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Introduction
Company Profile
Starbucks is an international coffeehouse chain, with headquarters based in Seattle, Washington. Currently existing as the largest coffeehouse chain in the world, the brand is well-known and recognized all around the world. Starbucks locations are opened all around the global market, including Japan, China, Canada, the UK, Korea and many other nations (Starbucks Stores By Country | Statista, 2021). The biggest number of Starbucks stores, however, is open in the United States. As of October 2021, more than 15.000 locations operate within the US alone (Starbucks Stores By Country | Statista, 2021). The majority of locations on the territory of the US are company-owned, with the other part taken by officially licensed collaborators (Starbucks Stores By Country | Statista, 2021). In other countries, the rate of company owned-to-licensed locations fluctuates considerably.
The company maintains a friendly and approachable image, placing great importance on their relationship with the local communities. According to Starbuck’s website, the company’s mission is “To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.” This idea is reflected in many of the organization’s values as well, as they strive to provide more high-quality, unique experiences to the public (Culture And Values: Starbucks Coffee Company, 2022). Placing their customer base, their workers and their product as the central consideration, Starbucks highlights values of workplace culture, quality, accountability, innovation, and connection. All of these considerations are reflected in their values statement.
Another important aspect of the company’s operation are its subsidiaries. Due to the size of the Starbucks company, its influence and financial capability, it has many different smaller organizations under its management. These companies include both country-exclusive Starbucks locations or other coffee-related brands. According to the US Securities and Exchange commission, organizations such as Emerald City C.V. Evolution Fresh, Inc., Guangdong Starbucks Coffee Company Limited, High Grown Investment Group (Hong Kong) Ltd., Koffee Sirena LLC, and many others are officially registered as Starbucks’ subsidiaries (U.S. Securities And Exchange Commission, 2022). Much like other organizations in the recent years, Starbucks has experienced a sharp loss in employee numbers during the pandemic, making the current employee count around 138 thousand (Starbucks: Number Of Employees 2010-2022 | SBUX, 2022). The decline is connected with COVID-19-related issues, low wages and changing corporate brand perception.
In tandem with the issues presented by low historically employee numbers, Starbucks also has to work against many competitors, both in the domestic and international market. Brands with a strong global presence, such as Dunkin Donuts and McDonald’s present the company with a challenge to keep up (Who Are Starbucks’ Main Competitors?, 2022). While their specific niche differs from Starbucks, both of the locations mentioned have a strong connection with coffee and other breakfast foods. Without a strong grip on the market, good service and adaptation, it will be difficult for Starbucks to maintain its profits. Considering all of the issues that the organization faces, combined with the need to adequately recover from the effects of the pandemic, the role of Strategic HR management becomes elevated. The organization has to effectively use its remaining employee numbers, train their hires and attract new potential. Proper management of existing assets can help the organization regain its footing and gain back the favor of their workers. In addition, the recent push for unionization within the company cannot go unnoticed, and must be addressed with proper consideration.
Review of Leadership Style
In order to best answer the existing and emergent needs of the company, it is necessary to adopt the correct leadership style. For this process, a number of potential options will be reviewed, allowing to compare and contrast their potential benefits to Starbucks. Five types of leadership will be considered – authoritarian leadership, participative leadership, delegative leadership, transactional leadership and transformational leadership (The 5 Leadership Styles You Can Use & How To Implement Each In 2022, 2022). The first among these types of leadership, authoritarian, primes itself on the actions and decisions of a single leader, who decides on the direction a company follows.
All processes and considerations move through a singular leader, and the input of the rest of the workplace becomes limited. Due to the sheer size of the Starbucks company, combined with the variety of cultures and communities it serves, using this type of leadership is infeasible and ineffective. This type of leadership is also strict, suppressing creativity and innovation in the workplace. Authoritarian leadership goes against the values of the Starbucks company. Delegative leadership, owing to its name, focuses on delegating responsibility over company action to individual members. Experienced employees and managers can use this system to introduce needed change, while the value of creativity escalates significantly. The main issue of this method comes from a difficulty in placing responsibility, coordinating actions between various members, and quickly adapting to the change on the market. In order to successfully compete with other companies in the global arena, Starbucks needs to avoid such problems. Effective coordination must be achieved through organization-wide coordination, which also manages to emphasize personal impact of the employees.
