Organizational Behavior Paper

Starbucks Corporation

Satrio Haryoseno
09/296071/PEK/14677

MASTER OF MANAGEMENT
FACULTY OF ECONOMICS AND BUSINESS
GADJAH MADA UNIVERSITY
YOGYAKARTA
2010

Organizational Behavior Paper

Starbucks Corporation
Starbucks Corporation, named after the first mate in Herman Melvilles Moby Dick, averages
more than $35 million customer visits each week, has stores in over 37 countries and has loyal
patrons who typically return 18 times a month (Michelli, 2007). Not bad for a coffee shop
founded in 1971 in Seattles Pike Place Market. Starbucks stores can be found in urban and
suburban areas, across this country as well as in Europe, Latin America, the Middle East and the
Pacific Rim. According to Michelli (2007), Starbucks is more than just a story its culture,
brand and product excellence continues to win glowing accolades. In 2007, Starbucks was
recognized by Fortune as one of Americas best companies to work for (Fortune, 2008).
In the early 1990s, Starbucks senior executive team, lead by Howard Schultz, and its partners
(Starbucks-speak for employees) contributed to defining and shaping the companys core values,
principles and culture when they penned the companys mission statement laying out the guiding
principles behind the company. Starbucks (2008) mission is to establish itself as the premier
purveyor of the finest coffee in the world while maintaining uncompromising principles as they
grow. In order to achieve this, Starbucks includes six guiding principles that helps measure the
appropriateness of their decisions. The six principles are (1) provide a great work environment
and treat each other with respect and dignity; (2) embrace diversity as an essential component in
the way they do business; (3) apply the highest standards of excellence to the purchasing,
roasting and fresh delivery of coffee; (4) develop enthusiastically satisfied customers all of the
time; (5) contribute positively to the communities and environment and (6) recognize that
profitability is essential to future success.
The first principle in Starbucks mission statement is to provide a great work environment and
treat each other with respect and dignity. Starbucks leadership is committed to their mission
statement and guiding principles because they have established internal checks to make sure that
leaders are living the companys espoused values (Michelli, 2007). Two of Starbucks internal
checks are the Mission Review Committee and Partner View Surveys. The review committee is
where partners are encouraged to voice their opinions about if the company practices are
consistent with the mission statement and guiding principles and the Partner View Surveys

which are conducted every 18-24 months seek anonymous feedback from partners around the
globe.
Howard Schultzs vision had little to do with making great coffee and everything to do with
partners receiving and offering exceptional customer service.

Starbucks main competitive

strategy is its communication with its partners and customers. For example, partners are given
extensive training in product knowledge, guiding principles of success, personal empowerment,
and the importance of creating warm customer experiences. Starbucks consistently spends more
on training than it does on advertising and it pays huge dividends for Starbucks in retaining
employees, maintaining connections with current customers, and bringing new customers into its
stores (Michelli, 2007).
Jim Alling, president of Starbucks U.S. Business, notes the accomplishments of Starbucks
leadership are not the result of magic, its just who we are. Maybe there is something magical
about founding a business that aspires to enrich human spirit (Michelli, 2007). Starbucks claims
to live every day by their mission statement and principles. According to Michelli (2007), the
Starbucks Experience has two very distinct levels in the company: its unique corporate culture
and its passing down of these values to its partners.

In its corporate culture, Starbucks

management creates a culture for employees in which empowerment, entrepreneurship, quality

and service define the values of the firm. In passing down these values, the partners create a
unique and personal experience for customers. The Starbucks Experience reflects doctrines that
are simple, results-oriented and very powerful (Michelli, 2007). They are Make It Your Own,
Everything Matters, Surprise and Delight, Embrace Resistance and Leave Your Mark. Michelli
(2007) stated, In the spirit of Starbucks, these principles encourage us to listen and respond with
a greater awareness of opportunity. They remind us that we are responsible for unleashing
passion that ripples outward from behind the scenes, through the customer experience, and
ultimately into our communities (p. 17). Through Starbucks mission, guiding principles and
their doctrines the organization avoids misalignment between its values.
The responsibility for keeping an organization informed falls squarely on the shoulders of the
companys leadership. Communication from leaders to partners, partners to customers and
partners to suppliers must be modeled, nurtured and practiced consistently. Starbucks is so
committed to this principle that they have open lines of communication between the main

headquarters and its partners. According to Gallo (2008), Schultzs vision was not to build a
coffee shop, but instead to build a company that treats people with dignity and respect. During
an interview last year with CNBCs Donnie Deutsch, Howard Schultz said, were in the people
business. Its all human connection. Gallo goes on to say, what we can learn from Schultz is
that respect for employees will translate into better customer service, which ultimately leads to a
stronger bottom line.
Starbucks has successfully used conflict-resolution to grow business and increase profitability.
One conflict involved the lack of paid leave for adoptive parents vs. natural parents (Michelli,
2007). In a matter of a few weeks, the issue made it to the Mission Review Committee and
Starbucks leaders provided this parent-group with a two week benefit. This is one example of
how Starbucks leaders resolved one issue that conflicted with one of their guiding principles.
Organizational Behaviors Perspectives
What makes the Starbucks become world wide company?
Corporate Cuture
One of the main things that draw people to Starbucks is its culture.

