Human resources practices at Starbucks

HR SBUX

The company I have chosen is Starbucks. The two positions within the company are barista and assistant store manager. The compensation plans for these two positions will be compared.

There are many similarities between these two plans, based on the way that Starbucks has designed all of its compensation plans. However, there are some differences. One of the biggest differences is that the barista position is typically an hourly position, based on part-time work usually. The company's compensation plan is designed around the principle of base pay for all positions, with some positions being eligible for bonuses. The latter are typically the salaried positions of which assistant store manager is one. The barista has an incentive to perform because performance creates opportunities at higher levels of the organization, and move upwards from an hourly position. Managerial roles within the company are eligible for performance-based bonuses, as there are a number of metrics available for the company to measure the performance of managers. The assistant store manager is not eligible for a large bonus, but at this level there is opportunity to earn one.

After the distinction between hourly and salaried work, there are a lot of similarities between the compensation plans for these two positions. The company offers benefits to all of its permanent employees, and a barista can become a permanent employee. Benefits are made available to all part-time and full-time partners, the term Starbucks uses for its employees. Thus, once somebody reaches permanent status within the company, they become eligible for a variety of benefits. The company offers comprehensive health coverage, including medical, dental and vision. There is a highly competitive 401(k) plan, and company matching for that plan.

One of the unique elements of the Starbucks compensation plan is that all permanent employees are offered a stock equity reward program. The company states that it is "one of the only retailers to offer (such a program) to part-time retail hourly partners." This means that the stock equity program is offered to both baristas and to assistant store managers. This is in keeping with the need of Starbucks to hire talented, motivated individuals. It feels that if it can skim the cream of the retail crop, it will be able to deliver better service, something that is part of its business model.

The underlying principle of much of Starbucks' retail compensation plans is internal equity. In other companies, a barista might be held as a distinct position from a managerial position, but at Starbucks they are known as partners, and given most of the same benefits and privileges as the salaried staff and full-timers. This creates a more harmonious work environment but it also shows to the baristas that they are not just viewed as low-level employees, but rather as a stakeholder and someone who could progress going forward and build a career at the company. This internal equity should result in a better work environment, in addition to helping to attract better employees to these positions (Kappel, 2012).