Analysis of HR Practices at Starbucks - Case Study Example

Analysis of HR Practices at Starbucks (Name) (Course) (Institution) (Instructor’s name) (Date) Abstract Starbucks is a leading global coffee shop with 16,858 branches in more than 50 countries worldwide. In 2010, the company registered annual revenue of more than $10 billion. This is attributed to its human resource management and development. It has a comprehensive recruitment and training program which ensures equal employment opportunity for all across the globe. Starbucks has won the second best Company to Work For Award as a result of its human resource development practice. Among its competitors is Coffee Cup Ltd, which fails in human resource development and concentrates more on coffee development, hence its failure in the market. At Starbuck, customers are served by refined well-rained employees who are motivated through rewards, promotion and employee programs such as annual leave allowances and employee insurance schemes. Analysis of Human Resources Practices at Starbucks Modern businesses are investing and developing their human resource departments as a management strategy to overcome modern-day challenges, which stems from shifting competitive market forces which are coupled with rapid shifts in financial, technological, legal, social-cultural, political, environmental, and economical resources (Paauwe, 2009). There has been an increasing need to develop and implement effective, quality and efficient human resources, in pursuit to accomplish the organization’s goals and objectives, which are primarily to produce at minimum costs and accrue maximum profits (Derek, Laura, and Stephen, 2004). Among areas in focus when developing an efficient and effective human resource system is in the recruiting practices, development of training structures, performance feedback, rewarding high quality performance and workforce planning, among others. Recruiting practices and training are key to the overall success of the Starbucks Coffee Company and its globalization efforts. The purpose of this report is to carry out an in-depth analysis of recruiting practices, training structure, and overall Human Resources strategies at Starbucks Coffee Company and compare the strategy at Starbucks to that of a competitor while highlighting the key differences and the impact of these differences on respective company performance. Human Resources Practices Development and implementation of best Human Resources (HR) practices is dependent on having proper leadership and management structures which are able to candidly integrate fundamental dimensions of an organization which include the organization culture, organization structures, the workforces and the human resource infrastructures. Starbucks Coffee Company Starbucks Coffee Company is a public company that was established in the year 1971 by Jerry Baldwin, Z. Siegl and G. Bowker in Seattle, Washington. The company, which started local, has expanded globally to serve more than 55 countries in not fewer than sixteen thousand locations. The company has grown to become a top market leader in coffee dealings (Michelli, 2007). Starbucks Coffee Company buys, roasts, and retails brewed coffee and espresso drinks as well as other coffee-related products. The company has not only invested in the retail beverage industry, but also in the entertainment industry. The company deals with assorted products such as whole bean coffee, bottled beverages, baked goods, smoothies, Frappuccino drinks, boxed teas and instant drinks, among others (Michelli, 2007). In the year 2010, Starbucks Coffee Company registered annual revenue of more than $10 dollars with an operating income of not less than $1 billion. The Company’s total assets amount to more than $6 billion, total equity of approximately $3.6 billion with an employee capacity of more than 135,000 workers. HR Practice at Starbucks Coffee Company The company boasts of immense success, which has been attributed to excellent and quality service offered by the Company’s employees and the effective interactions, developed between the Starbucks staff and their customers. With as many subsidiary companies such as Seattle’s Best Coffee, Tazo Tea Company, Hear Music, Torrefazione Italia and Ethos Wate, having the right kind of employee, who is not only skilled and knowledgeable, but also is capable of handling every day challenges and having the willingness to learn is fundamental (Michelli, 2007). The company mission statement is “to inspire and nurture the human spirit–one person, one cup and one neighborhood at a time” (Starbuck, 2010). This means not only focusing on the products, customer, management and the service but also ensuring there is a committed, well-recruited team. Recruiting and the selection practice The company invests in conducting a comprehensive recruiting process since recruiting the right candidate means improvement in production performance, reduced chances of poor service and product delivery, reduced employee turnover and acquiring a high skilled, experienced workforce that gives their maximum best (Paauwe, 2009). The company recruits in areas of administration, call center, engineering, marketing, legal, procurement, research and development, sales, supply chain management, social responsibility, green coffee and tea management and