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Starbucks Corporation: Case Study in Motivation

HRM (case solution)

HUMAN RESOURSE MANAGEMENT

A CASE STUDY ON STARBUCKS

Prepared By
Rossi Norman Dias.
MBA
BRAC University.

Date: 19 November 2013

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Starbucks Corporation: Case Study in Motivation
HRM (case solution)

Starbucks
Motivation

Corporation:

Case

Study

in

Because of rapid globalization over recent years, competition around the world
becomes more intense, especially for the service industry with similar products.
The most critical point for business to achieve success is not only the quality of
products they supply, but the atmosphere of cooperating and the amount
yielded from teamwork in retail sales. Therefore, it turns out to be essential for
companies to motivate, reward and train their employees to be the best quality
personnel.
Starbucks Corporation, the most famous chain of retail coffee shops in the
world, mainly benefits from roasting and selling special coffee beans, and other
various kinds of coffee or tea drinks. It owns about 4000 branches in the whole
world. Moreover, it has been one of the most rapid growing corporations in
America as well. The reasons why Starbucks is popular worldwide are not only
the quality of coffee, but also its customer service and cosy environment.
Starbucks establishes comfortable surroundings for people to socialize with a
fair price, which attracts all ages of consumers to come into the stores. Besides,
it is also noted for its employee satisfaction. The turnover rate of employees at
Starbucks was 65% and the rate of managers was 25% a year However, the
rates of other national chain retailers are 150% to 400% and 50% respectively.
Compared with them, the turnover rate of Starbucks is much lower than other
industries on average. As a result, Starbucks is one of the optimal business
models for strategies of employee motivation, customer satisfaction and
cooperation of teamwork.
The history of Starbucks:
Starbucks began by three friends, Jerry Baldwin, Zev Siegl, and Gordon Bowker,
who knew each other at the University of Seattle, in 1971. A sales
representative, Howard Schultz, decided to be a part of Starbucks, as director of
marketing and retail sales, after he realized the atmosphere and environment of
the company. In 1985 Howard Schultz chose to establish a new coffee shop,

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Starbucks Corporation: Case Study in Motivation
HRM (case solution)

named II Giornale, in Seattle. After the next two years, due to the successful
strategy of Schultz, the original three owners of Starbucks decided to sell their
corporation to Schultz. Then Schultz gathered other investors and changed the
name of II Giornale to Starbucks. He sought to pursue his dream to make
everyone taste his coffee, so he focused on the rate of expanding. At that time,
he though that the most efficient way to grow the amount of branches was to
set up new stores in other places. In I987, Starbucks had the first overseas store
in Japan. Until the end of 2002, Starbucks has developed from 17 stores to 5,688
spreading over 30 it has grown over 300 times in these ten years! In Fortune
magazine, Starbucks was ranked the 11th best company to work for in 2005 in
the USA and then rose up in 2006 to 29th. In 2007, it was ranked as the 16th
best. In the same year, Starbucks was also voted as one of the top ten UK
workplaces by the Financial Times.
Motivation:
Motivation is a vital factor for business in the production process. Labourers are
not machines, and can not always do the same task with equal passion. The
chief executive officer of Starbucks corporation, Howard Schultz, considers that
the reason for success in Starbucks is not coffee but employees. He firmly
believes that the spirit of Starbucks is employees and feels honoured about the
value of Starbucks employees. Starbucks offers an interactive structure that
makes personnel throw themselves into their job.
1) Equal treatment: The managers in Starbucks treat each employee equally
and all of the staff are called partners, even the supervisors of each branch. In
order to narrow the gap between managers and employees, they also cowork
with the basic level staff in the front line. Due to this, they can maintain a good
management system and create a much closer and more familiar atmosphere
than other places. Not only do employees enjoy their job but customers are also
affected by their enthusiasm.
2) Listen to employees: Starbucks has a wellorganized communication channel
for employees. It places great importance on labour. For example, managers
plan the working hours per workers and arrange the schedule of time off,
according to the workers wants in order to meet their requirements. There are
interviews weekly to see what employees needs are. The partners have the
right to figure out what is the best policy for them, and the directors show a
respect for each suggestion. Starbucks even wants every employee to join in
making and developing plans, then work together in achieving their goals. As a
result, the policies and principles are communicated between all staff, and there
is no limitation in employees personal opinions.
3) Good welfare measures: All employees, including informal personnel, are
offered a great deal of welfare policies, for instance, commodities discounts for
employees, medical insurance (including health, vision and dental) and
vacations. Moreover, the partners who work over 20 hours a week are entitled to
benefits.

