Ethical leadership and organizational effectiveness at Starbucks

¶ … ethics in an organization, and their association with organizational effectiveness. Organizational leadership skills and traits necessary for tackling ethical issues will also be examined.

Importance of Organization Ethics/Organizational Effectiveness

Ethics is being prioritized in organizations. In the present era, ethics isn't an option or a luxury. Society is becoming increasingly intolerant towards irresponsible and selfish behavior, which enriches crafty individuals whilst impoverishing others. Hewlett-Packard exhibited its dedication to ethicality during former Chief Executive, Carly Fiorina's leadership. She stated, of her time as CEO of the company (i.e., six years), that some among the most crucial choices she ever had to make was firing employees who behaved without integrity. By contrast, the R. J. Reynolds Tobacco Company came under fire for trying to cover up vital information concerning nicotine's addictive nature (Brimmer, n.d). Tolerance of bad behavior for improving organizational bottom line, followed by justifying the action as not being really illegal eventually gives rise to a corrosive climate. Aside from social responsibility, other compelling incentives exist for corporations to prioritize ethical values in the twenty-first century.

Ethics mustn't be given the mere status of a moral or legal obligation; rather, it must be accorded high priority in organizations. Organizational leaders should also constantly monitor their vision, mission, company culture, values, goals, and strategy. Amidst all the above elements, incorporating another element as a key priority is no easy task. There are several critical aspects within a company, with varying levels of importance; however, only some of these will be extremely crucial. Ethical values must be recognized as one of the most crucial and leading success factors for modern-day organizations. Ethics, as a priority for companies, will impact decision-making as well as, eventually, the culture of the organization (Brimmer, n.d). For achieving this ideal, a process of alignment is required, which combines business ethics and corporate vision, mission, objectives, values, and strategies. Ethics are principally of a social nature, and hence, this process of alignment will involve relationships as well as the outlining of relationship-based expectations.

Ethical Issue Faced by Organization

The U.S. and Chile outlets of Starbucks have been bombarded with labor discord; unionized workers of the coffee giant have initiated a solidarity campaign and protest for improved worker benefits and wages. The multinational coffee chain encountered its foremost worker protest at their cafes in Chile, following a mass walk-out of over two hundred unionized baristas on the 7th of July. Members of Chilean trade union, Sindicato de Trabajadores de Starbucks Coffee Chile have been demanding for a rise in wages to help them survive the inflation, increased contribution of their employer towards worker health insurance, and a stipend for lunch similar to that offered to managers (Yoshikane, 2011). Numerous union leaders intensified their efforts through the launch of a weekend hunger strike staged before Starbucks' Santiago office, for drawing out the company's representatives for negotiations.

The company, which began its business in Chile in the year 2003, currently has over thirty stores within the country. Approximately a third of its 670-strong Chilean staff is unionized. On a global level, 17,009 Starbucks cafes are primarily nonunion. From 2002-2010, the company was labeled by Fortune as one among the top 100 companies to be employed in. Also, from 2007-2010, Starbucks was ranked by Ethisphere as one among the most ethical organizations in the world. However, disputes between the company and baristas in relation to union activity have occurred in the U.S. According to a Reuters report, Starbucks cafes across the nation haven't closed down at the time of protests; instead, nonunion workers have substituted protesting workers. Jin Olson, a spokesman for Starbucks, informed Wall Street Journal, the international daily, that Chilean workers' wages exceeded industry standards; the total compensation for starting baristas was 30% more than industry average. Furthermore, Starbucks covers 70% of worker healthcare and offers them company stock (Yoshikane, 2011). A list presented by the protesting workers of what they desire from the company (comprising 25 items in total), includes bonuses for a newborn and for weddings; these lie well outside standard Chilean business norms. However, the union isn't ready to agree upon this. The Sindicato claims that workers have been denied a raise since 8 years. On the basis of consumer price index (CPI) adjustments, it asserts that employees received 31% lesser compensation than their 2003 compensation. Moreover, as per a Santiago Times report, managers pressurize workers to give up their established break periods in busy times; they don't receive compensation for those extra hours of work. The union also contends that rival companies pay their employees a relatively bigger wage, and that Chile's Starbucks employees don't enjoy benefits similar to those enjoyed by their superiors (Yoshikane, 2011). Reports claim that the protesting employees will be permitted to return to work under Chilean labor laws. However, the baristas seem to be bent on not working, unless their work conditions are improved.

Strengths Seen / Traits That Were Lacked

In my personal opinion, as regards company strengths, there was no powerful strength displayed under these circumstances. Leadership strengths include: dynamism, reliability, and intelligence, all of which appeared to be lacking in the above scenario. Instead, a fair degree of weaknesses were apparent, with regard to how negotiation committee members tackled the issue, and several key strengths need to be inculcated. It was declared by negotiation committee members that Starbucks won't negotiate with the union on their established points, on philosophical grounds rather than economic grounds (their monetary resources are sufficient) (Starbucks union strike in Chile, 2013). A valuable point to keep in mind is that this step is illegal -- a fine has been levied on Starbucks for it. For aggravating matters, workers felt insulted when the company advanced a public offer of two kinds of benefits for them:

1. Existing benefits (aimed at getting the union to sign a pact and hence validate themselves as a worker union, according to the company)

1. The possibility of unionized employees receiving compensation when leaving Starbucks

That is, the company's attitude hasn't changed since 2011; in fact, they are now going so far as to make an offer of money, for doing away with some union employees who choose to believe in the possibility of a democratic workplace model being constructed and profits distributed. Starbucks is depending on Chile's weak laws and its alleged intention to remain Socially Responsible. By clinging to prior policies rather than concentrating on essential future change, Starbucks leaders are coercing employees into a descending spiral, to some degree (Starbucks union strike in Chile, 2013).