The Coffee and the Customer

Starbucks as an Organization

Presented by:Graduate students in Organizational Leadership at Gonzaga

University

• Ashley DeVault• Chad Childears• Charles Kittay• Jason Lyons• Jason Boyd• Jon Beutler• Michelle Bornfleth

Table of Contents

• “Everywhere”• Introduction• Metaphor of Starbucks• Structural Frame• Political Frame• Human Resources Frame• “Starbucks Partners”• Symbolic Frame• Interviews with Starbucks Employees• Web of Inclusion• Conclusion• References• “For Fun”

“Everywhere”

Introduction

• Everyday local Starbucks stores serve as the “third place” for coffee lovers all around the world. With nearly 18,000 stores, Starbucks has brilliantly created and defined the idea of coffeehouse experience. While roasting and crafting high-quality coffees is the essence of what Starbucks is all about, they provide so much more than just a warm beverage.

• “But Starbucks’s undertaking is actually much larger since it brings us a space rather than a product. Some would say that it fills a psychological need that other companies have not had to do in quite the same way” (Walton, 2012).

Introduction

Mission Statement: To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.

• This is done through their commitment to the following principles:

• Coffee• Partners• Customers• Stores• Neighborhoods • Shareholders

(Our Starbucks Mission, 2012)

Introduction

• “Starbucks set out to be a different kind of company. One that not only celebrated coffee and the rich tradition, but that also brought a feeling of connection” (Our heritage, 2012).

Introduction

• Description/Key Facts– As of July 1st, 2012 Starbucks had 17,651 stores – operating in over 60 countries.– The company is primarily based out of Seattle, Washington; the location of their

first store.– The company’s leadership is the President and CEO, Howard Schultz.– Starbucks’ places high value on ethical behavior and company-wide diversity. – Employees are known as ‘partners’ and are seen as a valued part of the company.– Starbucks’ stores and partners are known for their excellent customer service and

inviting atmosphere. All customers receive the “Starbucks Experience.”– Starbucks locations offer a variety of espresso menu items, as well as, a selection

of whole bean coffees, refreshments and pastries, merchandise, brewing accessories, and gifts and books. A majority of stores also offer Wi-Fi services, adding to the “third place” concept.

Introduction

• Brief History– 1971 – Starbucks was founded by Jerry Baldwin, Zev Siegel, and Gordon Bowker as a

single store offering fine roasted whole coffee beans in Seattle’s Pike Place Market– 1982 – Schultz joins the Starbucks team and is hired to manage retail sales &

marketing– 1983 – While traveling in Italy, Schultz experiences Italian coffee bars and espresso

drinks. This inspires him to develop a similar model in the US– 1985 – Schultz leaves Starbucks to open II Giornale, a company serving espresso

drinks using Starbucks coffee beans– 1987 – Schultz, along with other local investors, purchases Starbucks from the

founders and quickly begins to expand throughout the United States – 1992 – Starbucks Company goes public– 1993 – Opens first roasting plant in Washington– 2011 – Celebrates 40th anniversary

(Starbucks company timeline, 2012)

Metaphor of Starbucks

• “ . . . theories of organization and management are based on implicit images or metaphors that lead us to see, understand, and manage organizations in distinctive yet partial ways . . . The use of metaphor implies a way of thinking and a way of seeing that pervade how we understand our world generally” (Morgan, 1997, p. 4).

• Starbucks is like Cirque du Soleil

Metaphor of Starbucks

• “ . . . constantly moving and working with each other to provide for the customer” (Unnamed Starbucks Partner, 2012).

• “ . . . We fuel families’ day to day life and we like to think of ourselves as a little family” (Unnamed Starbucks Partner, 2012).

Structural Frame

• While the Starbucks Company focuses on the essence of what they do, good coffee; they are also part of the competitive food industry and must operate with structure. The local Starbuck stores offer a relaxing and inviting atmosphere, with energetic customers; however, behind the scenes these neighborhood locations operate much like a factory, working to mix drinks, brew coffee, warm pastries, track orders, and more.

• Bolman and Deal (2008) write, “Rules, policies, standards and standard operating procedures limit individual discretion and help ensure that behavior is predictable and consistent” (p. 54). This quote perfectly describes the Starbucks Company. All Starbucks lovers know that their requested beverage will be exactly what they want because it is “predictable and consistent” and this is one of the qualities that has made Starbucks a success. It doesn’t matter if you are in Seattle or New York – a customer’s beverage will be the same.