John Moore (2006) from

Tribal Knowledge stated, People do not go to Starbucks to ingest the daily caffeine dosage; they
go in search of warmth provided not only by the beverage but also by the human store ambient as
well. A strong culture demonstrates high agreement among members about what the
organization stands for.
Managers strive toward making the coffee consumption unforgettable; Starbucks covers the
personalization of services and products to each client. In Starbucks people are treated as
individuals, with specific wishes and needs that must be quickly fulfilled by the company. This
philosophy demands that every single store adapts its marketing strategies and product mix to
please its own local customers.
Starbucks philosophy or culture shapes the Starbucks employee into a cohesive group of people
who all work together to accomplish Starbucks goal, which is to serve there customers as
individuals with specific needs.

Starbucks has the clear mission statement to establish itself as the premier purveyor of the finest
coffee in the world while maintaining uncompromising principles as they grow. They also have
value and great principal to achive that mission. The six principles are (1) provide a great work
environment and treat each other with respect and dignity; (2) embrace diversity as an essential
component in the way they do business; (3) apply the highest standards of excellence to the
purchasing, roasting and fresh delivery of coffee; (4) develop enthusiastically satisfied customers
all of the time; (5) contribute positively to the communities and environment and (6) recognize
that profitability is essential to future success. They have succeed to maintain their corporate
value, credo and principals so that their employees can walk together with diversity to share the
same vision and mission.
One of the things Starbucks has tried to do over a long period is truly build a company that has a
conscience, that achieves a balance between profitability and a level of benevolence. People
sometimes miss that because the headline is so often the ubiquity of the company, the growth of
the company. Starbucks has also done many things that no other company has done before in the
way they have tried to build the business.
Communication and Motivation
Communication is important for any successful organization. There are four functions of
communication they are the following: control, motivation, emotional expression, and
information. Communication acts to control employees behavior in certain ways.
Communication also helps motivation by giving employees detailed instructions on what needs
to be done. Communication is a release for employees to voice their frustrations through
emotional expression, and lastly giving employees information so, they can have the knowledge
to make decisions on their own; this is important in communication within an organization.
Starbucks uses a form of downward communication to implement instruction and training of
their employees. The following is the detailed training program that baristas at Starbucks go
through before starting their new jobs:
1. Every partner or barista hired for a retail job in a Starbucks store received at least 24 hours
training in the first two to four weeks. The training included classes on coffee history, drink

preparation, coffee knowledge (four hours), customer service (four hours), and retail skills, plus a
four-hour workshop called "Brewing the Perfect Cup."
2. Baristas were trained in using the cash register, weighing beans, opening the bag properly,
capturing the beans without spilling them on the floor, holding the bag in a way that keeps air
from being trapped inside and affixing labels on the package exactly one-half inch over the
Starbucks logo.
3. Beverage preparation occupied even more training time, involving such activities as grinding
the beans, steaming milk, learning to pull perfect (18- to 23-second) shots of espresso,
memorizing the recipes of all the different drinks, practicing making the different drinks and
learning how to make drinks to customer specifications.
4. There are sessions on how to clean the milk wand on the espresso machine, explain the Italian
drink names to customers, sell a $875 home espresso machine, make eye contact with customers,
and take personal responsibility for the cleanliness of the coffee bins.
5. Everyone is drilled in the Star Skills, three guidelines for on-the-job interpersonal relations:
(1) maintain and enhance self-esteem, (2) listen and acknowledge, and (3) ask for help.
6. These rules are to be memorized: milk must be steamed to at least 150 degrees Fahrenheit but
never more than 170 degrees; every espresso shot not pulled within 23 seconds must be tossed;
customers who order one pound of beans must be given exactly thatnot .995 pounds or 1.1
pounds; never let coffee sit in the pot more than 20 minutes; always compensate dissatisfied
customers with a Starbucks coupon that entitles them to a free drink. (Thompson & Gamble,
1992)
The training regime for Starbucks is detailed but is part of the many ways that Starbucks has a
good communication with its employees. By having such detailed training it Communicates
motivation by clarifying to the employees on what is to be done, how well they are doing, and
what can be done to improve performance if its Sub-par (Axia College of University of
Phoenix, 2008). Starbucks as an organization has specific rules that the employees must follow,
for instance never let the coffee pot stand for more than 20 minutes, or do not heat the milk over
170 degrees. By Starbucks doing this they are using a form of control to maintain employee

behavior within the business. This control is used to keep a peaceful working environment, so
instead of employees running to call the owner with their problems they go to the designated
manager, and follow the chain of command.
Marty Blalock (2005) stated that Communication is the key to build trust, promote
understanding and empower and motivate others. Starbucks has used their good communication
skills to help empower, and motivate their employees. The employees have the power to give
free drink cards, so to make their customer happy; the employee does not have to call for a
manager approval; this does much for an organization. Starbucks specific guidelines have
communicated with what Starbucks the organization needs and wants from their employees. The
message that Starbucks puts out there, has motivates their employees to fill the need that
Starbucks communicated in their training.
Conclusions
Starbucks has used Organizational behavior concepts to their benefit to get to the peak of their
success. Starbucks as an organization made 54.1 billion dollars in 2007; Starbucks has reached
these numbers by opening stores all over the world, and by making smart decisions like
partnering with Pepsi, Kraft foods, and Dryers ice cream. The internal working of the Starbucks
Organization have made lasting impressions on the customer by perfecting there organizational
culture. Starbucks has done this by striving to make their coffee consumption unforgettable for
their customers, and by setting standards that are unique for their business. Starbucks is also so
successful because they are always striving to re-ignite there emotional attachment with their
customers. Lastly, Starbucks has used organizational behavior concepts like communication to
build trust, to promote understanding, to empower, and to motivate its employees to ensure an
unforgettable experience.

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