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Starbucks Corporation: Case Study in Motivation
HRM (case solution)

Starbucks also thinks that debt financing is not the best choice, thus it chooses
to allocate stock dividends to all employees with a free script issue. By this
policy, the employees can get benefits from the dividends of the company.
Because of this, they have the same goal in other words, they are motivated to
increase the sales to earn more profits. To Starbucks, the employees are the
most important asset.
Teamwork:
1) The strategies to keep good relationships: Starbucks establishes a well
developed system to
keep good relationships between managers and employees. As mentioned, they
use the title partner regardless of the level of the worker, which narrows the
gap of bureaucracy. Furthermore, they cowork in the first line to eliminate the
distance between different statuses. Thirdly, the numbers of employees are
usually from three to six. Such a small size helps staff get to know each other
easily and deeply. Suggestions and complaints made by employees are treated
of equal importance. In the same way, they have a right to participate in the
process of revising company policies. In that case, each staff member thinks
that they also play an important role in company operating, and they jointly
work out the direction of Starbucks. All this gives employees respect and a
sense of participation.
2) A goal of public welfare: Starbucks contributes part of its profits to public
service. As a consequence staff have an idea that what they do for Starbucks is
for society as well. With regard to goals, Starbucks set a challenging and specific
goal, and it allows all partners to decide the direction.
Article adapted from
http://www.freeonlineresearchpapers.com/starbuckscasestudy
Questions:
1) Starbucks employees can be seen as a formal team as opposed to an
informal team.
Differentiate between formal and informal teams.
2) The employees of Starbucks retail shops clearly work together well as a
team.
List four characteristics of teams that have gelled together.
3) the numbers of employees are usually from three to six.
a. Why is the size of team an important factor?
b. What are the benefits to Starbucks of having small teams of staff in each
branch?
4) Starbucks achieve success and adhere to the criteria of planning, execution
and review.
a. Explain three issues that need to be addressed in the planning process.

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Starbucks Corporation: Case Study in Motivation
HRM (case solution)

b. Reviewing is an ongoing process. Explain three things Starbucks can do

continually to ensure goals are being accomplished. (HINT: apply your facts on
the review process to the Starbucks situation).
5) How does Starbucks manage to keep good relationships between their
managers and employees?
6) Name the five issues that teams should take note of and address if
necessary, before these issues become a crisis.
7) The staff at Starbucks are empowered and motivated employees. Briefly
explain, in your own words, the three principles that Starbucks implement in
motivating their employees.
8) Management needs to commit to certain aspects in order to empower
employees.
List four of these aspects.

SOLUTION OF THE CASE

1) Starbucks employees can be seen as a formal team as opposed to an informal team.
Differentiate between formal and informal teams.

Answer:
ormal team is those groups which are given legitimacy by the organization. For example, at
the Starbucks Company, the formal group is the formal organizational structure of the company which
involves the flat structure involving the board of directors, managers, and the staff. This group consists of
a manager and his subordinates, and both of them share a common specialty.

On the other hand, nformal teams have no structure whatsoever and they do not focus on specialty.
There is no manager/leader; team members are completely equal in informal teams. It is said that when
people come together and start interacting with each other for a long time, they form informal team.
Informal groups are said to affect the organizational structure. The informal team is established in this
company (Starbucks) to ensure that communication has been effective. Instead of using the various stages
in order to reach those above, then these groups can be used to help solve those problems. For example,

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Starbucks Corporation: Case Study in Motivation
HRM (case solution)