Transactional leadership is based on the principles of “give and take” a clear reward and punishment structure is introduced into the workplace, allowing leaders to facilitate certain types of behaviors. This style of leadership concerns itself with enforcing compliance through acceptable means, focusing on established patterns and mechanisms instead of innovation. Furthermore, it decreases the importance of shared corporate values, beliefs or ideas, instead relying on a clear if-when relation. Similar to authoritarianism, this approach stands at a stark contrast with the values of Starbucks, deeming it ineffective. Transformational leadership, while possessing a similar-sounding name, is distinctly different from a transactional one. In this type of organization, a leader acts as a guiding force, or an inspiration to their employees. With a shared vision for a company’s future, established values and methods, this kind of leadership seeks to empower the workplace. Communication between the top and the bottom of the company is enhanced, and workers can often feel more inspired to perform well. While this style of leadership has a number of important benefits, and falls in line with the values presented by Starbucks, it is also difficult to enforce transformational leadership throughout all Starbucks locations.
The last type of leadership that will be discussed is participative leadership. The center of this management method is employee involvement. By giving the power to make decisions and move the company forward to the employees, it is possible to achieve better satisfaction and productivity. In addition, this process makes the workers feel more included in the company’s growth and development, making an organization part of their individual identity. This leadership style has the potential to build trust, loyalty and understanding within a company. This type of organization is beneficial to Starbucks, as the current employees expressed concerns, both about a lack of power and a change in the company’s values. To maintain the existing brand image, and help workers be better represented within Starbucks, adopting a participative leadership type may be necessary. Of course, it should be combined with proper training and education for all personnel involved, so that individuals are more qualified to solve organization or branch-wide issues.
Literature Review
As mentioned previously, the Starbucks brand currently faces a number of issues pertaining to its sustainability and long term competitive advantage. Brought down by the effects of the pandemic, and building employee dissatisfaction, the brand now faces active union involvement and the lowest worker numbers of the recent years. Therefore, there is a necessity to introduce changes, which will help Starbucks better manage their existing human capital, and expand it. It is suggested that the use of strategic human resource management can be conductive to meeting the existing and emergent goals of the company. However, the specific proposed benefits of this approach need to be examined. This section will focus on reviewing contemporary literature concerning the subject of strategic HRM, and discussing its benefits to the Starbucks company.
Competitive Advantage and Commitment
Researchers have spent considerable time attempting to understand the relationship between structural HRM practices and actual long-lasting benefits to the work of companies. As a result, they were able to establish a connection between various performance goals and this type of management. A study by Emeagwal and Ogbonmwan (2018) applies structural equation modelling to evaluate SHRM practices. Their result shows that the tactic is able to provide a sustainable competitive advantage to organizations. The application of strategic management develops human capital and enhances commitment, allowing both the leadership and its subjects to be satisfied throughout the change process.
HRM During Change
Another interesting effect of applying strategic management comes from its ability to improve employee attitudes. The study in question uses the framework of a merger in order to discuss the subject of worker satisfaction and confidence. Large organizational changes, such as acquisitions and mergers, can often have a profound effect on the wellbeing of a company’s employees (Febriani and Yancey, 2019). Therefore, it becomes necessary to implement timely and effective solutions to smooth out the process and guarantee best performance. In the case of many types of change, structural human resources management is capable of providing companies with a smooth transition phase. This trend is also highlighted in other works, such as Baran, Filipkowski and Stockwell’s (2018) assessment of human resource management during organizational change. However, this work is more closely focused on determining the leading roles HR professionals in the process of change. By collecting data from 547 human resources professionals, the authors found that the potential obligations of a HR mangers vary significantly. In some cases, HRM’s can act as agents of change, introducing new initiatives and leading the organization toward excellence. In other climates, they often appear as consultants, important assets to receive the necessary guidance from. This demonstrates both the importance of human resource management in change strategies, and the flexibility of the HRM position.
