Human Resource Management Techniques - Starbucks - Essay Example

?Running Head: Managing People Managing People [Institute’s Table of Contents Table of Contents 2 Introduction 3 Findings and Analysis 4 Leadership 4 Organisational Culture 6 Organisational Structure 7 Human Resource Management Techniques (Employee Motivation) 9 Organisational Learning 10 Recommendations 11 References 14 Introduction Founded in the year 1971 by Jerry Baldwin, Gordon Bowker and Zev Siegl, Starbucks is now the biggest coffeehouse company in the entire world with a network of over 19000 stores spread over 58 different countries. The company witnessed impeccable growth during 1990s and early 2000s when was opening a new store every workday and company’s stores and brand name emerged as the symbol of modernisation, progress and globalisation (DiJulius, 2008, p. 249). Today, almost one third of the stores of the company are outside United States. If the geographical scope, financial strength, and wide customer base fail to persuade someone about the prominence of Starbucks as an icon of the corporate world, one can come up with a long list of laurels and awards that the company holds under its name, highlighting its success and reputation (Clark, 2007, p. 427; Michelli, 2006, p. 387). Zagat’s Survey of National Chain Restaurants for the year 2010 identified Starbucks as “No. 1 Best Coffee” and “No.1 Most Popular Quick Refreshment Chain”. For the past decade, it has appeared on the Fortune’s list of “Most Admired companies in America” and “The 100 Best Companies to Work for” (Mangold, 2010, p. 82). Quite understandably, a significant portion of this impeccable success enjoyed by Starbucks comes from its ability to manage, effectively and efficiently, its human resource. As a service oriented business, employees determine the customer service quality of the company, represent the company and their productivity determines the overall productivity of the organisation (Hellriegel & Slocum, 2007, p. 97). This paper is an attempt to discuss the leadership, organisational culture, organisational structure, organisational learning and employee motivation techniques employed by Starbucks. The paper argues that the prime leadership for Starbucks comes from Howard Schultz, for most parts, has appeared as a transformational leader. In fact, fitting the profile of a transformational leader, has allowed Schultz to inspire and create many more leaders in the company who have assisted in driving the growth by providing a wonderful customer service experience (Behar, 2007, p. 489). The culture of the company can be classified as collaborative work culture, one where much importance is placed on employee empowerment, employee engagement and worker welfare. More importantly, it is the decentralised, flat and matrix structure is the prime entity, which supports such as a work culture through promoting open and efficient communication amongst employees (Gilbert, 2008, p. 111). Moreover, the employee motivation at Starbucks can be understood through the application of Expectancy theory and Equity theory of Motivation. Besides, the above mentioned points, the paper will also outline a change management processes for the company and would provide recommendations based on the findings and analysis. Findings and Analysis Leadership There is evidence to believe that, Howard Schultz has been a transformational leader for Starbucks. The prime reason for it is rooted in the fact that Schultz, right from the very beginning had a vision in mind. It was in the early 1980s Howard Schultz, the current CEO, Chairman and President of the company, joined Starbucks as head of marketing. Schultz, after a trip from Italy, realised that to those people, coffee meant much more than just a drink. It was an experience, glue holding together people and their conversations and bringing them closer (Schultz & Yang, 1999, p. 27). Schultz landed upon the idea of creating coffee houses where coffee becomes an enchanting and relaxing experience rather than a mere product. Jerry Baldwin had left the company until then and Gordon Bowker and Zev Siegl were not thrilled by the idea. Schultz still got the permission to open a small espresso bar. Nevertheless, in order to make his dream a reality, Schultz left the company, opened his own stores, contacted some investors and bought the ownership of Gordon and Zev for 3.7 million US dollars to create the Starbucks Corporation that we know today (DiJulius, 2008, p. 249). The point here is that, as a transformational leader, Schultz had a unique vision, to achieve which, he inspired hundreds of people, investors, creditors, employees, suppliers and even customers. For the people of America, Schultz’s vision appeared bizarre but he had the ability to convince stakeholders to embrace his vision. Today, thousands of people would prefer to become a part of Starbucks’s business model (Clark, 2007, p. 427). More importantly, there is also evidence to believe that Howard Schultz, during the past couple of decades, has created and groomed many leaders under his leadership. Furthermore, Schultz, based on record of accomplishment, is a leader with compassion and courage, something that is attributed to the transformational leaders (Williams, 2009, p. 38). Transactional leaders remained focused on the exchange relationships and the value that those relationships could generate for the leader and the company. On the other hand, transformational