Starbucks uses the informal groups to address the matters which arise in this company. It is through this
group that the information is communicated to the rest of the workers.
Thus formal and informal teams differ from each other in the following respects:
1. Origin: The reasons and circumstances of origin of both formal and informal teams are quite different.
The formal teams are created deliberately and consciously by the framers of the company. On the other
hand, informal teams arc created because of the operation of socio-psychological forces at the workplace,
that is, people while working together develops certain liking and disliking for others for the type of
interactions not provided officially.
2. Purpose: Since formal teams are deliberate creation, they are created for achieving the legitimate
objectives of the company. The informal teams are created by company members for their social and
psychological satisfaction.
3. Size: Formal teams may be quite large in size. Sometimes formal teams are constituted to give
representation to various interest groups in the company, and their size has to be kept large. However, the
informal teams tend to be small in size so as to maintain the group cohesiveness which is essential for the
informal teams to be attractive for the members concerned.
4. Authority: The members of formal team derive authority through the formal source that is through the
process of delegation and reallocation. Thus authority flows from the higher lo lower levels. In the
informal team, all members are equal; however, some may command more authority by virtue of their
personal qualities. Thus, authority is commanded. People give authority to those persons who are likely to
meet members' needs maximum. This is the way of emergence of informal leaders in the informal groups.
Such people have maximum positive interactions in the groups.
5. Behavior of Members: The behavior of members in the formal team is governed by formal rules and
regulations. The rules are normally directed towards rationality and efficiency. In the informal team, the
behavior of the members is governed by norms, belief, and values of the groups. The kind of behavior
that is expected of a member is specified by these factors.
6. Communication: Communication is prescribed in the formal team. It is normally through chain of
command to which people refer as formal channel of communication. All communications in the formal
groups are expected to pass through that channel. In these informal groups, the communications pass
through informal channels.
2) The employees of Starbucks retail shops clearly work together well as a team. List four
characteristics of teams that have gelled together.
Answer: The employees of Starbucks retail shops clearly work together well as a team; according to this
the four characteristics of teams that have gelled together could be the following respects:
The Managers and supervisors of Starbucks company co-work with the basic level staff in front
line which creates the management system a much closer and more familiar atmosphere than
other bureaucrat places.

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HRM (case solution)

The numbers of employees in Starbucks are usually from three to six, that helps staffs get to
know each other well and deeply. Any ideas and objections made by employees are treated of
equal significance.
The chief executive officer of Starbucks Corporation confidently feels and believes that the spirit
of Starbucks is its employees and offers an interactive structure that makes personnel throw
themselves into their job.
The Managers of Starbucks Corporation treat each employee equally and all of the stuff called
partners to narrow the gap between managers and employees.
3) the numbers of employees are usually from three to six.
a. Why is the size of team an important factor?
b. What are the benefits to Starbucks of having small teams of staff in each branch?
Answer:

a. Team size is determined by company/organizational task types, goals, and processes. So, the size of a
team is clearly an important factor, because a large team is hard to manage and sometimes it could be
biased to some individuals than others. Also it is difficult to know well and deeply every members of
a large team. Whereas, smaller teams experience better work-life quality and work outcomes. Smaller
team also may experience less conflict, stronger communication, and more cohesion.
b. The benefits to Starbucks enjoying of having small teams of staff in each branch are:
It narrows the gap of bureaucracy.
Stronger communication among the staffs.
Experience better and quality work.
It creates bridge between organization-level strategy and staffing decisions.
It eliminates the distance between different statuses.
It helps to treat employees equal importance.
4) Starbucks achieve success and adhere to the criteria of planning, execution and review.
a. Explain three issues that need to be addressed in the planning process.
b. Reviewing is an ongoing process. Explain three things Starbucks can do continually to ensure goals
are being accomplished. (HINT: apply your facts on the review process to the Starbucks situation).
Answer: a. As reading the case of Starbucks Corporation it is clear that the three issues which need to be
addressed in the planning process are: Equal Treatment, Listen to the employees, Good welfare measures.

Equal treatment: It is one of the important issues which need to be addressed in the planning
process. Equal treatment at the work place means that the employer may not treat anyone
differently to other employees. In the case we see that, the managers in Starbucks treat each
employee equally and all of the staffs are called partners. It helps to narrow the gaps between
managers and employees. Every employee deserves fair and equal treatment and respect in the
work place, it helps to create friendly working environment. So, if equal treatment addressed in
the planning process it will help a company to maintain a good management system and create a
much closer and more familiar atmosphere than other places.

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Starbucks Corporation: Case Study in Motivation
HRM (case solution)

Listen to the employees: Listening to the employees can be another important issue which needs
to address in the planning process. Sometimes business faces ricks when they fail to address this
concern. In the case we see that, Starbucks wants its every employee to join in making and
developing plans, then work together in achieving their goals. As a result, their policies and
principles are communicated between all staff, and there occurs no limitation in employees
personal opinions. Listening to the employees means giving them great importance which can
motivate and encourage them to concentrate on their work effectively.
Good welfare measures: Good welfare measures is an issue where employees are offered welfare
policies like medical insurance(including health, vision and dental), commodities discounts,
house rent etc. In the case we observe, all employees of the Starbucks, including informal
personnel, are offered a great deal of welfare policies. Moreover, the partners who work over
20hours a week are entitled to benefits. So, this issue needs to be addressed in the planning
process to motivate the employees.

