Evaluation and Advice on the Four Elements of Starbucks from Human Resource Management Perspective - Case Study Example

Starbucks' Human Resource management policies Table of Contents Evaluation and Recommendations (Whenever Appropriate) On the Four Key Elements of Starbucks from the Human Resource Management Perspective 2 Challenges Faced By Starbucks in Recruiting People 7 Reference 10 Evaluation and Recommendations (Whenever Appropriate) On the Four Key Elements of Starbucks from the Human Resource Management Perspective Starbucks Coffee Company (Starbucks) earned attention and great acclamation for its outstanding HR policies which made it unique and one of the most productive organisations within the retail industry in the early 2000s. As other companies were unable to minimise the huge labour turnover rates and were looming under the adverse effects of high attrition rates, Starbucks was found to register a rapid growth momentum due to its strong employee culture. The human resource policies framed by the company helped it to strengthen its competitive edge in the market and rendered a continuous support to its future business plans. The four elements which were mainly responsible for Starbuck’s growth can be underlined as follows: Recruitment Strategy adopted by the company (inducting people who would contribute to the company’s team culture and help in building an atmosphere of mutual collaboration within the organisation) Employee training ( ensuring employee development and providing an environment of higher growth and knowledge building) Employee benefit scheme (providing monetary as well as non–monetary benefits) Flexibility and equality which defined the work culture of the company Recruitment has been a major area of importance to Starbucks and had played a vital role in paving its path for better performance and higher employee productivity since its early years. The company underlined its motto as ‘to have the right people hiring the right people’. This strategy mainly aimed at recruiting people, who would be reliable, committed and would nurture the underlying principles of the company’s mission statement. The company wanted to employ people who would be able to work in a team culture and would not possess authoritative style of leadership. The company had a supportive and friendly employee culture and so it was very careful about recruiting the ‘right people’ who would help the company to retain its culture, even when the company was gradually expanding and turning into a global name. The management of the company wanted to maintain the employee culture generally possessed by small companies. This would help them to build a culture of strong interpersonal relationships and leave no room for conflict or mutual disputes. To ensure that only the right candidates who possess the qualities needed to work in the Starbuck’s culture apply for the vacancies in the company, Starbucks made it a point to clearly illustrate the job specifications needed to work in the company. This made the selection process easy and less tedious as the candidates who felt that they possessed the qualities and traits needed to work in such an environment only applied to the job vacancies. So, it was apparent that a major role in the overall growth and performance of the company was played by the recruitment strategy that the company had adopted. To sustain and to maintain a rapid growth momentum, the company needs to retain its focus on the recruitment policies that had been earlier identified by the company. This would enable the company to strengthen the employee culture of the organisation despite having diversity within its increasing work force. To sustain in the competitive market, the company needs to have a strong work force which believes in being united and carries out their responsibilities accordingly. This would ensure greater productivity and render higher customer satisfaction thereby triggering the further growth of the company. Recruitment has always played a vital role in maintaining a sound employee culture as it is the initial process of inducting an employee within an organisation. So, the significance of this process cannot be underestimated with the changing economic scenario. A stable work force which is aligned with the culture of an organisation plays a deciding role in determining the future prospects of a company. So, if Starbucks continues to focus on its recruitment strategy and ensures that it abides by the principles of the mission statement, the company would be able to make remarkable progress maintaining its attrition levels lowest in the industry. Another important factor which contributed to the company’s growth was its training programme. After inducting employees, they were given training for 24 hours which helped them to understand the organisation’s principles and the managers were given training for about 8 to 12 weeks (Regani S., 2005). These training programmes helped the employees to develop their skills and knowledge base and get acquainted with the company’s objectives. Proper induction training was followed by on–the job or off- the–job training which helped employees to understand their operational responsibilities. This imbibed within them a sense of being an important part of the organisation. This made them understand the importance of the role played by them. The company should improvise its training standards to meet the requirements of today’s changing demands of the industry. With the changing competitive scenario and the nature of jobs, the company needs to update its training methods accordingly in order to enhance the productivity of the employees. One of the most important factors that had helped the company to build a committed and highly productive work force was the benefit schemes adopted by the company. Besides providing a huge salary structure, the company ensured that both monetary and non-monetary benefits were provided to the employees as that would enable it to retain its workforce and imbibe employee loyalty within its workforce. The company’s benefit schemes were launched following the principle that if the employees were treated as family members then they would always aim at giving their best to the organisation. The company launched a work life balance program which not only included the full time employees of the organisation but was extended to include even the part timers. This scheme was a part of the employee welfare scheme and ensured that the employees felt needed and believed themselves to be an indispensable part of the organisation. This plan included providing several medical benefits to ensure the physical and mental well being of the employees. The company treated the employees as their partners and so launched a stock option plan known as the ‘Bean Stock Plan’ in 1991 ,to share the profits of the organisation with the employees (Regani S., 2005). This helped in building greater employee loyalty and was largely responsible for increasing the overall performance of the company for the years to follow. This plan included all the employees who have been associated with the company for at least six months and have rendered at least 20 hour service per week during these months (Regani S., 2005). The type of option made available to the employees varied according to the salary structure of the individual employees, the stock prices of the company and the overall financial performance