leaders like Schultz show compassion and empathy that go beyond the mere exchange relationships (Pahl, 2009, p. 38). In the year 1997, when Schultz received a call that three employees of Starbucks working in Georgetown, Washington have been shot dead. Rather than calling the lawyers, public relations and communications department, he directly went to the location, talked to the police officers, went to the homes of the employees and shared their grief (Williams, 2009, p. 38). In fact, Schultz has never refrained from engaging himself in the day-to-day operations of the company, with regular visits to the stores and chats with the employees. Organisational Culture For most organisations, when a new recruit joins the company, with the help of orientation, informal and formal training sessions during the few weeks and months; the organisation aims at teaching them “their way” (Robbins & Judge, 2010, p. 74). After operating for years, organisations and its members come up with a basic set of norms and assumptions, which are either experienced, experimented, discovered, invented or developed while the organisations operates, innovates, adapts and solves its problems; something that is known as organisational culture (Moore, 2006, p. 149). Considering the fact that Starbucks is a global corporation spread over 58 different countries, something which it has achieved in just four decades, something which is not less than a success story; the company has created its own culture. According to the company, its corporate or organisational culture is rooted in the six principles that constitute its core set of values. These include provision of a great work environment and treating each other with respect, embracing diversity, applying highest standards of excellence, satisfying customers, contributing positively to the environment and community and understanding the importance of profitability in the success of the company (Gilbert, 2008, p. 111; Moore, 2006, p. 149). Considering the work environment within the company, it appears that Starbucks has a collaborative work culture. Also referred as clan culture, Starbucks is known for providing one of the most comfortable and amiable customer services and experience to its external customers and when it comes to the internal customers, the company has earned a reputation of providing a cosy work environment (Schultz, 2011, p. 58). Rather than bossing around, supervisors are trained guide, support and facilitate their sub ordinates. Only when a manager is able to develop expert and referent power, the manager gets a chance to be refer him as successful. Supervisor training sessions ensure that they rarely reply on reward power, coercive power and legitimate power separately (Bussing-Burks, 2009, p. 207). An important aspect of this culture, which plays an important role in making the culture functional, is the fact that this type of culture stresses significantly on worker welfare (Kurtz, et al., 2009, p. 21). Organisations looks for motivated, skilled, qualified and talented employees, trains them with the best possible approaches and then encourages them to use their talent and creativity for out of box thinking, something that is rewarded handsomely as well. Consider the fact that it was in the year 1988; only a year after Howard Schultz and a group of investors had acquired Starbucks that the company started offering health benefits to both full time and part time employees (Torrington et al., 2007, p. 63). Furthermore, in the year 1991, Starbucks also became the first privately owned US firm that was offering stock options to full time as well part time employees. During the past couple of decades, when they company enjoyed unprecedented growth and widening customer base with excellent customer service, the organisation continued to reward employees and allowed them to share the benefits, something that earned much need employee commitment and loyalty (Champoux, 2010, p. 85). Organisational Structure Organisational structure, simply put, refers to the formal outlook of task and reporting relationships within the people of an organisation, also depicting the communication channels, allocation of responsibilities and chain of command. According to the mainstream literature, there are not more than 6-8 basic organisational structure types but different companies go on to twist these structures to suit their needs, mission and culture. In case of Starbucks, it appears that the organisations uses a matrix organisational structure, which according to the CEO of the organisation, allows them to create a culture of innovation and creativity and encourage communication between people from different departments and teams (Schultz, 2011, p. 58). However, this matrix structure, which influences the organisation for large part is actually superseded by a divisional structure based on geographic regions of US, which are, Western/Pacific, Northwest/Mountain, Southeast/Plains and Northeast/Atlantic. Furthermore, when one looks at the international operations there are more divisions to look, separately, after the operations such as the division of Asia Pacific, China, Japan and others (Simon, 2009, p. 338; Robbins & Judge, 2010, p. 74). Howard Schultz rightly indicates that the matrix structure has allowed Starbucks to keep pace with the changing consumer preferences and business environment. When many players within the industry have come and gone, primarily