Corporate Culture in Starbucks through the paradigm of Functionalist - Assignment Example

?Corporate Culture in Starbucks through the paradigm of Functionalist Introduction In organizations, employees with different mindset would work together to complete the allocated work, under the command of a leader, for the benefit of the organization as well as the workers themselves. This team of employees will be different from one another because they could have come from different backgrounds and could have different mindset on certain issues or many issues. Unison of these different workers under a single roof like organization to accomplish the set objectives could be difficult task, with differences and dissension raising its ugly head. However, if a common, feasible and workable organizational culture is actualized or ‘operationalised’, the organization as well as the employees can coordinate and cooperate in a more effective manner, thereby achieving greater success. The blueprint for the success can only be formulated by an effective leader or manager. The leader following the paradigm of Functionalism or by becoming Functionalists can actualize an optimum organizational culture, according to the structure and situation of the organization, thereby solving many of its problems. As Functionalists fundamentally believe in the structure of the organisations and their necessity, they will focus on the problems that negatively impact that organization, and seek solutions for it. This assignment focusing on the organization, Starbucks and its leader, Howard Schultz will discuss how incorporation of optimum organizational culture fulfilled its ethical objectives, and importantly how it is line with Functionalist paradigm. The assignment after discussing about paradigm, will review the literature about the functionalism paradigm and its relation to organizational culture, then will do the organizational analysis focusing on Starbucks and ending with conclusions and recommendations for further improvement. 2. Paradigmatic Perspectives: Functionalism As mentioned above, Functionalism focuses on how an organization or any entity exists and operates, based not only on its internal structure or constitution, but the way it functions. Because of this perspective only, organizations can focus on the problems that is impacting its functions, rather than focusing on its structure, and thereby come up with apt solutions. Although, the term ‘functionalism’ can be used to view as well as designate a variety of perspectives in different fields or disciplines, including psychology, sociology, economics, and even business environment, functionalism’ focus from philosophical perspective provides apt meanings. “Functionalism in the philosophy of mind is the doctrine that what makes something a mental state of a particular type does not depend on its internal constitution, but rather on the way it functions, or the role it plays, in the system of which it is a part.” (Levin 2004). This philosophical perspective about Functionalism originated from Aristotle's conception and ideas of the soul, and also based on Hobbes's conception of the mind. Thus, Functionalism can be considered as one of the oldest perspectives or paradigms, which is at the same time, relevant to the current times in various fields. The other key perspective about Functionalism is, it will make the organizations or any entity function in a more organised and systematic manner, while analyzing the problems and coming up with solutions. “Functionalists sought to explain the mental processes in a more systematic and accurate manner. Rather than focusing on the elements of consciousness, functionalists focused on the purpose of consciousness and behavior.” (Cherry). When Functionalism is focused on the basis of Ontological and epistemological assumptions, it gives different and interesting perspectives. Functionalism according to ontological assumptions is a paradigm which stays stable for a long time, and so it is available for study for a longer time. That is, without undergoing major changes, it could be realistic and can be compared with other stable perspectives for better understanding. Functionalism in its most common forms is almost relentlessly realist in its ontological assumptions and functionalism presumes that constructs are reasonably stable over time, thus allowing comparisons over time. (Gioia). On the other hand, epistemological assumptions focus on the evolutionary or even changing aspects of Functionalism .That is, although, it is stable process, evolution can play a part in changing the entities and organizations following the functionalism perspective. The concept of function is important in epistemology, especially in functionalism paradigm and it shows how the human mind, language and human knowledge changes due to the its functional adaptations to an environment. (Hjorland and Nicolaisen). Thus, it is clear that Functionalism when viewed from organizational perspective, incorporates both ontological as well as epistemological assumptions, as it tries to maintain a stable organizational environment or organizational culture, even while changing according to the problems it faces and also changes while coming up with the solutions for it. 3. Company background Starbucks Chairman, Howard