b. The three things that Starbucks can do continually to ensure goals accomplishment are:
i. Motivate employees
ii. Continue team work and communicate properly
iii. Maintain excellent relationship (with the employees and customer).
i. Motivate employees: Starbucks is already a famous coffee shop in the world and it has been one of the
most rapid growing corporations. If Starbucks wants to keep this accomplishment than it has to motivate
its employees properly on a continue basis. Starbucks believes that if the employees are motivated, they
work properly for the accomplishment of the organizational goal. As Employees are the heart of any
business so by motivating its employees will help Starbucks not only to achieve its goal but also to
expand its business.
ii. Continue team work and communicate properly: Without an effective communication between
Managers & employees an organization cant go for a long way. It means it cant sustain in the business
world. So if Starbucks wants to ensure continually goal accomplishment, it must have to communicate in
a proper channel.
iii. Maintain excellent relationship: To ensure the goal accomplishment Starbucks should maintain a
good relationship with both customers and its employees. It provides great support to its employees as
well as customers, so by continuing this relationship Starbucks can ensure its objective.
5. How does Starbucks manage to keep good relationships between their managers and
employees?
Answer: The managers of Starbucks treat each employee equally and all of the staffs are called

partners. Moreover to narrow the gap, they also co-work with basic level staff in the front line so that
they can maintain a good management system and create a much closer and familiar environment.
Managers also pay attention to employees through a communication channel. Starbucks manage to keep
good relationship between their managers and employees are:

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Starbucks Corporation: Case Study in Motivation
HRM (case solution)

Promote Understanding of Shared Goals: For employees to work together effectively, they must
understand group and individual goals. Lack of goal clarity often is misidentified as an individual
performance issue. This leads to blame, conflict and increased turnover by frustrated employees
who are working hard but not getting the results the organization expects. Starbucks promote a
clear understanding by sharing goals to its employees and managers.
Promote Understanding of Task Relevance: When employees understand shared goals, talent
managers can cultivate an atmosphere focused on problem solving, removing performance
barriers and delivering outcomes. This eliminates finger-pointing because when everyone
understands the relevance of everyone elses contributions, employees have increased awareness
of their interdependencies and thus have more respect for one another. Starbucks manages to
promote a clear understanding about its every task relevance among the managers and employees.
Managers and employees both has access in giving opinion : Starbucks manages to keep good
relationship between their managers and employees by permitting them both in presenting their
views and opinion.
Equal Treatment: Starbucks treats all its employees equally, which help to manage good relation
between managers and employees.
Flexible working Hours: Starbucks: Starbucks have flexible working hours, where managers plan
the working hours per workers and arrange the schedule of time off, according to the workers
wants in order to meet their requirements.
Good welfare measures: Starbucks offer a great deal of welfare policies, for instance,
commodities discounts for employees.
Treat as important Asset: Starbuck treats its employees as the most important asset in the
corporation, which also help to manage good relation between managers and employees.
6) Name the five issues that teams should take note of and address if necessary, before these
issues become a crisis.
Answer: The five issues that teams should take note of and address if necessary are:
Strong values to the customer: Team should give strong note to its customers. A strong value to
the customers comes from the culture of company which develops customers values and
societys values including the value of organization to drive the direction of business
improvement. Starbucks mission is that of providing a good environmental workplace and
treating partners with respect, various elements of business, highest standard of delivery coffee,
engaging communities and environment, active to make customer satisfaction and having
profitable business. The company has made a long run relationship with suppliers and sellers
more than need low prices because it wants to high quality products and service. Strong values
drive customer value come from the culture of company which develops customers values and
societys values including the value of organization to drive the direction of business
improvement.

Values-based service brand and communication for values resonance:

rands are very
important because it can communicate with customers. So a teams responsibility is to value its
brand and if the products or services of an organization are good they are appreciated by the
consumers. But if they are not there will be damage of companys image. Starbucks has
succeeded in marketing and has good resonance because it has strong relationships with its
customers, the local communities that create trust to each other. Starbucks has collaborated with
social responsibilities and also communicate company activities with its stakeholders to promote
an accountable environment. Brand of Starbucks has succeeded by improving the environment of
the stores through attractive furnishing, fixtures, artwork and music. Starbucks has designed the

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HRM (case solution)

stores as the bridge between the workplace and home for the customers. Starbucks has given to
create a warm and comfortable environment for the customers who would always feel different
when they would come to a Starbucks store to consume coffee.