Structural Frame

• In addition, individual discretion is not a luxury within Starbucks locations. Managerial staff may have the opportunity to create their own environment, but ultimately partners must follow company policies. Feedback from company staff indicated that they do not necessarily have the option for local autonomy within their stores. Because of corporate structure and involvement, the working environment within Starbucks is defined through daily tasks and store policies.

• Another example of the structural frame is the requirement for partners to track the timing of beverage orders. Both Starbucks employees who were interviewed communicated that tracking orders was a goal and policy of the company. The goal is for a quick turnaround so that the customer is served promptly; therefore, partners are measured on how quickly they get orders out.

Political Frame

• Bolman and Deal (2008) state that, “the political frame views organizations as roiling arenas hosting ongoing contests of individual and group interests” (p. 194). Part of the political frame is the idea of power and competition. Within such a large company, such as Starbucks, power often becomes a key factor. There are different types of power that can be identified through the political frame.

Political Frame

• The history of Starbucks is largely based on issues relating to the Political Frame. Back in 1985 Howard Schultz, now CEO and president, started his own coffee company, working in direct competition of the Starbucks stores, founders, and previous employers. Schultz believed that if given the opportunity, espresso-type cafes would be successful. What began as a conflict between two entities (Starbucks and II Giornale), led to competition and finally Schultz having more of the power by purchasing the Starbucks stores and renaming the company to Starbucks Corporation (Starbucks company timeline, 2012). Because of the company’s heritage, much of how Starbucks has been able to be successful has been through the power they hold over the coffee and espresso industry: (Bolman and Deal, 2008, p. 203-204)– Positional Power for coffee buyers and sellers; – Reputation of providing quality coffee and “reputation builds expertise” (Bolman and

Deal, 2008, p. 203); – Alliances and networks: Starbucks has built numerous business relationships with a variety

of companies, such as Pepsi, Barnes and Noble, Tazo Tea, and more (Starbucks company timeline, 2012)

Human Resources Frame

• Fortune magazine has ranked the company among the “100 best companies to work for” and earned a 100% rating according to the Human rights Campaign’s (HRC) Corporate equality Index rating.

• Every barista hired for a retail job at Starbucks goes through at least 24 hours of training during the first month of hire. They have to master the ‘Star Skills’. Managers and leaders take more training classes.

• Starbucks is a value driven company. Employees come first and utilize bottom up decision-making.

• Some Starbucks workers have joined the Industrial Workers of the World (IWW) as the Starbucks Workers Union since 2004. It has expanded from New York City to Chicago and Maryland.

Starbucks Partners

Human Resources Frame

• In 2006, the IWW and Starbucks agreed to a National Labor Relations Board settlement in which three Starbucks workers were granted almost US$2,000 in back wages and two fired employees were offered reinstatement.

• In March 2008, Starbucks was ordered to pay baristas over US$100 million in back tips in a Californian class action lawsuit launched by baristas alleging that granting shift-supervisors a portion of tips violates state labor laws. As part of these labor laws, managers are not allowed a portion of tips received from customers.

• As part of the reading from Bolman & Deal the role of the human resource manager is to help identify and resolve issues. The executive team within Starbucks has helped mitigate issues by counter-suing and appealing these lawsuits. As of today only sever stores have workers that belong to a union.

Symbolic Framework

• “People create symbols to resolve confusion, increase predictability, find direction, and anchor faith” (Bolman & Deal, 2008, p. 242). Collectively, these symbols create culture, something described by Bolman and Deal (2008) as “the glue that holds an organization together and unites people around shared values and beliefs” (p. 243)

• The logo according to Valerie O'Neil, a Starbucks spokeswoman, is a mermaid or siren from Greek mythology.

• Several years ago, Starbucks temporarily reintroduced its original brown logo on paper hot-drink cups. Starbucks stated that this was done to show the company's heritage from the Pacific Northwest and to celebrate 35 years of business. The vintage logo sparked some controversy due in part to the siren's bare breasts, but the temporary switch garnered little attention from the media. Starbucks had drawn similar criticism when they reintroduced the vintage logo in 2006.

Symbolic Framework

• The logo was altered when Starbucks entered the Saudi Arabian market in 2000 to remove the siren, leaving only her crown, as reported in a Pulitzer Prize-winning column by Colbert I. King in The Washington Post in 2002. The company announced three months later that it would be using the international logo in Saudi Arabia.

• In January 2011, Starbucks announced that they would make small changes to the company's logo, removing the Starbucks word mark around the siren, enlarging the siren image, and making it green.

