Starbucks as an Ideal Employer - Essay Example

Case Study of HR Table of Content Q3 In a published statement ，the CEO of Starbucks said 'if they had faith in me and my motives they wouldn't need a union' (Seattle Times 2.1.200 ).What does this statement tell you about the CEO's view of leadership? Making reference to appropriate models and theories of leadership，provide a critical evaluation of the leadership approach and style in Starbucks. 2 04 'Motivated and committed human resources were the key to success'. What strategies has Starbucks used in order to gain the motivation and commitment of its employees? With reference to appropriate theories and models provide a reasoned discussion of how the company can ensure the levels of motivation and commitment that it needs to succeed in the future? 7 Reference 12 Part Two Q3 In a published statement ，the CEO of Starbucks said 'if they had faith in me and my motives they wouldn't need a union' (Seattle Times 2.1.200 ).What does this statement tell you about the CEO's view of leadership? Making reference to appropriate models and theories of leadership，provide a critical evaluation of the leadership approach and style in Starbucks. Starbucks is considered as an “ideal employer”. In their mission statement it has been clearly maintained that “they treat each other with respect and dignity”. The company considers their employees as their partners; they provide every employee the right to invest in company’s stock so that they can be a part of Starbucks, and can participate in growth and development of the company. Starbucks have a firm believe that it’s the employees who are responsible for success and rapid growth of company. Company makes all possible effort of satisfy its employees, irrespective of the fact that either they are par-time employees or are full time employees. Even at the growth rate of 20 percent per year, company managed to retain a “small company atmosphere”, where the top managers used to talk with the store managers on regular basis so that a feeling of togetherness exists in organisational culture. Starbucks always maintained high pay scale as compared to the industry standers; also other facilities like health care benefits, not just for the full time employees, but also for the par-time workers; “work-life balance programs” to provide flexibility in the working hours to suit different requirements of different people; also provided “working solution” facility for the employees so that they can easily search for childcare or eldercare services. Main motto of these facilities was to provide assistance to the employees so that they can work without any hindrance or disturbance. Company pays great emphasis on recruiting their employees and training them, because they believe that “right people should select right people”. Starbucks makes huge investment for training their employees. They provide special 24 hour conduction training to all employee, during which the employees come to know about company’s mission and goal, they gather knowledge regarding coffee roasting and coffee making, and the most important thing that “how to satisfy need of customers”. As a result of this, turn over rate is just 60 percent per year in Starbucks which is one third of the retail industrial market (200 percent per year). So it can be conclude that Starbucks pays a lot of attention in selecting and retaining right employees, they assists their employees in the best possible manner so that employees can provide their best services to the company. The main aim of company is to maintain a small company culture where both the employer and employees feels like a family. Thus the CEO said 'if they had faith in me and my motives they wouldn't need a union' because a union will create barrier between management and employees, it will spoil the small company culture where everybody is inter-connected with each other. Union will lead to more formal relation among employer and employees. The statement given by CEO of Starbucks indicated that CEO follows Democratic style of leadership. CEO believes in two way communications and making discussion with employees so that they can participate in decision making procedure, management motivates employees to maintain entrepreneurship spirit. The ideas and suggestion provided by them are taken seriously into consideration, they are implemented and feedback is provided to employees. CEO also introduced different rewards like “Warm Reward”, “MUG” (Moves of Uncommon Greatness) Award, “BRAVO!”, and “Spirit of Starbucks Awards”. The company delegates responsibility to their front line employee regarding how they satisfy their customer and fulfill customers’ needs. But as the CEO is a people oriented manager who give importance to company’s employee, hence he feel that if employees will form union, then a communication gap will develop in between employees and management. There are several leadership theories which were proposed by different theorist and have different views regarding leaders. For example Great Man Theory says that “leaders are born but not made”. As per this theory great leader arises when there is a great need. Trait Theory assumes that people are born with their inherent traits and the one who emerges as a leader have right combination of traits. In 1974, Stogdill identified and segregated several traits and skills which were found in leaders. McCall and Lombardo in 1983 carried out research and found four primary traits responsible for success or derail of a leader which are- Intellectual breadth, Admitting error, Good interpersonal skills, Emotional stability and composure. As per Behavioral Theory, leaders are not born, rather they can be made, which means that leadership can be learned instead of being inherent. Managerial Grid was proposed by Blake and Mount, who was inspired by Ohio Stated and Michigan studies. The grid provides nine possible positions depending on concern for production and concern for people. Managerial Grid (Source: Management .n.d.) Participative Leadership assumes that decision making procedure should involve every one, thus people will be more committed to each other for achieving the goal. Where as in Situational Leadership action of leader depend on situational factor. Depending on the need and the nature of relation with subordinates, leader follows different leadership styles. Contingency Theory belongs to behavior theory and it believes that there is no best way of leading, thus a leadership style which is suitable in one situation may not suit in another. As per this theory there are two basic leadership styles- Transactional Leadership which believes that people get motivated by reward & punishments and system works best with a chain of command. The subordinated should do what their supervisor wants them to do. Assumption of Transformational Leadership is that, people will follow a person who inspires them, who have vision and passion to achieve great thing in life. People feel wonderful to work under such leader who care and motivate them to attain successes (St. Norbert College.n.d.). In Starbucks, the CEO is people oriented; he try do develop and train the employees in best possible manner. He believes that only trained employees put their best effort in their work. But in the company’s mission statement it has been clearly maintained that they believes in high standers of excellence and profit should be made for future development of the company. So this makes clear that management is equally production oriented. Basically management follows contingency theory where different leadership style is applied as per the requirement and situation. The top management follows Transformational Leadership styles; they set the vision and then try to convince other employees to participate with management in achieving organisational goal. The management motivates their employees not only to achieve organisational goal, but also to participate in goal setting procedure. They make their employees feel that company care the most for them and thus they reduce turnover rates and increases employees’ satisfaction. 