because they failed to adapt to the changing business environment, Starbucks has gone to define the industry standards (Mangold, 2010, p. 82). The utility of such as organisational culture, for most part, depends upon whether or not; the matrix organisational structure is strong or weak. Weak matrix organisational structure refers to an organisational culture where the project managers have little authority over their team members and resource allocation, since the same lies with the functional managers (McLoughlin & Aaker, 2010, p. 36-37). In these cases, successful completion of projects became problematic for project managers because they, technically, are operating as mere “facilitators” and not “managers”. The success of project managers and their projects lies heavily on the cooperation and contribution from the side of the functional managers, something that may end up deifying the very purpose of matrix organisational structure (Pendergrast, 2010, p. 67). Strong matrix organisational structure refers to the structure where the project managers enjoy significant authority in terms of budget, expenses, employee appraisals and others resources. Employees are reporting to two bosses at the same time and they see the rationale in remaining loyal to both of them (Schultz, 2011, p. 58). However, the real test of such an organisational structure is that when the demands of the functional managers conflicts with the demands made by the project manager on the employee or vice versa. Then again, communication and collaboration between project and functional managers is a necessary ingredient to operate, successfully, with such an organisational structure (Kleynhans, 2006, p. 157). Human Resource Management Techniques (Employee Motivation) Even for the unskilled jobs, the company always maintained the policy of paying well above the minimum wage requirements and industry average. Furthermore, the financial benefits of the company has not only included pays or salaries but also bonuses, over time, stock options, profit sharing, gain sharing, insurances, pensions, funds, pay raises, increments and others (Mangold, 2010, p. 82). When one considers the same from the point of view of Equity Theory of Work Motivation, this has contributed significantly towards greater employee motivation and higher productivity (Pettinger, 2010, p. 82). The point here is that with these above average salaries and benefits, the company has created a perceived inequity in the minds of their employees, because the ratio of their outcomes to inputs is significantly higher than that of the relevant others (Koster, 2007, pp. 30-32). In such a case, when employees perceive that they are enjoying greater benefits with similar jobs, it is highly likely that they would increase their productivity and inputs to match the level of outcomes of the relevant others with similar level of inputs. Towards the end of the day, it creates a workforce of employees who are ready to go out of their way for contributing towards the satisfaction of the customers and the success and profitability of the organisation (Behar, 2007, p. 489). Furthermore, the high employee motivation of Starbucks’s employees can also be understood through the Vroom’s Expectancy Theory of Motivation. According the motivation of employees for achievement of certain goals would be at maximum, when the valence, expectancy and instrumentality are at their highest level. Valence refers the degree to which the outcomes of higher performance are desired by the employees (Foot & Hook, 2008, p. 275). As suggested by the Maslow Hierarchy of Needs, different people at different stages of life and achievement are motivated through different needs; therefore, the desirability of rewards would differ amongst employees (Slocum & Hellriegel, 2009, p. 87). Therefore, Starbucks focuses on both intrinsic and extrinsic motivators so that it could appeal to all employees whether they are looking to fulfil their safety and security or the ones that are looking to fulfil their socialisation needs. In order to increase the expectancy of its employees, which is the perceived link between effort and performance, Starbucks has created an eloquent system of orienting and training employees (Koster, 2007, pp. 30-32). Employees are provided with, both, on the job and off the job training and the organisational culture of the company ensures that employees could quickly learn through the help of their colleagues and employees. Lastly, Starbucks maximises the instrumentality, which refers to the perceived link between performance and reward, through the creation of a strong performance management system based on appraisals and 360-degree feedback that aims to reward employees exactly for their performance (Wilson, 2005, p. 97). Organisational Learning It has been primarily because of the organisational learning systems employed by the company that it has been able to come up with sustainable and green solutions to environmental issues. The company attributes many of the solutions related to recycling, energy efficient structures, practices, and others with the creation of a learning organisation (Griffin & Moorhead, 2009, p. 63-67). For most part, the transfer of knowledge and information is facilitated through a decentralised, flat and matrix organisational structure of Starbucks, which ensures quick transfer of information between employees (Mathis & Jackson, 2006, p. 80; Williams, 