Figure 12.15

Starbucks Coffee (NASDAQ: SBUX) was born out of a desire for
convenience and accessibility to great coffee. In 1971, three
friends made that desire a reality and established the first
Starbucks coffee house in historic Pike Place Market on Seattle’s
waterfront. In 1990, Starbucks drafted its first mission statement,
and the number one principle was to “provide a great work
environment and treat each other with respect and dignity.” How has
the company lived up to that declaration 20 years later?? Starbucks
has consistently made Fortune magazine’s
“100 Best Companies to Work For” list and in addition is included
on a list of the best places to work for LGBT (lesbian, gay,
bisexual, and transgender) equality. Working conditions in the
service and retail industry are notoriously low paying with long
hours, but Starbucks manages to offer benefits for part-time and
full-time employees as well as higher-than-average salaries for
store managers. Why, one might ask, does Starbucks try so hard to
set itself apart?
Leadership development is a core element of the business process
at Starbucks, which ensures that the organizational culture of the
company is maintained with every CEO successor. Starbucks is
forward looking in this respect and strives to attract future
business leaders and managers. The idea of planning for one’s own
succession can often make people uneasy, but this idea is openly
embraced at Starbucks. The company plans far in advance to replace
its top-level successors. The importance of leadership is not only
ingrained in the upper management team, but Starbucks also ensures
that this is an understood value throughout the organization. In
2004, the Coffee Master program was introduced to teach employees
about regional coffee flavors. Graduates of the Coffee Master
program earn a prestigious black apron and a special insignia on
their business cards. In creating this ethos, Starbucks excels at
its ability to attract an educated workforce with a high
satisfaction level where individuals often move up to become
effective leaders within the company.
With the recession of 2009, Starbucks has been forced to rethink
its traditional strategy of accelerated growth by closing over
30,000 stores. CEO Howard Schultz has cut his salary to less than
$10,000 a year, down from $1.2 million. Despite these slowdowns,
Starbucks continues to call employees “partners” and offers a
dynamic place to work. As a result, the company had more than
150,000 people apply for jobs last year, a sure indication that the
company’s ability to cultivate talented leaders is as strong as
ever.
Based on information from Helm, B. (2007, April 9). Saving
Starbucks’ soul. BusinessWeek. pp. 56–61.
Retrieved April 30, 2010, from http://www.businessweek.com/magazine/content/07_15/b4029070.htm;
Cohn, J., Khurana, R., & Reeves, L. (2005). Growing talent as
if your business depended on it. Harvard
Business Review, 83(10), 62–70;
Stanley, A. (2002). Starbucks Coffee Company. Tuck School of Business at Dartmouth (no. 1–0023).
Retrieved April 23, 2010, from
mba.tuck.dartmouth.edu/pdf/2002-1-0023.pdf; 100 best companies to
work for. (2010, February 8). Fortune.
Retrieved February 14, 2010, from http://money.cnn.com/magazines/fortune/bestcompanies/2010/snapshots/93.html;
Miller, C. C. (2009, January 29). Starbucks to close 300 stores and
open fewer new ones. New York Times.
Retrieved February 15, 2010, from http://www.nytimes.com/2009/01/29/business/29sbux.html.
Discussion Questions
- Why does Starbucks Coffee consider internal leadership
development such an important part of its core business
process?
- What possible negative repercussions can the aggressive growth
strategy that Starbucks exhibits have on its leadership
agenda?
- With the slowdown of business, how can Starbucks ensure that
the importance of leadership development does not get
overlooked?
- How does your experience with leadership and management compare
with the case of Starbucks?