Schultz exactly did these actions in 1985, when he established the new organization of Starbucks and then created his own organizational culture. Starbucks Coffee or Corporation was actually founded by three persons Jerry Baldwin, Zev Siegel and Gordon Bowker in 1971. In the initial stages, they sold coffee beans and other coffee related tools or equipments. Howard Schultz joined as an employee in Starbucks at its coffee shop in Seattle. As part of his work, he was asked to go to Milan, Italy to study, understand and learn from the coffee market there. Coming back to Seattle, he advised the Starbucks management, to sell coffee and espresso drinks along with the beans, seeing the potential to develop a similar coffeehouse culture in Seattle (starbucks.com). But, the management team rejected Schultz’s idea. Schultz for his part was more than sure that there will be a good customer base for coffee-based beverages, and moved out of Starbucks and established his own chain of coffee bars under the name, Il Giornale 1985. II Giornale made a strong impression on the market. Howard Schultz developed his organization further by incorporating his own assumptions and views as part of the organizational culture, minimizing any influences from his employer, Starbucks. These strong leadership capabilities of Schultz in relation to the organizational culture were rewarded in 1987, when the original Starbucks owners sold its entire Starbucks organization to Howard Schultz. With the recognition and approval coming from the same persons who initially rejected his idea of coffee chains selling coffee beverages and with Starbucks under his control, Schultz renamed Il Giornale as ‘Starbucks’ and aggressively developed it, imbuing his own organizational culture. From that start, Starbucks has become the world’s largest Coffee shop chain with a strong and optimal customer base. 4. Methodology The methodology used to analyze an organization through the paradigm of functionalism involves research and analysis of around 20 sources, which includes books, journals and websites. These sources are picked on the basis of their relevance to the model or framework of organizational culture and also their relevance to the paradigm of Functionalism. Using these sources and the common concepts about organizational culture, the structure of the paper was formalized. The organizational analysis was carried out based on the concrete and predetermined paradigm of functionalism. Once the variable of functionalism is used to analyze the organization (Starbucks in this case), the results of that analysis will provide the problems faced by that organization, as well as the solutions that were found it, including the recommendations that can be implemented in future. 5. Literature review: One of the crucial initial tasks of any organization and its leader is the creation and actualization of a common organizational Culture. That is, the initial duty or task of a leader is to formulate a common organizational culture, embed that culture into the working environment, sustain it and also modify or reorient it, when problems occur. According to Edgar Schein (2004, p.17), “The culture of a group can now be defined as a pattern of shared basic assumptions that was learned by a group as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems”. Instead of restating the existing organizational culture or modifying the existing culture or copying another organizational culture, it would be better and optimum if the leader creates, his/her own according to the needs of the organization and importantly employees. This perspective was further put forward by DeSimone, Werner & Harris (2002, pg. 594) “Organizational cultural interventions involve more than simply restating values, beliefs, or norms and communicating them to individuals. Cultural changes involve a complex process of replacing an existing paradigm or way of thinking with another.” After the apt employees or culturally tuned ones are recruited, leaders to actualize a common organizational culture should impose his/hers assumptions, ideas, principles, etc on the employees, and make it as part of the organizational culture. Normally, the founders as leaders will have strong assumptions about the nature of the world, how humans function in the world as well as the organizational context, the role those organizations play in that world, etc. (Schein, 2004). With those credentials, employees will be more than comfortable to imposing their assumptions or personal cultures on the employees, and make it as part of the organizational culture. Even if the employees do not accept and favour those cultures, the leaders had to make them understand the importance of it and importantly should ‘seduce’ them into following that culture. This perspective of how the leaders had to slowly make the employees follow the organizational culture is put forward by Beer and Nohria (2000). They state, “Leadership focuses on developing corporate culture and human capability, patiently building trust and emotional commitment to the company through teamwork and communication.” The teamwork is the key because when the employees work as a team, and also follows the set organizational culture en masse, it will be adopted and followed by many employees and that will lead to better