information technology among others. Jeremy Langhans is the Senior Recruiter for Talent Engagement within Starbucks. The recruiting and the selection practice is designed in such a way as to ensure there is a comprehensive and timely engagement and proper communication between the interviewees, the hiring personnel, the recruiting staff, peer recruiters and among other stakeholders involved in the recruiting and selection process (Gatewood, Field, & Barrick 2008). The candidates are offered equal employment opportunities, where the company advertises its vacant positions through internal memos posted at the official bulletin boards, and through electronic and print media. Most recently, the company has invested in using the Internet to conduct the recruiting and selection process (Michelli, 2007). The advertisements contain job descriptions and job summaries, job requirements and specific qualifications that are required for various positions (Derek et al., 2004). When the candidates are called in for interviews, the company ensures that they receive positive experience. In interview processes, the candidate’s ability and qualifications are assessed by reading their resumes, application forms, consulting the references, and conducting in-house testing such as analyzing their computer literacy, general knowledge and offering them aptitude and mental tests. The company facilitates post interview debrief meetings to choose the appropriate candidate for the job. Thereby, the recruiting and selection team give the job offers, negotiate terms and conditions with the finalist and eventually close the offers. The recruiting and selection process is supposed to conform to the company’s employment policies and guidelines and comply with local and international employment regulations and standards (Paauwe, 2009). The chosen candidate attends a two-week training more or less based on the area of expertise they will be working and three months probation period. During the post-hiring training, the candidate is informed of the Company’s mission, goals and objectives, and is offered basic information regarding the Company’s structure, culture and work processes (Michelli, 2007). Training structures at Starbucks Coffee Company Employee training is seen as a fundamental element to having an effective human resource. The purpose of offering training for employees is to increase their skills and knowledge and improve on their abilities in order for them to execute their duties effectively and efficiently (Rosemary, 2005). This translates to improved quality of performance of the company, on time delivery of goods and service and cutting on costs that lead to increased profitability for the company (Derek et al., 2004). Training is a form of developing and making the life of the workforces better both professionally and personally. Training is among the motivational tools as described by Freud and Maslow motivational theories. Through training, an organization is able to empower weaker employees, it is able to retain hardworking and resourceful employees and eventually reap greatly in terms of good relationships within various organization structures, teamwork and high performance by labor forces. Starbucks as a retail organization is in constant and immense pressure to seek, select and retain the right type and capacity of staff to handle its imminent future expansion. Therefore, the recruitment and selection practice and the training structures are seen as a fertile ground to find the right type and number of employees required (Michelli, 2007). The corporate strategy integrated with the human resource strategy is to ensure employees are capable to handle tasks and roles assigned to them, and training ensures that candidates eligible for promotion are able to fit into the new shoes accordingly with the least amount of challenge (Legge, 2004). This allows for hiring, motivating and retaining the best employees in the business. With retail business there is cutthroat competition to not only offer the best quality products and services, but also to have a skilled, continually trained and able workforce which through training and to come up with innovative products and services. This reduces the costs incurred with employee turnovers, employees unaware of current market and technological trends and unmotivated employees (Legge, 2004). Through training structures embedded within Starbucks’s organizational culture, employees undergo routine and continuous in-house and external training, which leads employees to be more loyal to the company, and use the skills, knowledge and experience earned to add to the company’s competitive edge (Michelli, 2007). Workers within Starbucks Coffee Company are eligible for courses and crash training programs. Employees who have finished the Coffee Master Programs wear black aprons exhibiting the Coffee Master label. The Coffee Master course trains employees about elements of coffee tasting, coffee brewing, the art of roasting coffee and educating the learner employee about regional and international coffee growing areas and how to conduct effective and efficient buying of the right type of coffee. This allows employees to learn the best coffee-making methods. By investing in developing actionable, measurable, realistic and time bound training objectives and structures, Starbucks