Assess the organisation in terms of its organisational strategy, objectives, mission and values.
Analyse the environment in which the organisation operates with regards to industry, business life cycle, etc.
Evaluate the organisation's current reward and pay strategies on two criteria: for meeting its overall organisational strategy and for maintaining competitive advantage in the face of new challenges and changing conditions.
Reach a reasoned and evidence-based conclusion about the level of success achieved by the organisation in motivating employees to reach organisational objectives and propose a reward and pay strategy that may better serve this purpose.
Starbucks: The Company and its Compensation System.
Starbucks is the largest coffee producing industry in the world with 19,555 stores in 58 countries. This includes 12,811 in the United States, 1,248 in Canada, 965 in Japan, 766 in Great Britain, 580 in China and 420 in South Korea (Location xcelrated). Starbucks has succeeded to the extent that it has a reputation as being the foremost coffee-offering location. Its logo, brand, and patents have become unassailable. Starbucks, too, has motivated and loyal employees as well as a good relationship with suppliers and customer loyalty.
It has won numerous awards and accreditations including being rated one of the Fortune Top 100 Companies to Work For in 2005. This reputation has been further spread by at least one book written by one of its employees that has become a popular seller on the "Starbucks experience." The company is known too for its sustainability performance. Its environmental mission for instance reads: 'Starbucks is committed to a role of environmental leadership in all facets of our business.'
Starbucks' Mission and objectives
The Starbucks mission is: "To inspire and nurture the human spirit -- one person, one cup and one neighborhood at a time." (About.com). The Starbuck's vision, objectives and goals are to gain complete effectiveness in each of the following factors: their coffee; their partners; their customers; their stores; their neighborhood; and their shareholders. They intend to be passionate, to treat each other with respect and dignity, to embrace diversity, to make their stores shelters of solace and comfort, to care for the environment, and to reward their shareholders (Starbucks)
The organization has created the motif of the "Starbucks experience" and employees rally around that. Their value, mission, objectives are also clearly spelled and unify the employees, aside from which they have created a distinctive Starbucks corporate culture.
The environment in which the organization operates
The environment possesses both opportunities and threats. As part of its disadvantages, the company faces a great deal of competition from other fast food stores and manufacturers that produce coffee. So far, Starbucks has outlived the competition but the fact that they are almost exclusively centered in the U.S.A. with more than three-quarters of their outlets located here could make them vulnerable prey. There is, also, too much focus on expansion rather than on internal growth. In the millennium, for instance, the Company opened a store a day. Their rapid internal growth was impeded by the recession which compelled them to close 300 locations (Miller, 2009).
Another environmental weakness is the product itself. Although Starbucks continuously innovates, the limitation of their offering necessarily and logically dictates potential waning of innovation over time. The recent -- not yet -- over recession is a threat to Starbucks with customers preferring to budget on their coffee or chase costs elsewhere. Another environmental threat is the costliness of the product pricing, due partially to the rising cost of coffee, to the price of coffee that fluctuates in developing countries and to the rising cost of dairy products. Starbucks overcame the recession but their pricing is a weakness. This feeds into the hands of the numerous competitors that include restaurants, vendors, and supermarkets.
Some of these competitors are on the rise. The 2007 Consumer Reports of American fast-food chain coffee rated McDonald's Premium Roast coffee to be the "cheapest and best," and one that surpassed Starbuck's coffee in all areas. The magazine proceeded to described Starbucks' brand as being "strong, but burnt and bitter enough to make your eyes water instead of open" (ibid)
Other environmental factors that limit Starbucks include the national trend towards healthiness and away from caffeine and the fact that Starbucks has received negative publicity from poorly treated farmers in developing and supplying countries.
Furthermore, Starbucks experiences unpredictable political issues in certain of their countries where they are located and Starbucks, too, has a reputation as a greedy, sprawling corporation with anti-competitive practices (Damien, 2009)
Lastly, since the company is dependent on the competitive factor of retail of coffee, they may be slow into diversifying in other factors should the need arise.