• The logo has been significantly streamlined over the years. The logo is known worldwide and has conformed to the variety of cultures throughout the world and their beliefs.

Partner Interviews

• With the easy access of Starbucks locations, especially here in the United States, we had the opportunity to interview two employees at two different locations, one in Washington State, the other in the state of Nebraska.Their stories here are brief, but lead to the same understanding we have come to know of the Starbucks’ atmosphere.

CEO: Howard Schultz

Interview 1

• 1. As an employee of Starbucks is there a metaphor you think best describes your employer?• Life. We fuel family’s day-to-day life and we like to think of ourselves as a little family. • 2. What’s your favorite blend?• The new Costa Rica Finca Palmilera

• 3. How do you feel valued as an employee?• I’ve worked at Starbucks for almost two years now; it’s a part of who I am.

• 4. How would you describe the leadership of the company?• Coffee-centric Elaboration: Howard Schultz is all about providing the best coffee experience.

He did do a piss poor job with the Sonics though. If he would have handled that better and we’d still have a team.

• 5. Do you feel that you are a part of the bigger executive picture of Starbucks? • Not really I guess. We do like to refer to employees as partners. It’s a corporate culture thing.

Interview 1 Continued

• 6. How are you or other employees recognized? • There are a variety of programs. Bonuses, coffee cards, PTO, pat on the back, whatev’.

• 7. What are your assigned goals and targets and how are you made aware of your progress towards those goals and targets?

• We track order turn times.

• 8. Are you allowed any autonomy to make location specific decisions, especially on how to work with your subordinates?

• Each manager has their own managerial style. I’m sure there are guidelines and policies but my manager is pretty cool.

• 9. Can you give some examples of corporate policies that you do or do not agree with? If not why and do you have a "safe" way to voice your concerns or disagreement?

• Good question. I remember debate about our open policy in regards to guns. Like, people could carry them in the store- depending on the state, concealed or not. I don’t know if it’s still that way but I’ve never seen a gun at work.

• 10. Describe you locations culture? Describe the corporate culture? Can you provide examples of how that culture is manifested?

• Corporate culture? We’re pretty cool. Everyone has a good time. We all love coffee; have that in common.

Being a Partner

Interview 2

• 1. As an employee of Starbucks is there a metaphor you think best describes your employer?• It’s like the Cirque du Soleil; we are constantly moving and working with each other to provide for the

customer

• 2. What’s your favorite blend?• I prefer the original roast; it has a very “Starbucks” flavor that you can’t get with any other coffee

• 3. How do you feel valued as an employee?• We are not considered employees we are “partners”. We have a great time at work and the store

manager is awesome. She is always helping us and coaching us and she is kind.

• 4. How would you describe the leadership of the company?• It’s all about the coffee and exceeding our customer’s expectations. Treating our customer almost like

a family member, being genuine and happy.

• 5. Do you feel that you are a part of the bigger executive picture of Starbucks? • No, but there is opportunity for advancement is you want it. You can become a shift leader and that

could lead to bigger and better things.

Interview 2 Continued

• 6. How are you or other employees recognized? • Bonuses: free coffee, other things. (Did not want to talk about pay or any extra benefits)

• 7. What are your assigned goals and targets and how are you made aware of your progress towards those goals and targets?

• We are measured on the time we get orders out and also customer feedback about the store. Our manager will talk with us if there have been any complaints.

• 8. Are you allowed any autonomy to make location specific decisions, especially on how to work with your subordinates?

• Not that I have noticed, but I think our manager has meetings and calls to discuss those types of things. • 9. Can you give some examples of corporate policies that you do or do not agree with? If not why and do you have a

"safe" way to voice your concerns or disagreement? • The hours can suck sometimes, but no, not really.

• 10. Describe you locations culture? Describe the corporate culture? Can you provide examples of how that culture is manifested?

• It’s always a positive place to work. Everyone has a good attitude and likes to be around people. I think that was some of the interview questions and what they really look for in people is that a new “partner” is good with customers, happy and able to control their emotions, as sometimes customers can be difficult, but most of the time its fun. On a corporate level, it’s all about the coffee and the customer.

Web of Inclusion

• “No organization can hope to be both flexible and specialized unless its own structure is able continually evolve. Because the web of inclusion is always spawning new lines of connection, and connecting people in new ways, it can serve as an instrument for constant reorganization” (Helgesen, 1995, p. 32).

• “A web, though often configured to achieve a specific mission plays more important lasting role . . . a true web also helps to transform the organization it is a part” (Helgesen, 1995, p. 33).