Application of Understanding and Knowledge
Review of HRM Activities
The main objective of Starbucks as a company is to retain its position as the biggest global coffeehouse chain, while also being capable of addressing the most recent challenges it is presented with. Problems of employee retention, low wages, stagnant and ineffective management, comprise the main driver for change, one that requires immediate attention. Only by remedying these problems can an organization move forward successfully and amass further profits. In this environment, the goals of HR stand to support the needs of the company as a whole, enabling faster change, improving organization-wide performance and addressing the needs of the workers. This process includes the objective of changing the core leadership principles of the organization, providing employees with sufficient training, enhancing work culture and enabling a smooth transition to a new internal structure. There are a number of benefits that come from these HR actions. First, the change of leadership strategy was already discussed as an important step in fulfilling worker needs. In order to establish a collaborative relationship with employees, prevent high turnover rates and work dissatisfaction, HR must work on giving more power to regular employees. According to worker testimonies and publicized articles, the shift toward online delivery, along with the poor working conditions has been a large point of concern for most US Starbucks employees (Rainey, 2022). The inability of management to adequately address the problem, combined with the lack of proper support during the pandemic, created critical conditions for employee burnout and conflict in the organization. According to research, HR management presents prime opportunity to address the issues created by the COVID-19 pandemic (Zhong et al., 2021). With the emergence of Starbucks worker unions, HR managers must act as an intermediary between the union’s demands and corporate capabilities, in order to ensure the wellness of all participants (Kelly, 2022). Furthermore, it is necessary for HR to use staff management capabilities to address two major work related issues – understaffing and unreasonable work hours (Sainato, 2022). HR must concern itself with attracting more workers, primarily by providing a better workplace environment and conditions. As shown by the primary trends of the last two years, people are no longer content to work in bad conditions for low pay, making the necessity of change apparent (Rozsa, 2022). An adequate change strategy and response to these issues is crucial in continuing to provide best service to Starbucks customers, and following the company’s core values.
Change Implementation Plan
For evaluating the effect of SHRM on organizational change, and providing a change plan consistent with the goals of the organization, McKinsey 7-S model will be used. First, the current state of the organization and gaps in excellence will be noted. Then, a specific change strategy will be proposed to address the issues.
Strategy
The strategy of the Starbucks brand has constituted international expansion, adaptation and change in accordance with the needs of the market. In its efforts, the company has adopted cost-effective practices that guarantee short-term profits, many of which thrive off of exploiting the labor of employees. While the company proclaims its adherence to values of worker feedback, and has previously reported majority worker satisfaction, such considerations seem to be improperly respected in the modern day (Hammers, 2022). Changes in customer demands and pressure from other competitors is addressed through constant change of the product lineup, strict standards of product quality and marketing. In addition, the unique position of the company as the only leading coffeehouse chain gives it the opportunity to avoid direct competition. Environmental concerns are similarly addressed, both with the use of renewable materials and thoughtful coffee harvesting (Starbucks Announces Coffee-Specific Environmental Goals, 2022). The combination of sustainable work culture and continuous innovation in the field of environment protection places Starbucks on the forefront of climate-conscious discussions.
Structure
In structure, the Starbucks brand works in geographic divisions, depending on where a particular store is open. The three major bases of operation are the “Americas”, “China and Asia-Pacific”, and “Europe, Middle East and Africa”. Senior executives exist within each division and within every store location itself as well, creating a structured chain of command. The regular employees as members of the team enjoy specific responsibilities, and have to answer to their managers. The system gives the majority of power to select individuals, who have to shoulder the task of deciding the best course of action and regulating all other employees. As it stands, this structure does not promote employee feedback or engagement, making it difficult for involved individuals to truly participate in the corporate organization process.