actualization. As a continuation of that process, the employees can be made to adopt the organizational culture in a stronger way, if the organization and its leader make them a key part of the decision making processes inside the organization. During the decision-making process, which will be initiated before coming up with any key decisions, one of the approaches that will be tried by the leader is putting his/hers thoughts, ideas and strategies for discussion among the employees. After that, leader can elicit their constructive and effective feedbacks about the strategies, which can be incorporated while taking the decisions and also into the organizational functioning. This step can provide favourable results, because all the employees, who are involved, will be greatly motivated to give their effective feedbacks. More importantly if that feedback is accepted, they will work even harder to actualize those suggestions. This perspective was put forward in the website, HR Zone “…give them a clear sense of purpose, an accurate explanation of their personal importance in the running of the organisation, and regular communication about the direction and performance of the business”. Although, conflicts and disagreements could rise during this decision making process, employees can be made work as a team, and the success will be achieved with the right approach or attitude of the leader who builds the team. (Costa 2003). When they work as a team following a particular organizational culture, that culture will be strengthened more. This perspective about how organizational culture can be strengthened by involving the employees productively was validated by Locke, Latham & Erez (1998), who stated, Participation in goal-setting was found to be an effective method for enhancing goal commitment. As part of an optimal organizational culture, ethics component also has to be incorporated. Companies that do not have proper… “…ethics procedures risk severe damage to their reputation, criminal/legal action and regulatory penalties. The consequences could include loss of customers, reduced share price” (Advice on management). Thus, when ethics is included as part of organizational culture and then apt corporate social responsibility initiatives are carried out, it is most likely that a business’ performance, image and stakeholders perception will be enhanced. (Enderle 1999). This was validated by Kercher (2006) who stated that business entities has to manage purposefully to achieve both economic as well as socio goals and benefits, even while achieving enhanced ethical image, thus owing ‘a duty to stakeholders other than shareholders’ 6. Organisational analysis The leader by formulating the culture and then imbibing the culture as part of the organization’s structure and functioning, on the lines of Functionalism, by making the employees follow it. As functionalism proponents or Functionalist focus on trusting the structure of the organization, without maximally changing it, they cannot bring in wholesome changes to make the employees follow and adopt the organizational culture. Instead, in line with Functionalism, they have to tune or optimize their current processes, which will not only make the employees adopt organizational culture, but also make them motivated, solving problems like dissatisfaction. The employees can follow the organizational culture optimally, if they are included in all the important decision making processes that are taken within the organizational structure. “The sheer number of decisions that must be made keeps them occupied with the decision making process, necessitating that intermediaries convey these decisions throughout the company” (Carlzon 1989). As mentioned in the literature review, productively involving the employees to play a part in the decision-making and eliciting their responses, and then using it to come up with decisions, is a motivating strategy that can be carried out by the leader, and is also in line with the functionalist leader or individual. It is line with Functionalist paradigm because leader of management's task, according to this Functionalist view, is to define the organizational goals and strategies; while the employee’s task is to collect the objective data and come with feedbacks, “concerning the way in which the organization functions around goal orientation and maintenance.” (Clegg., Hardy and Nord 1996). This Functionalist paradigm or trait was exhibited by Howard Schultz in many processes inside Starbucks. That is, Starbucks Chairman, Howard Schultz improved the functioning of the employees by formulating and adopting a mission statement, which included important guiding principles for the employees. These principles guided its employees (or ‘partners’ – term used by Schultz) to determine their roles in relation to Starbuck’s targets or objectives. Importantly, it also gave the employees, the opportunity to give their responses and feedbacks about the mission statement. “New employees discuss the Starbucks mission statement and do customer-service role-playing.” (Schultz qtd. inc.com). So, Schultz was able to introduce employee based or centric organizational culture by actualizing the ‘customer feedback incorporated company’s mission statement’. The formulation of Mission Statement and the employees’ involvement is divided into three stages of employee participation, which in a way is based on the importance of structure, in the functionalism paradigm. In the first stage, the Schultz distributed a basic or tentative copy of the mission statement, plus gave them comment cards for giving their feedback as part of the initial orientation of the new employees. Then in the second stage, Starbucks related all the processes and the decisions that were taken inside Starbucks to the guiding principles. In the final third stage, the Schultz formed a “Mission Review” system, under which each employee could comment on a decision or decisions, which were undertaken by the management in relation with the consistency of the formulated six guiding principles. Finally, based on the feedbacks given by all the employees, Starbucks formulated and released a final statement titled, “people first and profits last”. Productively involving the employees in Mission Statement formulation as part of organizational culture, provides good advantages for Starbucks. More importantly, it was in line with the Functionalism paradigm because this decision of Schultz to involve the employees in the decision making process only led to cooperation, consensus and coherence among the employees, and not any conflicts. “Functionalist research emphasizes consensus and coherence rather than conflict, dissension and the operations of power. The key concept is that of the organization as a 'system’…achieves explicit goals…through rational decision-making.” (Clegg., Hardy and Nord 1996). Starbucks and Schultz were able to incorporate the ethics component as part of its organizational culture, when they started treating the coffee farmers in Third World countries ethically by adopting Fair Trade system. In addition, by solving the ethical criticism for its unfair treatment of the farmers, it also fell in line with Functionalism paradigm. That is, Starbucks was accused of purchasing coffee beans from the African coffee growers at a very low price, thereby pushing them into a cycle of poverty. To correct this ethical criticism, Schultz as a Functionalist leader decided to give the coffee farmers particularly from the disadvantaged African countries like Ethiopia, Rwanda, etc, premium prices for their produces. As Schultz took that decision because of the social factors, it is in line with Functionalism paradigm. Functionalism often focuses on the individual, particularly a leader, usually with the intent to show how that individual’s behaviour and importantly his/her decisions will be mainly moulded by broader social forces. (McClelland 2000). This strategy of Schultz constituted the concept of Fair Trade, and at the same time also gave good income to the farmers and thereby prevented them from planting illegal crops. Apart from this core business based initiative, Schultz also cooperated with the popular social organization, CARE and this lead to many benefits to communities in those Third World countries - like construction of welfare setups including clean-water systems, good sanitation facilities, eradication of literacy by providing resources and necessary training. So, by concentrating on the important ‘partners’ and aiding them as part of the organizational culture, Schultz and Starbucks is getting good opportunities to improve further and also garner rewards. Although, Starbucks or Schultz appeared to be an “amoral chameleon” in the lines of Punch’s (1996) statement because of its earlier unfair practices, he was able to solve it like a functionalist leader, thus managing the ethical dilemmas aptly and incorporating it into the organizational culture. (Crane & Matten 2007). 7. Recommendations and Conclusions After analyzing all these strategies as well as initiatives of Howard Schultz on the basis of organizational culture, Schultz has clearly exhibited positive strategic leadership. Those created opportunities and achievement of set targets, aided by the common organizational culture made Starbucks one of the successful companies. However, there is still room for improvement. Since the world of business is very dynamic and competitive, it is recommended that the Starbucks’ management continues to implement certain ethical strategies for its farmers or suppliers throughout the world, not limiting to African countries. Although, Starbucks is offering Premium prices to its South American growers as well, they could also carry out constructive community activities for them also. In particular, there should not be slackening of these constructive activities to the African farmers well. So, the key thing is, Starbucks or any organization, after incorporating ethics as part of their organizational culture, should continue to carry out proactive practices, instead of being reactive. . “Companies are increasingly recognizing the value of adopting proactive, rather than reactive, ethical policies. Such an approach to supply chain management can have a positive value both inside and outside of companies.” (Nicholls and Opal 2005, p.68). Thus, if Starbucks or any other organization is able to do this, it will surely build their reputation, goodwill and public image among the stakeholders, including the prospective customers and the general public. 8. 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