Managing People Global Context-Human Resources Management at Starbucks - Case Study Example

The employment relationship and the firms approach to intrinsic and extrinsic motivation of workers - The case of Starbucks. (Words: 2495 Introduction Securing the interests of stakeholders is usually a key priority for managers in modern organizations. In practice, it has been proved that not all stakeholders are given the same attention, in regard to their rights. Reference is made especially to employees who often face inequality and unfairness despite the fact that their role in the development of organizational performance is vital. Current paper explores employment relationship in a particular organization, Starbucks. The firm has already established its position in the global market. The firm’s success has been highly related to its HR strategy. Indeed, it seems that in Starbucks the contribution of employees in organizational performance is highly appreciated. The role of intrinsic and extrinsic motivation in Starbucks is analyzed below using appropriate literature. It is proved that emphasizing on employee motivation can help an organization to increase its competitiveness even when market conditions are quite turbulent, as today. 2. Employment relationship – intrinsic and extrinsic motivation as described in literature In order to understand the importance of employee motivation for the standardization of business performance, it is necessary to understand the context of employment relationship, as developed in businesses of different size worldwide. According to a description provided by ILO (2005) the employment relationship is a framework in the context of which an individual, called ‘worker’ provides services to the employer, an individual or an organization, under specific terms (ILO 2005, p.22). The terms of the employment relationship, including the level of payment, the length of days-off and so on, can be differentiated in each country according to the local laws and ethics (ILO 2005, p.22). In the literature, the aspects of employment relationship have been extensively explored. Most theorists have focused on the importance of employee satisfaction for employee performance, at the level that an employee who is satisfied with his job he is more likely to perform high compared to an employee who is dissatisfied, i.e. an employee who feels that his contribution in the development of daily organizational activities is not appropriately appreciated (Kaufman 2004). Reference can be made, for example, to the Motivation - Hygiene theory of Herzberg. The specific theory promotes the idea that ‘employee satisfaction and dissatisfaction have two different dimensions’ (Pride et al. 2011, p.283). In fact, the factors that can influence employee satisfaction are divided into two categories, Motivation factors and Hygiene factors. Managers who wish to enhance employee performance need to ensure that the requirements included in each of these factors are met (Pride 2011, p.283). Focusing only on one of these factors cannot secure employee satisfaction (Pride 2011, p.283). Other theories developed in regard to employee motivation are the following ones: a) the Expectancy Theory of Vroom; this theory is based on the idea that the outcome of job, meaning the monetary and non-monetary awards given to the employee, is considered as ‘a means to satisfy needs’ (Armstrong 2007, p.132); b) the Maslow Theory of Needs; this theory promotes the view that when employee needs are not satisfied then the appearance of tension and disequilibrium in the organization’ (Armstrong 2007, p.132) cannot be avoided. These two theories are mentioned for two reasons: a) they are both related to employee motivation and b) they show that employee needs are vital for employee performance, a fact that enhances the value of extrinsic motivation, as described below, which is often negatively criticized. In practice, employee motivation is divided into two, major, categories: intrinsic and extrinsic. These categories reflect the dependency of employee motivation on different factors. In this context, intrinsic motivation is a term used for denoting the satisfaction of employee by the work itself (Mosley and Pietri 2010, p.198). This means that the motivation of an employee is intrinsic when the employee feels quite satisfied while developing the tasks assigned to him (Mosley and Pietri 2010, p.198). On the other hand, extrinsic motivation shows the satisfaction of employee ‘not by the work itself but by the rewards related to the work, such as pay, benefits or working conditions’ (Mosley and Pietri 2010, p.198). According to Perkins and Arvinen-Muondo (2013) the value of intrinsic and extrinsic motivation within each organization is not standardized. Indeed, there may be employees that would prefer to be rewarded for their job with an increase in their existing wages while for others the assignment to them of a quite challenging job may be more attractive (Perkins and Arvinen-Muondo 2013, p.92). Managers need to be able to distinguish whether employees tend to value more extrinsic or intrinsic motivation and take appropriate measures for enhancing employee satisfaction (Perkins and Arvinen-Muondo 2013, p.92). It should be also noted that the same employee may be motivated by different factors at different points of time (Perkins and Arvinen-Muondo 2013, p.92). For example, an employee who used to be highly motivated by taking international assignments and meeting new cultures may choose to ask rather for an increase in his wages in case of a severe family problem that would oblige him to change priorities (Perkins and Arvinen-Muondo 2013, p.92). From a different point of view, Cartright and Cooper (2009) note that intrinsic motivation is often more important than extrinsic motivation. For this reason, managers should focus on promoting intrinsic motivation rather than extrinsic motivation across organization (Cartright and Cooper 2009, p.196). Reference can be made to the following example: in a firm where emphasis has been given on ‘building an employment relationship based on mutual