Systems
The company places a lot of emphasis on the work of HR and managers, as the central figures in continued operation of Starbucks stores. The employee evaluation process and all decision making is supported by new technology, including learning artificial intelligence and analytics (Marr, 2018). Employees are encouraged to utilize company apps in order to make the process of arranging shifts and taking days off more convenient.
Shared Values
According to the company’s website, Starbucks values employee participation, creativity, and a welcoming atmosphere at its locations. Standards of excellence in customer service, combined with a respect for the brand’s longstanding heritage exist to create a unique company image. Starbucks strives to do more for local communities, exist as a place of gathering, a flagship of people’s daily lives. Many of these principles, however, only apply to customers and visitors. Employees often struggle to see similar principles applied to their own time with the company. The voices of the majority remain unheard, while excessive amounts of work keep the people trapped. Stated values of the company harshly contradict with the realities posed by its workers.
Style
According to existing data, Starbucks follows innovative leadership styles and approaches. The leader of the company, Howard Shultz, professes himself to be a transformational leader, one focused on enabling the shared vision of his organization (Howard Schultz – leadership style & commandments, 2021). This includes continuing high standards of service, enabling customers and employees alike to take part in the way the organization works. In essence, the ideal professed leadership style of the company is one facilitated by beliefs and core values. As mentioned previously, there are many specific problems with the actual implementation of this leadership type in the company. The shared vision of employee participation gets overshadowed by subpar treatment and low wages, which disallow regular employees from making an impact on their workplace.
Staff
The major positions that exist in Starbucks are: Baristas, Shift Supervisors, Shift Managers, Assistant Store Managers, Store Managers, and District Managers. Among these positions, most require either previous knowledge, education, or special training. Baristas receive education during their admission process, allowing them to fulfill their professional responsibilities. The competencies of other workers, on the other hand, come from a combination of previous experience and on-site training. According to employee reviews, the management was often underqualified for its position, or held unreasonable expectations of workers. The issue presents a considerable issue in Starbucks’ operation.
Skills
The skills and competencies that are most evident to an everyday visitor of a Starbucks store are those of Baristas. These employees are specifically educated to be knowledgeable in various kinds of coffee, having the ability to both discuss it and serve it. Managers and staff-related workers, on the other hand, fulfill a more invisible job of helping employees to fulfill their work in a timely and effective manner. As mentioned in the previous section, many managers are under-qualified to do their job, or present with unwarranted expectations from other team members. Comparatively, baristas do not have the power or influence necessary to control the workplace process.
The problems of the company emerge primarily from management issues, as well as the inability of the organization to fully follow through on its proposed values. While considerations of inclusion, empowerment and community stand as important in the eyes of top executive, actual workers do not experience the same quality of treatment. In order to improve organizational performance on these fronts, it is necessary to adopt a more employee-centered leadership style, one that encourages participation, decision-making and feedback. Furthermore, employees must be taught about their capability to influence the organization as a whole, and core principles of cooperative management. Managers, similarly, must be better taught in order to adapt to changes in organizational needs.
Recommendations and Conclusion
In conclusion, it can be said that Starbucks is a good example of a progressive company that faces contemporary issues. Much like other international giants, it has a strong foothold in many different markets, being capable of adapting to the needs of a particular community or demographic. The company values the environment, encourages others to consider it an important place of gathering, and contributes much to its local area. Sustainability efforts are used to protect the climate and spread awareness, while the organization continues to work toward development and innovation. Despite its success, however, the company faces significant issues concerning staffing, management and employee satisfaction. Wage stagnation, combined with poor job retention, improper management and COVID-19 related concerns has exacerbated all of the existing imperfections of the Starbucks system, making it open to larger systemic failures. As shown by the workers unionization movement and massive losses in employment over the recent years, Starbucks must introduce change in order to combat its emergent issues. To meet the demands of the employees and unions, the company should adopt a participative leadership strategy, one that empowers and centers workers as the main force behind decision making. Having the power and capability to make decisions based on majority consensus, adjust strategies with the needs of each location, and decide the future of their store will likely work to enhance employee morale, and reduce turnover rates.
Reference List
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