2009, p. 38). At the stores of Starbucks, there are employees that wear the “black apron” indicating that are coffee masters and they have completed many training programs and courses related to the operational management at Starbucks. However, as mentioned earlier, much of the knowledge management initiatives of Starbucks are focused on separate geographic divisions amongst which employees can communicate their ideas, tips, tricks, practices, approaches and others (Slocum & Hellriegel, 2009, p. 87). Nevertheless, as global company, time has come that Starbucks should create systems and mechanisms that could facilitate the sharing of information across the borders. This would add significantly to the current knowledge base of the organisation but at the same time, it would allow the employees to experience that they are working for a global corporation (Simon, 2009, p. 338). Recommendations A much need change management process in the organisation could be the shift of its organisational structure from a weak matrix structure to a strong matrix structure. The fact is that any change management process at Starbucks would be met with resistance because it is human nature to remain in their comfort zones. However, this change in the organisational structure would disturb the equilibrium of the company and force many employees and stakeholders to come out of their comfort zones (Kurtz, et al., 2009, p. 21; Robbins & Judge, 2010, p. 74). The change management process, as believed by Kurt Lewin, would be a three-step process of unfreezing, change and freeze or refreeze. During the unfreezing process, the company will have to build the stage or platform to create this change (McLoughlin & Aaker, 2010, p. 36-37). It will have to create the urgency for the change providing more power and influence to the forces that are promoting change and discouraging forces that are trying to restore and sustain the status quo. Starbucks can identify change agents that can champion the cause of change and promote the required sense of urgency amongst employees (Slocum & Hellriegel, 2009, p. 87). The stage is concerned with mentally preparing the employees through engaging them in the process of change since their engagement would lead to their perceived ownership of the process and the same would make them change agents (Champoux, 2010, p. 85). The second change of actual change is the most difficult part of the change management process. Important change to note is that this change would not be an isolated event but it would be a process, which would have to be carefully planned and executed. Time and communication would be the key during this stage (McLoughlin & Aaker, 2010, p. 36-37). Subjects and stakeholders would have to be given enough time to embrace, understand and adapt to the change and throughout the process, open communication should ensure that there are no misunderstandings amongst the employees (Mathis & Jackson, 2006, p. 80). Lastly, the third stage of change management, refreezing, is the stage where the opposite of the first stage is done. Starbucks would aim at strengthening the forces that are pro status quo and anti change because any further change may not be the desired option for the time being (Pettinger, 2010, p. 82). The change agents would have to become status quo agents so that the company could reap the benefits from the new organisational structure. Refreezing also ensures that the organisation does not go back to the old organisational structure. Change is a disturbing process and only when the organisation is able to refreeze effectively, the organisation is able to progress (Wilson, 2005, p. 97). Based on the findings and analysis, following are a few recommendations for Starbucks. Starbucks should create a global management system; one that includes its employees spread overall the 58 countries. The same would allow the employees to share their ideas, best practices, problem solving approaches and others with all the employees all over the world, thus creating a sea of internal information and uniformity in the service quality. Furthermore, it would also instil a sense of a global corporation amongst the employees of the company (Torrington et al., 2007, p. 63). Howard Schultz, for most part, has been the visionary leader of Starbucks and under his leadership; the company has made great strides towards success and growth. However, it is time for Starbucks to show evidence of succession planning. There are no doubts in the fact that Schultz has inspired many leaders but for the time being, Schultz should focus all his energies for grooming his successor so that when Schultz leaves the company, the process of transfer of power and authority could occur as smoothly as possible (Griffin & Moorhead, 2009, p. 63-67). The company should work hard and ensure that its matrix organisational structure does not become a weak matrix structure but rather it could be identified as a strong matrix structure. This is important because a weak matrix structure, essentially, is not a matrix structure (Slocum & Hellriegel, 2009, p. 87). Nevertheless, the company would have effectively train its supervisors, functional and project managers, to create a harmony between the demands that they make on the employees so that they do not get confused in the process of reporting to two bosses (Hellriegel & Slocum, 2007, p. 97). References Behar, H. 2007. 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