trust and respect’ (Cartright and Cooper 2009, p.196) it would be more difficult for employees to decide to leave the organization. In opposition, in organizations where the key means for keeping employees satisfied is the provision of ‘high monetary rewards’ (Cartright and Cooper 2009, p.196) the risk for losing employees is higher. In the last case, employees would be willing to leave their organization immediately when a firm offering a higher level of salary appears (Cartright and Cooper 2009, p.196). On the other hand, Cameron and Gretchen (2011) claim that intrinsic motivation is not necessarily more important from extrinsic motivation because of the following reason: even if intrinsic motivation is highly based on the need for promoting creativity it can lead the individual to ignore organizational rules in order to support personal ideas. Such practice can threaten organizational stability, especially if other employees are persuaded to follow (Cameron and Gretchen 2011, p.37). Towards the same direction, Neely (2007) supports that extrinsic motivation should not be regarded as a negative HR strategy. In fact, extrinsic motivation is based on the following fact: an employee who is able to cover his financial needs is expected to perform well in his job at the level that he does concerns in regard to his financial liabilities (Neely 2007, p.434). Because of its importance, extrinsic motivation is highly expanded in firms worldwide, more than intrinsic motivation (Neely 2007, p.434). A common HR strategy for promoting extrinsic motivation is the ‘pay for performance strategy’ (Neely 2007, p.434). 3. Intrinsic and extrinsic motivation in Starbucks 3a. Company overview The firm started as ‘a retailer of ground coffee in 1971’ (Starbucks Company Profile 2013). Today, the firm has stores in more than 60 countries (Starbucks Company Profile 2013). The firm’s mission reveals the willingness of the organization to promote quality and to build a long term relationship with its customers. In the firm’s website the organizational mission is described as follows: ‘to inspire and nurture the human spirit’ (Starbucks Company Profile 2013). In June of 2012 the firm’s stores reached the ’17,651’ (Starbucks Company Profile 2013). This figure is really impressive if taking into consideration the turbulences in markets worldwide. 3b. Employment relationship in Starbucks – Intrinsic and extrinsic motivation In Starbucks, emphasis is given on employee support through all phases of employment relationship. In fact, as noted in the organization’s website, since his entrance in the organization, an employee has the chance to learn about the key product of the organization: coffee; being informed on the ingredients and taste of coffee provided through the organization is considered as a key requirement for the firm’s employees (Starbucks, Working at Starbucks 2013). If referring to the use of extrinsic and intrinsic motivation as criteria for the development of organization’s HR strategies, the following explanations would be made: the firm has tried to use both dimensions of motivation in order to promote employee satisfaction. For example, incentives like ‘competitive pay, bonuses and emergency financial aid’ (Starbucks, Working at Starbucks 2013), which are related to extrinsic motivation, are combined with incentives of different type, such as ‘support in exploring career opportunities and in providing references, if required’ (Starbucks, Career Advancement 2013). A ‘Performance Improvement Plan’ (Starbucks, Career Advancement 2013) in order to help employees to face problems in regard to the tasks assigned to them. It should be noted that candidates for a job position in Starbucks have the chance to discuss primarily with one of the firm’s managers and be informed on the terms of employment but also on the organizational culture (Starbucks, Career Advancement 2013). Furthermore, candidates can discuss with managers, before applying for a job, in regard to the job position that would be more aligned with their skills and expectations (Starbucks, Career Advancement 2013). These benefits can be considered as related to the intrinsic motivation of candidates as future employees. From this point of view, it could be said that in Starbucks the will and needs of individuals are respected at all phases of the employment relationship but even before the hiring of individuals. This practice would attract more candidates to the organization given to intrinsic motivation another perspective: the case of Starbucks proves that intrinsic motivation can be expanded, having the power to influence an individual to enter a particular organization. As for the emphasis given by the organization on diversity, this practice would be rather related to intrinsic motivation than the extrinsic one (Starbucks, Diversity, 2013). In fact, with no problems of discrimination in the workplace each employee is expected to feel more comfortable in developing his daily tasks; in other words diversity in the workplace would be considered as promoting intrinsic motivation rather than the extrinsic one. The comparison of the incentives given by Starbucks to its employees but also to candidates leads to the assumption that the firm focuses on extrinsic motivation rather than on intrinsic motivation. In fact, the range of incentives focusing on employees’ extrinsic motivation is extremely high, targeting at the health, family needs and vacation needs of employees. This practice is not necessarily negative, as also noted in the literature presented above. Reference should be made here at certain studies focusing on the benefits of extrinsic motivation. These studies could explain the importance of extrinsic motivation for HR managers in Starbucks. According to Tapomoy (2009) compensation is not necessarily related to extrinsic motivation. In fact, monetary reward can be considered as ‘both extrinsic motivator and hygiene factor according to the needs of employee’ (Tapomoy 2009, p.250). More specifically, in case of an employee who has high financial needs, for example due to family issues, the