has been able to establish employee growth provisions, assessment, proficiency structures, and educating workers in order to promote worker performance, equip them to carry out their responsibilities and hence, adapt to embrace organization changes (Michelli, 2007). Through training structures developed within Starbucks, the company has been able to sustain excellence in employee performance by guaranteeing close assimilation with plans connecting growth, reward and professional progression. The main objective of training structures implemented is to allow an analysis of the substance of employee growth provisions on a continuous basis (Legge, 2004). In addition, establish healthy infrastructures to determine and analyze the implications of staff training and growth, and thereby, evaluate the return on investment (Rosemary, 2005). The coffee classes facilitated at the company educate employees to make decisions that promote customer satisfaction without necessarily consulting the senior authorization. Another area of training at Starbucks is the bar classes. Bar classes are training facilities within the company where workers experiment on how to take customer orders, brew coffee and serve. By so doing, workers are able to sharpen their customer, coffee brewing and serving skills within less intimidating settings. The company safeguards its image and name for only those workers who do well in the bar classes are allowed to serve customers. Overall HR strategies at Starbucks Coffee Company Starbucks is reputed for offering their employees good remuneration and rewards for their workers. Rewarding performance is among integral HR strategies and best practices. The company offers its employees considerate employment terms, appropriate remunerations, added privileges such as health insurance and offering employees paid annual leaves. Appreciation of good performance by issuing bonuses, arrears and public pronouncement through intranets and office boards goes a long way in promoting the employees’ morale to work even harder (Legge, 2004). This is illustrated by winning second place in the Fortune Best Companies to Work for Category. Establishment of open management strategies and promotion of occupational health and safety measures within the company is a form of HR strategy. The employees within the firm not only feel safe and secure, but also are actively integrated and kept informed by the top-level management about the company’s performance, dealings, contracts, and objectives (Michelli, 2007). The HR department is more cooperative and works towards meeting the organization’s goals if the management consults them on issues they relate with, asking the worker’s opinions on how processes and mechanisms within the firm can be enhanced, hence, the staff feels trusted and needed (Gatewood et al., 2008). Encouraging idea generation through organized staff meetings and discussion forums is a great way modern organizations use to garner ideas that are productive, innovative, hence increasing its competitiveness in the global markets (Legge, 2004). How do these components relate to the overall success of the company and its globalization efforts? The recruitment, selection and training processes and structures within Starbucks Coffee Company has contributed to the overall success and high performance of the company and its globalization efforts. This is because the structures within the firm, its subsidiaries and various branches located within 55 countries across Africa, North America, Asia, Oceania and Europe are standardized to ensure quality, skilled, effective, efficient, knowledgeable and experienced employees are not only hired, but also retained. Training structures allow the company to enlighten its workforces on what is new, what is changing, what works and what is productive within modern global market environments. By so doing, Starbucks is able to sell its brand as a name and as a quality brand globally and thereby, consolidate a stable global employee and customer loyalty (Michelli, 2007). By ensuring candidates undergoing the recruitment and selection process have the best experience in Starbucks, the unsuccessful ones spread the good name of the company. By offering continuous training for the staff, employees are empowered to make the right decisions and offer quality service wherever and whenever they are across the globe (Armstrong, 2006). Through training, the employees of Starbucks develop and grow personally and professionally which motivates them to work harder to not only meet their personal goals but the organization’s. By so doing, they offer better services and products to the customer, thus, promoting its competitive advantage (Schoonhoven & Romanelli, 2001). This leads to increased global market share, hence, increased profitability and success. By having workers, products, and services that meet international qualifications and standards respectively, Starbucks is able to infiltrate global markets and is accepted with ease (Gilbert, 2008). Comparison of the HR strategy at Starbucks to Second Cup Ltd; key differences and the impact of the differences on respective company performance Starbucks is a member of the Human Resource Planning Society (HRPS), whose mandate is to empower its members by offering cost-effective organization growth centered on research, market