The company also has an interest in hiring internally. Staffing is a challenge for Starbucks, however, because of the company's growth rate and the need to maintain high standards of customer service (Weber, 2005). This is why the company emphasizes training to the extent it does, because training and enculturation is needed to support the staffing policy.
Employee Training and Development
Starbucks has an extensive training program in order to ensure that high customer service standards are met. Although Starbucks does not disclose specific figures, it spends more on training than it does on advertising, such is the value it puts on building a quality workforce (Weber, 2005). The training program includes both task elements of the job and enculturation, the latter being a critical component in the training program. Customer service standards are emphasized, and the training program includes situations on dealing with customers, as well as leadership and diversity (Weber, 2005). The latter two are critical to the company's strategy to promote from within to build the management ranks.
Although Starbucks has a competitive benefits package, the company relies on intrinsic motivation. Partners are hired and trained based on the idea that giving excellent customer service and achieving excellence is something that should come from within. Enculturation helps to support intrinsic motivation because employees believe in what they are doing and have passion for the job, they will perform at a superior level. As such, Starbucks tries to encourage its partners to view their jobs as a springboard to something important. There are minor extrinsic motivation forms, such as small gifts, that are available to managers, but the focus is on intrinsic forms of motivation at Starbucks.
Leadership and Management
Starbucks is lead by Howard Schultz, who was an early inspirational leader at the company. Under his leadership, the company has defined itself and worked to re-invigorate itself as well. At lower levels, Starbucks offers leadership training to its employees as a means of developing leadership talent internally. The company seeks to develop different levels of leadership, including store level and regional level.
Managing Conflict and Stress
There is no publicly available information about Starbuck's conflict management strategies. The firm in general takes a view towards minimizing public conflict, such as in the Maryland breastfeeding case where the company was targeted by professional activists (AW Page Society, no date). However, for obvious reasons, the company does not publish its strategy for dealing with conflict.
Starbucks has implemented a concerted effort at organizational change over the past few years. The "transformation" process, as the company describes it, consists of several key components. Perhaps the most important component was strong leadership. Change efforts typically do not succeed if they are not supported at the top of the organization. In this case, the CEO drove the change effort, spearheading efforts to launch innovative new products, to reconnect with customers, to control costs and to grow through international expansion. The change effort did not require a shift in corporate culture so much as a renewal of the existing culture, which had been undersold by management for a few years. The change effort began with a strong vision that was well communicated throughout the organization. The company followed through on its vision with a number of critical actions that were directly related to the change effort -- closing underperforming stores and introducing the VIA in particular. These efforts signaled to the rest of the organization that senior management's vision was unified and thus helped to instill a desire to change throughout the entire organization.
Starbucks has a number of control mechanisms that it utilizes. Product quality at the supplier level is controlled by professional tasters, who ensure that the beans and the roasts are consistent with Starbucks quality standards. The company also has strong control mechanisms at the staff level. Although in general these are not well publicized there is evidence of a few of the mechanisms utilized. The first is direct communication...
Executives have a habit of phoning stores at random and speaking to the employees (Weber, 2005). This creates a direct feedback loop that allows executives to learn about store level operations and store staff to understand that there is direct senior management into their activities. Starbucks also has a secret shopper program, in which the secret shopper tests time, service levels, coffee quality and other aspects of the Starbucks experience (Starbucks Union, 2006).
Appraising and Rewarding
Starbucks employees are appraised on both direct managerial appraisal and on aggregate based on reports from the secret shoppers. The company has a set of metrics for service level and coffee quality that it uses as part of its appraisals. Those who are found to excel at the company's metrics may receive a small reward as incentive. However, the most significant rewards are reserved for those who make Starbucks a career choice, as the company has programs to develop in-house talent, as defined by exceeding service standards and maintaining a long relationship with the company.
Operations Management and Plans
Starbucks has exacting operational standards, against which performance is appraised. To facilitate this, there is a high degree of standardization in the company's equipment and back of house layout. This standardization allows the company's training program to be widely applicable in all of its shops. At the logistics level, operations are supported by a number of warehouses that keep the stores supplied. The company's logistics and purchasing departments are responsible for supporting the retail operations. The company plans to increase its logistics capabilities in accordance with general growth.
Starbucks has sought in recent years to gain more control over its back office operations. This has required an upgrade in information technology investment, particularly with respect to streamlining inventory management. As a result of these investments, the company has improved its inventory turnover from 15 times in 2008 to 19.7 times in 2010. This is evidence of the key role that operations control plays in working capital management and profitability at Starbucks.
Working through the different elements of Starbucks' strategy it is clear that many of the different elements work in conjunction with each other. The base strategy is as a differentiated provider and this is in part supported by the in-store experience. That in-store experience is the product of tight inventory controls, diversity programs in hiring, extensive training, strong leadership, intrinsic motivation systems and controls such as the mystery shoppers.
Each distinct element contributes to the overall organizational output of high customer services levels, which in turn supports the premium pricing that results from the differentiated strategy. For each element of Starbucks' strategy, a wide number of elements support the strategy. The ability of management to tie different elements and tactics together form a coherent strategy is one of the great strengths of successful firms like Starbucks. The company's success begins with leadership and strategy, but these plans must be executed consistently throughout the organization in order to deliver tangible benefit. When this is the case, Starbucks succeeds. A couple of years ago the company had failed to deliver on some of its control mechanisms and this caused difficulty for the company. Once the control mechanisms and corporate culture were restored, Starbucks once again began to excel.
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AW Page Society. (no date). Starbucks Corporation: Can customers breastfeed in a coffee shop? AW Page Society. Retrieved November 30, 2010 from http://www.awpagesociety.com/images/uploads/Starbucks_Case.pdf
China Business Daily. (2010). Starbucks brews up Yunnan flavor. China Business News. Retrieved November 30, 2010 from http://cnbusinessnews.com/starbucks-brews-up-yunnan-flavor/
Fujimura, N. & Firn, M. (2010). Starbucks says VIA sales may pass $1 billion globally. Business Week. Retrieved November 30, 2010 from http://www.businessweek.com/news/2010-04-13/starbucks-says-via-sales-may-pass-1-billion-globally-correct-.html
MSN Moneycentral: Starbucks. (2010). Retrieved November 30, 2010 from http://moneycentral.msn.com/detail/stock_quote?Symbol=sbux&getquote=Get+Quote
Starbucks 2009 Annual Report. Retrieved November 30, 2010 from http://media.corporate-ir.net/media_files/irol/99/99518/SBUX_AR.pdf
Starbucks 2010 earnings conference call. Retrieved November 30, 2010 from http://investor.starbucks.com/phoenix.zhtml?p=irol-eventDetails&c=99518&eventID=3462170
Starbucks.com website, various pages. Retrieved November 30, 2010 from http://www.starbucks.com
Starbucks Union. (2006) Mystery shoppers at Starbucks. IWW Starbucks Workers Union. Retrieved November 30, 2010 from http://www.starbucksunion.org/node/1036
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