provision of financial aid or the increase of salary can be regarded more as hygiene factor, while it is also an extrinsic motivation. Following this view, the practice of Starbucks to emphasize on the monetary rewards of its employees does not reveal the intention of the firm to focus on extrinsic motivation but rather shows the care for employees’ daily needs, as hygiene factor influencing employee performance. From a same point of view, Mills et al. (2006) claim that extrinsic motivation should not be regarded as negative, even in practice such trend seems to exist. It is explained that without the basic needs to be covered an employer’s efforts to support the increase of employee performance would fail (Mills et al. 2006, p.212). For this reason, it is suggested that intrinsic motivation is combined with extrinsic motivation so that all aspects of employment satisfaction are addressed (Mills et al. 2006, p.212). As noted above, managers in Starbucks have tried to keep employee satisfaction high using both extrinsic and intrinsic motivators. The particular strategy of Starbucks can be characterized as quite successful, as this assumption can be developed using the views of Mills et al. (2006) and Tapomoy (2009), as presented earlier. The effectiveness of the strategy of Starbucks in regard to the promotion of its employee satisfaction is further verified through the study of Furman (2008). The above researcher has tried to check the value of extrinsic motivation, as a factor influencing employee performance. At a first level, intrinsic motivation seems to be critical, leading to employee commitment easier than extrinsic motivation which is always related with the following risk: employee may compare his existing salary with the salary provided by a competitor (Furman 2008, p.38). However, when the employer has taken measures for promoting intrinsic motivation, along with the extrinsic motivation, then the risk for losing employees who will seek for job to a competitor are decreased (Furman 2008, p.38). Of course, at this point, reference could be made to the view of Tapomoy (2009) that monetary rewards given in the context of the employment relationship are not necessarily related to extrinsic motivation but they can also be related to intrinsic motivation, in the context described above. 4. Conclusion The development of effective HR strategies can help an organization to achieve a rapid growth. The success of Starbucks verifies the role of HR in organizational performance. As explained above, HR managers have tried to combine intrinsic and extrinsic motivation so that employee satisfaction is secured. Moreover, it seems that emphasis is given on intrinsic motivation, as a factor that can guarantee employee satisfaction in the long term, a fact that has been also highlighted in the literature. One of the key aspects of employee satisfaction in Starbucks seems to be the potential of employees to choose the position that best suits to their skills and their goals. In this way, the employment relationship in Starbucks is based on mutual respect, at the level that each party understands and respect the will and interests of the other party. Under these terms, the HRM framework in Starbucks can be considered as an indicator of the potentials of employee motivation to influence not only employment relationship but also organizational structure and goals. As for the mode of employee motivation promoted in each organization, this depends on organizational culture, objectives and financial status. This means that emphasizing on employee motivation may not be feasible on all organizations; however, when employee motivation is set as a key factor in the design of organizational strategic framework then the organizational success is secured, as proved through the case of Starbucks. On the other hand, the high range of monetary rewards that the organization has established for its employees does not show the firm’s intention to focus only on extrinsic motivation; in opposition, this practice can be considered as an effort to promote intrinsic motivation by securing that employees’ basic needs are fully covered. References Armstrong, Michael. Employee Reward Management and Practice. London: Kogan Page Publishers, 2007. Cameron, Kim and Gretchen, Spreitzer. The Oxford Handbook of Positive Organizational Scholarship. Oxford: Oxford University Press, 2011. Cartright, Susan and Cary Cooper. The Oxford Handbook of Organizatonal Well-Being. Oxford: Oxford Handbooks Online, 2009. Deb, Tapomoy. Performance Appraisal And Management. New Delhi: Excel Books India, 2009. International Labour Office. The Employment Relationship. Genève: International Labour Organization, 2005. Furman, Donald. A Study of the Relationship Between Individual Motivation and Level of Team Development. London: ProQuest, 2008. Kaufman, Bruce. Theoretical Perspectives On Work And The Employment Relationship. New York: Cornell University Press, 2004. Mills, Albert, Mills, Jean, Forshaw, Carolyn and John Bratton. Organizational Behaviour in a Global Context. Toronto: University of Toronto Press, 2006. Mosley, Donald and Paul H. Pietri. Supervisory Management. 8th ed. Belmont: Cengage Learning, 2010. Neely, Andy. Business Performance Measurement: Unifying Theory and Integrating Practice. 2nd ed. Cambridge: Cambridge University Press, 2007. Perkins, Stephen and Raisa Arvinen-Muondo. Organizational Behaviour: People, Process, Work and Human Resource Management. London: Kogan Page Publishers, 2013. Pride, William, Hughes, Robert and Jack, Kapoor. Business. 11th ed. Belmont: Cengage Learning. Starbucks. “Working at Starbucks.” Accessed February 25, 2013. http://www.starbucks.com/career-center/working-at-starbucks. Starbucks. “Career Diversity.” Accessed February 25, 2013. http://www.starbucks.com/career-center/career-diversity Starbucks. “Career Advancement.” Accessed February 25, 2013. http://www.starbucks.com/career-center/starbucks-career-advancement Starbucks. “Starbucks Company Profile.” Accessed February 25, 2013. http://globalassets.starbucks.com/assets/9a6616b98dc64271ac8c910fbee47884.pdf Read More