of the company. Besides, the company provided health insurance coverage to its employees paying 75% of the total premium (Regani S., 2005). The type of coverage differed with each individual employee and was tailor-made according to the varying requirements of the workforce. The company also introduced a Stock Investment Plan (SIP) which enabled a full time and a part time employee to buy the shares of the company at a discounted rate (Living our values-Corporate Social Responsibility-Fiscal 2003 Annual Report, 2003). Besides providing monetary benefits, the company gave due importance to the role played by the non-monetary incentives in attaining greater employee productivity. Some of the initial ‘wellness’ programs launched by the company were ‘Partner Connection’ and ‘Working Solutions’ which aimed at providing all sorts of assistance to the employees and helped in forming interest groups so that an intellectually stimulating environment would result thereby building a strong team culture within the organisation(Regani S., 2005). Informal groups like ‘The Wonderful World of Food Group’ and ‘The New Parent Group’ were formed which helped the employees to socially interact with other employees(Regani S., 2005).. With changing times and the increasing need of social interaction felt, the company introduced more than 30 recognition programmes to constantly motivate its workforce rate (Living our values-Corporate Social Responsibility-Fiscal 2003 Annual Report, 2003). To continue with the growth momentum and eliminate chances of internal strifes which may lead to industrial disputes, the company should continue to launch such programmes as the need arises. Starbucks today has become a global name with its offices located in disparate geographical locations leading to a diverse workforce, resulting in cultural differences. So to ensure that a spirit of being one and united remains within the employees, its necessary for the company to focus more on the non-financial incentives and adopt strategies like job rotation so that there is an opportunity for the employees to inter mingle amongst themselves which would help them to overcome their mutual differences and get aligned to the overall organisational culture of the organisation. Flexibility and equality are the key building blocks of the company and had led to a strong employee friendly culture. The company provides not only flexible work schedules but also flexible benefit options which vary according to the choices of the employees. With the help of ‘Mission Review’ programme, the company invites its employees to give feedbacks on the different processes and functions carried out by the company (Regani S., 2005). The suggestions made are also incorporated according to their importance felt by the management. So , employees at Starbucks play a vital role in decision making and helping the company to perform better which is making the company register greater profits every year and is responsible for it continuous growth. Challenges Faced By Starbucks in Recruiting People To remain competitive with the changing business scenario, Starbucks decided to expand its operations by the early 2000s. This started posing as one of the biggest challenges as it was becoming increasingly difficult to retain its workforce by providing them with the same type of benefits as was offered by them in the initial years of the company. With growth in the company’s operations and expansion in the international markets, the size of its total human resource was becoming extremely large. The cost incurred by the company in providing the employees with similar monetary benefits was becoming huge and somewhat unmanageable. This was posing as a constant threat to the company’s overall financial performance. It was found that the company was spending more on its employees than on the marketing endeavours. The company was in dilemma as it feared that it would lead to huge employee turnover if it decided to lower the financial benefits offered to the employees, which would again aggravate the recruitment and selections costs. To compensate the costs incurred due to the benefits provided to the human resources, the company increased the price of its coffee but it feared of losing its customers thereby giving the competitors a greater share of the market. Recruitment has become a matter of grave concern for the company and is one of the major causes responsible for such increasing problems faced by the company. Unable to attract the right talent has aggravated the woes of the company. When the company had planned for expansion, it should have focused on its motto. As the employee strength was increasing, the possibilities of strikes and industrial disputes were becoming apparent. Employees were found to have grievances and were keen to form unions. The employee culture was gradually falling apart. This can be largely attributed to the failure of the company to adhere to its initial motto of recruiting the right people. Either the people who were recruiting were not the proper people inducted by the company or the new people who were being recruited did not have the traits that they should posses to become an employee of the organisation. Despite providing huge salary structure, the employees were found to be dissatisfied with the working hours and the benefits provided by the company. They did not consider the work culture to be supportive or friendly. The employees found Starbucks to be anti-union thereby iron-handedly suppressing all such efforts made by them to form unions. This led to grievances and the bonds between the management and the employees started loosening. Starbucks had always, made endeavours to hire the best people as they have believed that a strong work team would make the company grow. But despite such clear motto the company was struggling to unite its workforce under its emblem. So, it was absolutely necessary for the company to redesign its recruitment strategy as that was the initial process of attracting the suitable candidates, who would in the future steer the company’s growth. With the changing business scenario, Starbucks needs to adopt strategies which would assure the employees that the company has best intentions and help it to win back the confidence of its employees. This can be achieved by redressing the grievances of the employees accordingly. A weak employee culture cannot lead to the formation of a strong organisation so Starbucks should focus on its recruitment strategy and adopt all such measures as felt appropriate to ensure that the company maintains its growth momentum. If the company fails to adhere to its motto of recruiting people, it might result in complete erosion of the employee culture leading to random strikes, huge labour turnover costs and inability of the company to sustain within the competitive market. So, the company should first and foremost concentrate on its recruitment strategy which ultimately would be the first step in deciding the type of people inducted in the organisation and the type of culture that the organisation would have in the future years. Reference Living our values-Corporate Social Responsibility-Fiscal 2003 Annual Report, 2003, Starbucks, [Online], Available: http://www.starbucks.com/aboutus/CSR_FY03_AR.pdf, [18th May 2009] Regani S., 2005, Starbucks’ Human Resource Management Policies and the Growth Challenge, Icfai Center of Management Research Read More