trends and international best HR practices, help members implement advanced plans that persuade employees to align their efforts to organization goals and hence propel overall success. This is in line with developing measures that will promote retention and dedication of team members and the entire labor force (Armstrong, 2006). This supports the company efforts in its recruitment, training and overall HR practices. Since the coffee business is so saturated, the only sustainable competitive advantage for Starbucks is having a loyal, effective and efficient labor force (Gilbert, 2008). Employee hiring, retention and regular training forms the core of the company’s HR strategies to drive it from its current position to greater heights. They offer all-inclusive benefits, which entails medical care, stock options, and product markdowns for all workers, training and occupational counseling, hence meeting its global objectives. An empowered employee is an asset (Armstrong, 2006). Second Cup Ltd, a company that was established by Tom Culligan and Frank O’Dea in Canada in 1975, has given Starbucks a run for their money under the management of Dinecorp Hospitality Inc. The coffee chain serves their customers with free wireless internet connections. Their HR strategies are not as comprehensive as Starbucks. Their recruitment and selection process is characterized by basic recruitment and selection practices. For the training structures, employees are allowed to pursue training on their own budget and at their own free time. Increased expenses associated with employee training necessitate this. The main difference in the HR strategy within the two organizations is that Starbucks offers comprehensive benefits to all staffs including part time/casual workers. This key difference has meant Starbucks does better in its profit margins than Second Cup does. Although initially, Starbucks accrued losses associated with the benefits to part-time workers, the strategy has paid off, since experienced and high performing workers seek to work with them, an advantage for Starbucks, and retained employees work even smarter and harder (Fridell, 2007). Starbucks has developed an “employee as a partner” culture, where they are, supported, encouraged and rewarded for good performance. The increased focus on employee training-unlike Second Cup, has allowed Starbucks to register increased competitiveness and development (Gilbert, 2008). Employees are taught about the inner and outer details of coffee business in the Brewing the Perfect Cup at Home workshop which is mandatory for new employees within the first one and a half month of employment. Using the Bean Stock Plan, in support of other HR strategies, the company reduces the rates of employee turnover (Michelli, 2007). Second Cup, on the other hand, has followed suit, and most recently has been facilitating in-house workshops to teach its staff the aspects of coffee roasting and brewing. This is expected to boosts its sales within regional and franchised branches. When Second Cup invests as much attention, support and resources in their recruitment, selection and training practices as they do in production of quality coffee, they may come to par with Starbucks and overtake the company. Conclusion The recruiting practices, training structure, and overall HR strategies are key to the overall success of the Starbucks Coffee Company and its globalization efforts. As indicated in the report, Starbucks has established itself as a market leader in coffee roasting and retailing by investing in recruiting and selecting the best employee and ensuring they continuously undergo training to update, enlighten and better their skills, knowledge and abilities. After selecting the best, the company has ensured they retain the best by offering competitive comprehensive packages, support, and inclusion in decision-making processes. Among training courses offered at Starbucks is the Coffee Master and Brewing the Perfect Cup at Home workshop among others. Recommendation With the growing market for coffee, Starbucks needs to expand its current branches from just 55 countries and target new countries and locations including the Middle East. With its well built brand name, the company will be able to beat its competitors in all its regions, a factor that they can capitalize on. Besides, Starbucks should also concentrate on technological innovations and offer their customers more entertainment facilities to remain competitive. References Armstrong, M. (2006). A handbook of human resource management practice (10th ed.). London: Kogan Page. Derek, T., Laura H., and Stephen T. (2004). Human resource management. New York: Pearson Education. Fridell, G. (2007). Fair trade coffee: The prospects and pitfalls of market-driven social justice. Toronto: University of Toronto Press. Gatewood, R.D., Field, H.S. & Barrick, M.R. (2008). Human resource selection. London: Cengage Learning. Gilbert, S. (2008). The story of Starbucks. Toronto: The Creative Company. Legge, K. (2004). Human resource management: Rhetorics and realities (anniversary ed.). Basingstoke: Palgrave Macmillan. Michelli, J.A. (2007). The Starbucks experience: 5 principles for turning ordinary into extraordinary. New York City: McGraw-Hill Professional. Paauwe, J. (2009). 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