So how has Starbucks become such a runaway success? Certainly, the high quality of Starbucks products, the ambiance of the stores, and the current trendiness of slurping steaming cappuccinos or mocha grandes out of bright white paper cups stamped with the famous green and black company logo have played a large part. However, of at least equal importance are Starbucks employees. And critical to this element is the way that Starbucks Coffee involves its employees in the business of making and selling coffee.
Starbucks builds the foundation of its commitment to its employees in its mission statement:
Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles as we grow. The following five guiding principles will help us measure the appropriateness of our decisions:
- Provide a great work environment and treat each other with respect and dignity.
- Apply the highest standards of excellence to the purchasing, roasting, and fresh delivery of our coffee.
- Develop enthusiastically satisfied customers all of the time.
- Contribute positively to our communities and to our environment.
- Recognize that profitability is essential to our future success.
And these aren’t just empty words or platitudes—Starbucks is a living model of employee learning, ownership, involvement, and communication. The result is a superior product, coupled with customer service that is truly caring and responsive. The icing on the cake is sales growth of 65 percent a year while net income skyrockets by 70 to 100 percent a year. If there isn’t a Starbucks near you yet, there will be soon.
All Starbucks employees—known internally as "partners"—start their careers with the company with 24 hours of classroom training at one of the company’s regional training centers. Partners can look forward to addressing a wide variety of topics including retail skills, coffee brewing methods, customer service, pouring the "perfect" shot of espresso (18 to 23 seconds), and many more. Courses are taught by district managers, specialists, and training managers who have all been through the courses already, and have worked in a retail store for at least two months. Managers have an additional 8 weeks of classes to choose from, including "Coffee Knowledge 101," and workshops on conducting performance appraisals, recruiting, project management, and more are available on request. Starbucks also pays for worker attendance at outside professional seminars and workshops as necessary.
Since purchasing the company in 1987, CEO Howard Schultz long dreamed of instituting an employee ownership program. In 1990, an internal development team took on the task of creating a stock-option plan that would not only involve partners more deeply in the company, but that would give them a real stake in the company. In 1991, with the implementation of the "Bean Stock" plan, Schultz’s dream came true. The Bean Stock plan allows partners who are employed a minimum of six months, and who work at least 20 hours a week, to be eligible for stock options. The extent of options awarded to individual partners depends on several factors including their annual salaries, the grant price of the stock, and the profitability of the company. When Starbucks implemented the Bean Stock plan, it became the first private company to offer stock options to both full-time and part-time employees.
Since most partners are also owners, they are very interested in getting access to company information. To accommodate this desire, senior management conducts quarterly open forums in the company’s different sales regions. While a broad range of issues is discussed, typical topics include expansion plans, financial information, and environmental issues. Partners are encouraged to share their ideas and suggestions with senior management at these forums. In addition to these quarterly meetings, Starbucks distributes annual Bean Stock reports to all partners and the company publishes Pinnacle, a newsletter that spotlights company performance as well as the activities of individual partners company wide. Starbucks is also taking advantage of videos and teleconferencing to reach out to its partners.
In an effort to increase employee involvement, Starbucks has recently instituted self-managed work teams at its coffee bean roasting plants. Although plant managers and supervisors are responsible for the initial organization of the teams, partners are encouraged to take over the day-to-day workings of the teams including decision making. Cross-functional teams of partners and supervisors are used to make hiring decisions. Everyone on the team has a voice in the selection process and partners are encouraged to offer their views on the candidates’ potential compatibility with the company. The company’s "Mission Review Team"—comprised of partners from throughout the company—visits Starbucks outlets to review the consistency of the stores’ operations and the company’s guiding principle of providing quality service and products.
Employee benefits are another company strength—one that helps to keep employee turnover at approximately 65 percent—far less than the industry average of 150 to 400 percent. Starbucks led the pack when it decided in 1987 to give all employees, including part-time partners, full healthcare benefits. If a partner works at least 20 hours a week, then he or she is eligible to begin receiving these benefits after only 90 days on the job. The health plan—which pays 90 to 100 percent of medical costs with a $10 co-pay—costs employees less than $400 a year. Dental insurance and vision care is provided for free. Disability and life insurance is also included in the employee benefits package.
Partners are invited to join the company’s 401(k) retirement plan after serving one year with Starbucks. Employee contributions are matched 25 cents to the dollar. The company provides its partners with vacation time, two personal days off each year, price discounts on Starbucks merchandise, and a free pound of coffee every week. All employees have access to a benefits help line which partners can call to ask questions about their stock or other benefits, and the company also offers an Employee Assistance Program, dependent-care reimbursement accounts, and an employee recognition program.
All in all, Starbucks offers an amazingly diverse range of opportunities and benefits to its partners. It’s little wonder that new stores continue to open at the rate of three to five every week, and employees are making careers at Starbucks instead of dropping out.
SOURCE: From "1001 Ways to Energize Employees" by Bob Nelson.