04 'Motivated and committed human resources were the key to success'. What strategies has Starbucks used in order to gain the motivation and commitment of its employees? With reference to appropriate theories and models provide a reasoned discussion of how the company can ensure the levels of motivation and commitment that it needs to succeed in the future? A company interacts with its customers through its employees, thus the front line employees play an important role in achieving success by satisfying the customer. At Starbuck, the company firmly believes that 'Motivated and committed human resource is the key to success'. Thus company takes all possible means to motivate their employees. Starbucks’ top management follows different motivational theories like Maslow’s Hierarchy of needs which says that employees can be motivated if company fulfills their different needs. These needs are physical need, safety needs, social or belonging needs, self esteem and actualisation need. Maslow’s Hierarchy of needs (Source: LeBon, 2006) For fulfilling physical need, company provide hourly rate which is above minimum wages set by government. The wages are also mare than what is prevailing in the industry. The aim is that an employees can satisfy their own and their family’s physical needs. They feel highly motivated when they see that their wage rate is higher to those who work in different organisations and perform same work. The second need as per the Maslow’s Hierarchy of needs pyramid is safety need. To satisfy this need of their employees, company had introduced medical insurance not only for the fulltime workers, but also for their part-time employees, none other company use to provide such healthcare facility to the part-time employees. Company also provide dental and vision insurance. Once in year, eye testing of employees is done and company reimburses cost of lenses per year and cost of frame once in two year. So the employees have a faith that company care for their employees’ health and safety and if something wrong happens in future, company will look after. Starbucks introduce different “Work Solution”, where employees can easily search for childcare and eldercare solution as and when required. Company pays equal importance towards physical and mental fitness of their employees. Social need or need for belonging matters a lot for every human. Starbucks realised this fact and took all possible means to satisfy this need of their employees. They introduced “Partner Connection” program. Through this program, partners with similar interest can link among each other and can share their views across the organisation. Till 2005, Starbucks had 25 informal groups like the Wonder World of Food and the New Parent Network. Also the Starbucks soccer group and Starbucks Coir were very famous. The partner success group was so successful because the employees themselves formed it and the company supported it through providing finance. This was a platform for the partners to get connected with other partners. Company also supported their employees to communicate with each other and with their customers. This react a great experience for customers to be in Starbucks stores and they feel like visiting the place again. In the mission statement of Starbucks it is clearly mentioned that company respect its partners and care for their dignity. Thus company corporate a healthy work environment for their employees, they provide good amount of training to their front level employees that how they should interact with customer and with each other. Management keeps less control their subordinates so that they themselves can take decision on day to day basis. Company have special bean stock offer where all the partners can apply for company’s stock, irrespective of the fact that whether an employee is fulltime employed or par time employed. The CEO believes that if employees invest in company’s stock, they make more contribution toward growth and development of company because they get a sense of ownership and get the opportunity to participate in decision making process and feel highly motivated. To satisfy their employees and to keep turnover rate minimum, company try to fulfill the self actualisation need of their partners. They maintain a small company environment where each employee cares for others need and dignity. They motivate employees to develop entrepreneurship skills. Any idea given by an employee is taken seriously by the top manager. They believe that as the employees are in direct contact with customer, so they understand customers need in the best possible manner, thus any suggestion provided by them valuable for company. Outcome of their faith in their employees’ idea was a wonderful product called “Frappuccino”, also the idea of marketing CDs came from one of their store manager. For enhancing self actualization, company distributes several awards like “Warm Regards”, “MUG” (Moves of Uncommon Greatness) Award, BRAVO! And “Spirit of Starbucks Award.” These awards not only increase self esteem of employees, but also provide a feeling of reorganization and fulfill their self actualisation need. At present, Starbucks have 16,120 stores in 49 countries; the company maintained a high growth rate for pretty long time. But due to global economic slowdown, its financial situation is getting disturbed. As per company policy, they have a strong believe that, main cause behind company’s success and growth is their partners, so if company makes any reduction in employees’ monitory or non monitory benefit, it will demotivate their employees. Thus company has to search some other means to uplift revenue, instead of cutting expenditure on employees training and their perks. Hence company has decided to diversify their business. They have a plan to inter in energy drinks market, as data reveals that demand for such drinks is growing, company has closed down whose stores where operation cost was high. They have a strategic plan to enter in market of developing countries where impact of economic slowdown in not so high. Even in such a state of slowdown they decided not to compromise with their employees’ quality and their training cost. Reference LeBon, Tim. 2006. Maslow's Hierarchy of needs (or pyramid of needs). timlebon.com. [online]. Available at: http://www.timlebon.com/maslow.htm [Accessed July 18, 2009]. Management. No date. Blake and McCanse’s Leadership Grid. Leadership Theories. [online]. available at: http://management.uta.edu/Rebecca/4311/Goolsby%20Leadership%20Theories.ppt [Accessed July 18, 2009]. St. Norbert College. No date. “Leadership Theories”. ChangingMinds.Org. [online]. available at: http://www.snc.edu/lsi/forms/Leadership_Theories.doc [Accessed July 18, 2009]. Read More