adherence to their mission and “guiding principles” as a method for decision making. According to the company fact sheet, the guiding principles are: Provide a great work environment and treat each other with respect and dignity. Embrace diversity as an essential component in the way we do business. Apply the highest standards of excellence to the purchasing, roasting and fresh delivery of our coffee. Develop enthusiastically satisfied customers all of the time. Contribute positively to our communities and our environment. Recognize that profitability is essential to our future success (Starbucks, 2005). It is with these principles that chairman Howard Schultz, one of the company’s founders, had a basis for the decision making process of his organization. By establishing these guidelines, it maintains consistency and ensures that the decisions made clearly reflect the vision of the organization. For example, in a Newsweek article entitled Grande Plans, CIBC World Markets analyst John Glass exclaims about starbucks that, “The two things that made them great are real estate and making sure that no one has a bad experience in their stores.” The reason why no one has had a bad experience is because employees are happy; the first principle. The article also noted how the strategic planning process of choosing real estate to build new stores is associated with making the stores accessible to customers so that they in turn are satisfied; the fourth principle. Furthermore, it discusses how starbucks has been especially focused on methods of moving the customers through lines as quickly as possible. This has a huge impact on the deciding on the use of credit card machines, equipment, traffic pattern, and drive-throughs. Again, focusing on the fourth principle. Another example of the impact of the principles on decision making is the environmentally responsible role that starbucks claims to make in every business transaction. Each decision is carefully and strategically measured against the guiding principles to promote the highest quality of service and environmental responsibility. Starbucks uses this third guiding principle to assure consumers that their organization is striving to “improve social and economic conditions for coffee farmers . . . minimizing our environmental impact . . . making a positive contribution in the communities where we do business (Starbucks, 2005). Starbucks also offers community building programs and produces a social corporate responsibility annual report through their website that outlines the efforts they take to ensure they follow this environmental principle. Throughout the various websites that post the history of starbucks, it is there is one clear recurring aspect of the decision making process that Schultz excelled at. He knew when and with whom to ask for help in making decisions. This is a key aspect to the organizational behavior-when an executive knows his weaknesses and where to find answers. Schultz consulted with top real estate teams and management consultants before making any concrete decisions. This is a very important aspect of making decisions because in the very critical stages of building an organization, the persons making the decisions must use the vision and guidelines to articulate their needs; but also know how to carry them out correctly. Human Resource Practices Finally, starbucks has led a successful organization because of its human resource practices. How does an organization become known as the best employer according to Fortune magazine? In an article entitled Preserving the Counter Culture, Dave Pace, the company’s executive vice president of partner resources discusses how the “intentionally strong mission and values statement” is used to create a positive work environment (Weber, 2005). Starbucks is known for their humanistic approach to their employees as well as how they conduct business. Mentioned earlier, the very first guiding principle on starbucks’ website is to “Provide a great work environment and treat each other with respect and dignity” (Starbucks, 2005). It is with this vision that they became a pioneer organization for providing a ‘special blend’ of employee benefits. In 1988, Starbucks became the first organization to give substantial benefits to all employees working twenty hours or more (Weiss, 1998). Before then, it was unheard of for part-time employees to receive corporate benefits. Employees are known as ‘partners’ and it became a goal to ensure that every ‘partner’ had a piece of the company so that they could feel a part of something great and grow with the company. There is also an entire work/life program that Joan Moffat is manager of. She states that it is a “special blend of employee benefits . . . that focuses on the physical, mental, emotional and creative aspects of each person” (Weiss, 1998). Starbucks offers ‘bean stock’ options, disability and life insurance, retirement savings, adoption assistance, and full medical and dental coverage with a choice of plans to name a few. A significant deciding factor for any employee is the benefits package. Starbucks offers a variety of different programs; those of which are not even posted on the website. For example, after the emotional death of an employee due to AIDS, Schultz created a health program that would enable terminally ill patients full medical coverage from the time they are unable to work until they are covered by the government (Thompson & Strickland, 1999). This plan was so effective, Schultz was invited to the White House to meet with former President Clinton to discuss how it works. This is a good example of the humanistic and socially responsible role that starbucks takes that makes a huge difference to employees and in turn to customers. It is not only the financial and physically-related benefits that make such a difference for Starbucks partners. It is also the open line of communication that exists in the organization. There are forums in which partners can discuss ideas or issues and even every day now new CEO Jim Donald “makes eight important phone calls . . . he contacts five of the 550 Starbucks district managers in North America . . . to check in . . . Then he dials three Starbucks stores at random to say thank you to employees and ask for feedback” (Weber, 2005). This shows not only the importance of communication at any level, but also between all levels. Starbucks also recognizes the importance of giving to its partners in return for a happy employee. An article in the Vancouver Sun points out that “Starbucks employees . . . receive one pound of free coffee every week, along with a 30-per-cent discount on merchandise and beverages, and free beverages while at work” (Constantineau, 2005). It is the small incentives such as these for partners that make the difference in a positive customer service experience. Therefore, not only is it creating a positive work atmosphere, it is a smart strategy to keep employees happy as they are the ones who will truly make the starbucks experience. Conclusion In conclusion, this paper focuses has focused on methods an organization can take to be successful. The Starbucks corporation is an exemplary model of an organization that has successfully made it to the top through their ability to effectively change management, create guidelines for the decision making process through their vision, and finally has become a pioneer offering corporate benefits to part-time employees. Of course, the underlying theme throughout every aspect of the organization’s success is its ability to employ effective communication at all levels. It is with this and an understanding of its vision and purpose that an organization will succeed when many others fail. References: Constantineau, B. (2005). Staff discounts can make a good employer great. The Vancouver Sun. British Columbia. Retrieved electronically on December 4, 2005 from http://web.lexis-nexis.com. Hoover’s Inc. (2005). Starbucks corporation. Hoover’s company records. Austin. Retrieved electronically on December 3, 2005 from http://proquest.umi.com. Starbucks. (2005). Company fact sheet. Retrieved electronically on December 3, 2005 from http://www.starbucks.com/aboutus/Company. Stone, B. (2004). Grande plans. Newsweek. 144, 14, p.40-41. Retrieved electronically on December 3, 2005 from http://proquest.umi.com. Thompson, A., Strickland, A.J. (1999). Strategic management. (11th ed.) McGraw-Hill. Weber, G. (2005). Preserving the counter culture. Workforce Management. Costa Mesa. 84, 22, 28. Weiss, N. (1998). How starbucks impassions workers to drive growth. Workforce. 77, 8, 60. Read More