Values-based service leadership for living the values: For any team the place of a eader is very
important and vital. A team should take notes to value its leadership service. Starbucks has
supported employees with touchable incentives like working conditions. Furthermore engages in
empowerment, corporation and communication of culture and value. All staff is called partners
without any regards to positions. The company empowers by decentralizing, where partners
corporate with the teams in each area.
Values-based service experience for co-creating: The main concept of services is that customers
should have real experience before buying and consuming services or commodities which they
need. The team responsibility is to priorities this issue. In-case of Starbucks we see that the
company has offered a good music and great environment in the Starbucks houses. No doubt,
why customers come to visit Starbucks to meet their friends, relaxing ever working because
Starbucks it offers customers more than beverages.
CSR as a strategy to sustain in the business: A team should take note to its CSR activities.

CSR or corporate social responsibilities can improve corporate production or services to build
the values. Starbucks has the long term relationships with suppliers to control the qualities and
prices, which they work together with suppliers and discuss strategic business to improve and
develop products. Starbucks focuses on social and environmental points. Starbucks company
engages the business ethics, which it can see Starbucks mission or Starbucks code of conduct
(from the part of Strong values drive customer value) including companys policy both social and
environmental.

These are the ive issues that teams should take note of and address if necessary, before these issues
become a crisis.
7. The staff at Starbucks are empowered and motivated employees. Briefly explain, in your own words,
the three principles that Starbucks implement in motivating their employees.
Answer: The three principles that Starbucks implement in motivating their employees are given below:
Equal treatments: Starbucks treat each employee equally and called partners, even the team
leaders. They also work with sales team members in front line to narrow the gap between them. They
have small teams which contains 3 to 6 workers, so that they can maintain good management system.
Equal treatment at the work place means that the employer may not treat anyone differently to other

employees. Every employee deserves fair and equal reatment and respect in the work place, it helps to
create friendly working environment.
Listen to employees: Listening to the employees means giving them great importance which can
motivate and encourage them to concentrate on their work effectively. Through a well-organized
communication channel, Starbucks listen to their employees. Managers plan according to employees
requirements which motivate them a lot. In the case we see that, Starbucks wants its every employee to
join in making and developing plans, then work together in achieving their goals. As a result, their

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Starbucks Corporation: Case Study in Motivation
HRM (case solution)

policies and principles are communicated between all staff, and there occurs no limitation in employees
personal opinions.
Good welfare measures: It is an issue where employees are offered welfare policies like
medical insurance (including health, vision and dental), commodities discounts, and house rent etc.
Starbucks offer a great deal of welfare policies: for example, a commodity discounts medical insurance
and vacations. Also the partners who work more than 20 hours entitled to benefits. Starbucks not only
offers a great deal of benefits, they also allocate stock dividends to all employees with a free script issue.
Because of this they have the same goal, which motives then to increase sales to earn more profits.

8. Management needs to commit to certain aspects in order to empower employees.

List four of these aspects.

Answer:
mpowerment is one of the philosophies discussed most often, especially as it relates to the
corporate team environment. The idea is simple enough: by implementing practices that help employees
feel confident, capable, and in control of the outcome of their work, they feel empowered to do that work
effectively and without excessive oversight. Ideally, this ensures commitment to the company's core
mission and vision, which results in greater productivity over the long term. Management needs to
commit certain aspects in order to empower employees. These aspects are:
1. Giving Reward: To empower employees manager needs to commit aspects of giving reward
which can help employees to continue to feel empowered, by rewarding them for their productivity will
encourage them to their job. A nice bonus or a gift card is always appreciated as a reward.

2. Developing Competency: In order to implement employee empowerment the employees

must be competent. Competency goes beyond developing job-task specific knowledge.
Employees must be properly trained. It does not make sense to empower employees to do things
such as make decisions or approve or initiate action if they are not properly trained
3. Delegating tasks: Once an employee has enough training that their ability to do the job is
unquestioned, manager will have to remind them that they are, in fact, empowered to do that job.
In other words, start delegating tasks to them, and make them aware that it's up to them to get the
job done.
4. Sharing Information: Information is what the organizational culture is made of initially.
Information is the gatekeeper to power. Sharing information about goals and, "Effective
communication about the organization's plans, successes, and failures may seem commonplace,
however its importance cannot be undervalued. So, management needs to share the information
about the organizations plan with the employees to empower them.
These are the four aspects that management needs to commit to empower employees.

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Conclusion
Starbucks changes the behaviours and view points of global consumers of
coffee, and this successful example has caught global attention. Nowadays, it is
not only one of the fastest growing corporation, but also an outstanding
business model with low employee turnover rate and high profit performance
shows that motivation is the key factor of a company policy, opposite to the
principles of classical management which is only concerned about production
and ignores workers ideas. A good relationship between managers and
employees could maintain a high quality of performance. We can learn from
Starbucks: using the correct strategy leads to success.