On the other hand, the company faces environmental possibilities of expanding its location with new opportunities for providing coffee in countries such as India and the Pacific Rim. The opportunity for co-branding with other manufactures of food and drink has also proved lucrative to Starbucks as well as providing music and ice-cream as well as coffee toppings and accompaniments to manufacturers of other services and products. In this way, it can branch of into peripheral offerings.
The constant spate of technological innovations (such as iPod) is for Starbuck's advantage particularly since they can display their products online and use social media for their advantage, and Starbucks, too, can expand into retail opportunities
Technology also gives them opportunity for new distribution channels
Starbucks determined to specialize and focus solely on its core competency and on none else- namely coffee. To that end, they have become extremely knowledgeable on this subject and have gained a reputation for being connoisseurs in the field. Starbucks also focuses on internal expansion so that they are glutted throughout N. America. The number of their retail locations, for instance, expanded 35% from1998 to 2000. Starbuck's functional structure is best described as unstructured. It relies on new ideas and innovation from employees in order to expand and broaden its products as well as enhance its coffee production service
One may best define Starbuck's style as being team oriented, flexible, and innovative. They also focus on environmentalism, social responsibility, and Fair Trade laws.
Starbucks' Compensation System
According to Fortune magazine, Starbucks is the #2 best company to work for when only large companies are included. When both small and large companies are included, Starbucks ranks as the #1 best place to work for.
In its January 24 issue, Fortune says: "The coffee behemoth is justly famous for its generous benefits. One example: Part-timers and their same-or opposite-sex partners receive comprehensive health coverage. Hypnotherapy? Covered. Naturopathy? Ditto." (Starbucks gossip, 2005). Average annual pay for salaried employees is $44,790, whilst for hourly employees, it is $35,294.
In Fortune's 100 Best Companies to Work For in 2006, the website rates Starbucks as 29th on its list noting that part-timers qualify for $500 in tuition reimbursement (CNN. Money). In fact, the Vault (Starbucks Corporation http://www.vault.com/wps/portal/usa/companies/company-profile/Starbucks-Corporation?companyId=1073), an authoritative career intelligence site notes that the company is a fixture on Fortune's Best Companies to Work For list and the Fortune 500, as well as proving a popular employer for college students (both undergraduates and MBA candidates)
According to Workforce, compensation is generous and evaluated regularly. Incentives are encouraging, employees are often promoted depending on merit, and employees are encouraged to learn as much as they can about coffee. Pleasing customers is the cinch of the system and the better the employee is at doing so and the more skilled and diligent he is in his work, the more chance he will receive of receiving bonuses. Researchers, too, are rewarded highly for emerging with new inventions and for expanding Starbuck's products.
Starbuck's philosophy regarding their employees (and extended to their customers is the following: "leave no one behind"). To meet that, all employees, including part-time employees, receive full-health coverage (including medical, dental, vision, and alternative services). EAP is available to all employees. The "Bean Stock" stock options (up to 14% of gross pay) enables employees to share in the company's growth and more than one employee has used the company stock options to build a home . A stock investment plan, too, enables employees to buy Starbuck stock at a discount (84% of fair market value) through payroll deductions. Starbucks, too, matches employee contributions to their "Future Roast' 401 (k) plans, adding from 25 to 150% of the first 4% of pay, depending on the length of service.
Starbucks's compensation system extends to the dignity and respect that they accord their employees. The employees servicing the counter, for instance, are called 'barristas' (never 'counter help's), and another survey discovered that employees largely like to work in Starbucks due to the fact that they have the "opportunity to work with an enthusiastic team" and "work in a place where I feel I have value" (Workforce) .
Starbucks is intent on pleasing its employees. It encourages them (tellingly, they are called 'partner's) to submit complaints and questions, and a two-person team considers and responds to each one. A result of one…