• “A web . . . may be defined as a team that goes the distance . . . A true web affects every aspect of the organization of which it is a part, eventually altering the whole in its own image” (Helgesen, 1995, p. 33).

Web of Inclusion

• “We . . . refer to employees as partners. It’s a corporate culture thing.” (Unnamed Starbucks Partner, 2012).

• “We are not considered employees, we are ‘partners’. We have a great time at work and the store manager is awesome. She is always helping us and coaching us and she is kind.” (Unnamed Starbucks

Partner, 2012).

Quotes are from interviews 1 and 2.

Web of Inclusion

• Starbucks is something of a corporate paradox. The company is a multinational giant and growing, especially through branches overseas and new packaged goods in the grocery aisle. At the same time, it is able to introduce risky ideas quickly, systematically, and sometimes idiosyncratically, much like a startup—even though it has more than 17,000 branches and nearly 200,000 employees [partners].

• How? Schultz has come to believe that size is not a limiting factor. In terms of being innovative, he says, “I think scale can be an advantage. It’s not about being big. It’s about behavior” (Gertner, 2012).

Web of Inclusion

• “When Schultz and I met in downtown Manhattan, we had spoken about an hour before we shook hands and said goodbye. I walked toward the door, but before leaving I looked back. The Starbucks boss—now comfortably a billionaire—was wiping a spill from the table with a napkin. Then he stood up to bus his mug to the counter. On the way, though, he paused: He had noticed an empty coffee cup that someone else had left behind, and so he grabbed that, too” (Gertner, 2012).

Conclusion

• Starbucks is Life! Over the course of the past 40 years a small coffee company in downtown Seattle has grown to more than 17,000 stores in 60 countries. It has insinuated itself into the life and culture of these areas by brewing a high quality cup of coffee mixed with a workforce dedicated to making your experience pleasurable and their store like a second home.

• Starbucks “partners” are the key to the success of the company and

management has recognized this. They have selected the best people to provide their brand of customer service and motivated them to greatness through a human resource model that emphasizes the lowest level employee as the key to their success.

Conclusion

• Starbucks see themselves as part of the global community starting first with each cup of coffee and then moving through their partners, customers, stores, neighborhoods and shareholders. By satisfying the needs of each of these groups and devoting a significant amount to charitable organizations the Starbucks logo has come to represent more than just coffee but community as well.

• Starbucks has placed themselves at the lead of the coffee community by

recognizing that good coffee can be found almost anywhere, but happy employees, a pleasant store experience and being an example of corporate commitment to others is something special. Is Starbucks “Life” as one of their employees states? Probably not as he meant it, however, as a corporate way of life and success, it is a path others should model.

References

• About us: Starbucks Coffee Co. (2012). Retrieved from http://www.starbucks.com/about-us

• Bolman, L. & Deal, T. (2008). Reframing Organizations: Artistry, Choice, and Leadership (4rd edition). San Francisco: Jossey-Bass.

• King, Colbert, I. The Pulitzer Prize winners. The Pulitzer Board. Archived from the original on 2005-12-15.

• Gertner, J. C. (2012). Starbucks: For infusing a steady stream of new ideas to revive its business. Fast Company, Mar2012(163), pp. 112-149. Retrieved from http:// ehis.ebscohost.com.libproxy.chapman.edu

• Helgesen, S. (2005). The web of inclusion. Washington, D.C. : Beard Books.

• Morgan, G. (1997). Images of organization. (2nd ed.). Thousand Oaks, CA: Sage Publications.

References

• Our heritage. (2012). Retrieved from http://www.starbucks.com/about-us/our-heritage

• Our Starbucks mission statement. (2012). Retrieved from http://www.starbucks.com/aboutus/company-information/mission-statement

• Starbucks company profile. (2012, August). Retrieved from http://globalassets.starbucks.com/assets/9a6616b98dc64271ac8c910fbee47884.pdf

• Starbucks company timeline. (2012). Retrieved from http://globalassets.starbucks.com/assets/e56b2a6b08244aaab0632dc6ac25ad0d.pdf

• Walton, A. (2012, May 29). Starbucks' power over us is bigger than coffee: It's personal. Retrieved from http://www.forbes.com/sites/alicegwalton/2012/05/29/starbucks-hold-on-us-is-bigger-than-coffee-its-psychology/

• WikiPedia Search Engine. Starbucks. http://en.wikipedia.org/wiki/ Starbucks. Retrieved November 16, 2012.

For Fun!