STARBUCKS MISSION STATEMENT Our mission: to inspire and nurture the human spirit one person, one cup

p and one neighborhood at a time. Here are the principles of how we live that every day: Our Coffee It has always been, and will always be, about quality. Were passionate about ethically sourcing the finest coffee beans, roasting them with great care, and improving the lives of people who grow them. We care deeply about all of this; our work is never done. Our Partners Were called partners, because its not just a job, its our passion. Together, we embrace diversity to create a place where each of us can be ourselves. We always treat each other with respect and dignity. And we hold each other to that standard. Our Customers When we are fully engaged, we connect with, laugh with, and uplift the lives of our customers even if just for a few moments. Sure, it starts with the promise of a perfectly made beverage, but our work goes far beyond that. Its really about human connection. Our Stores When our customers feel this sense of belonging, our stores become a haven, a break from the worries outside, a place where you can meet with friends. Its about enjoyment at the speed of life sometimes slow and savored, sometimes faster. Always full of humanity. Our Neighborhood Every store is part of a community, and we take our responsibility to be good neighbors seriously. We want to be invited in wherever we do business. We can be a force for positive action bringing together our partners, customers, and the community to contribute every day. Now we see that our responsibility and our potential for good is even larger. The world is looking to Starbucks to set the new standard, yet again. We will lead. Our Shareholders We know that as we deliver in each of these areas, we enjoy the kind of success that rewards our shareholders. We are fully accountable to get each of these elements right so that Starbucks and everyone it touches can endure and thrive.

Business Ethics and Compliance Starbucks believes that conducting business ethically and striving to do the right thing are vital to the success of the company. Business Ethics and Compliance is a program that supports Our Starbucks Mission and helps protect our culture and our reputation by providing resources that help partners make ethical decisions at work. The program develops and distributes awareness materials, including the Standards of Business Conduct; facilitates legal compliance and ethics training; investigates sensitive issues such as potential conflicts of interest; and provides additional channels for partners to voice concerns. Partners are encouraged to report all types of issues or concerns to the program through their choice of the offered communication channels. The majority of reports received by Business Ethics and Compliance involve employee relations issues. This trend is consistent with other companies retail or otherwise that provide alternative reporting mechanisms as part of a comprehensive ethics and compliance program. For more information about our commitment to Global Responsibility, visit Starbucks Shared Planet. For more information about Starbucks Business Ethics and Compliance, please email EthicsAndCompliance@Starbucks.com. Standards of Business Conduct The Standards of Business Conduct booklet is a resource distributed to all partners to help them make appropriate decisions at work. The standards are a brief statement of some of the company's expectations of how we are all to conduct Starbucks business, consistent with our Mission and core values.

Goals & Progress: Community Involvement Starbucks is committed to helping communities thrive in the neighborhoods, cities and countries where we operate. While we have historically had a strong connection to the communities we serve, we believe we have a responsibility to do even more with the assets of the company. In a sense using our scale for positive change. In the past year, we have experimented and innovated to bring together our partners (employees), customers, civic leaders and nonprofit organizations in their local communities with unique contributions. One way we do this is by inviting customers to join us in community service projects. In 2011 these projects generated more than 442,000 hours of service with 1,400 projects completed in Aprils Global Month of Service alone. We also believe in empowering young people to be catalysts for change in their local communities. Through our Youth Action Grants, we invest in young people to inspire them to create new and innovative solutions for community issues while gaining valuable leadership skills. In 2011 more than 50,000 young people contributed to their neighborhoods. As our company has grown to reach more diverse neighborhoods and communities around the world, the issue of diversity has only become more important in every facet of our business. To amplify community and diversity efforts, we collaborate with nonprofit organizations, businesses, civic leaders and individuals who share our values. We are also exploring new ways to reach underserved communities through an innovative business model and partnerships. In fiscal 2012 we will launch two community stores as part of this new approach; each transaction will generate a contribution benefiting New Yorks Harlem community through the Abyssinian Development Corporation, and the Los Angeles Urban League in the Crenshaw neighborhood. We will leverage our retail and online presence to increase awareness and galvanize support in these neighborhoods for the nonprofit partners and their critical work. At a time when there is a tremendous rollback in public and private resources, Starbucks is investing to create job opportunities and to strengthen community based organizations like Abyssinian Development Corporation. Their commitment remains to improve the quality of life for the communities they serve. Sheena Wright , President and CEO Abyssinian Development Corporation Going forward, as the global economy weathers these challenging times, we know that our commitment to being a good neighbor has never been more important. We will work to revitalize communities and fuel the human spirit through community economic development and other local efforts. We invite you to learn more about the programs we support and our recent milestones.

Starbucks: FOR INFUSING A STEADY STREAM OF NEW IDEAS TO REVIVE ITS BUSINESS.

Authors: CERTNER, JON, gertner@fastcompany.com Source: Fast Company; Mar2012, Issue 163, p112-149, 6p Document Type: Article Subjects: Starbucks Corp. -- Management; Business enterprises -- Size; Corporate culture; Innovation management; Innovations in business; Product management Abstract: The article focuses on the coffeeshop chain and coffee industry firm Starbucks Corp. An anomaly in the company's corporate culture is considered in which although Starbucks is a large international business enterprises, it focuses on the development and introduction of new products and innovations. Chief Executive Officer (CEO) Howard Schultz states that innovation in business has no relationship to the size of a business enterprise. Dub Hay, a Starbucks employee who is in charge of tasting and evaluating new coffee blends, discusses the development of a light roast coffee used as an example of a new product by Starbucks. Full Text Word Count: 3482 ISSN: 10859241 Accession Number: 71732748 Database: Business Abstracts with Full Text (H.W. Wilson) Section: 24 A man named Dub Hay works out of a big industrial kitchen on the seventh floor of Starbucks's headquarters in Seattle. Known as the cupping room, the space is furnished with stainless-steel tables and an impressive array of state-of-the art coffee machines. Hay -- friendly, stout, with a relaxed manner that belies his spectacular daily intake of caffeine (he even chews beans throughout the day) -- holds a position that essentially makes him the high priest of coffee at the world's biggest coffeehouse chain. "Best job in the company," he says matter-of-factly. His cupping-room ritual involves lining up glass tumblers filled with massive heaps of freshly ground coffee and small portions of boiling water. The brew is muddy and outrageously strong, or "cowboy coffee," as Hay calls it. Typically, fellow executives and employees -- "partners," in Starbucksspeak -- join him here to judge beans from around the world or help craft a new Starbucks blend. Is the aroma reminiscent of grapefruits? Dusty cocoa? Fresh-turned earth? (All good things.) Hay does not sip coffee. Rather, he notes its aroma and gently dips a tablespoon into a tumbler and brings it to his lips, and sucks the coffee in with a swift, loud, vacuumlike pull. Phwwwwwwwwp. "You have to let it atomize across your palate," he explains. Then he moves on to the next tumbler. Phwwwwwwwwp. When you try thousands of cups a year, he remarks, this is how you know which ones make the grade. Hay points out a particular steaming glass of coffee in the line. To me, it resembles all the others. But this cup is different: It contains the first light roast that Starbucks has ever sold. Trademarked "Blonde," this glass signals an important event for Hay and his boss, CEO Howard Schultz. For a company whose brand is built on the premise that dark roasts are better than light, it has been a formidable challenge to convince the executive team this wasn't an insane idea and to create a light roast to meet Hay's and Schultz's standards. "I figured it was going to be pretty easy -- in about a month we could knock this thing off," Hay tells me. But he failed over and over again. In addition to trying a multitude of beans, it took 80 different kinds of roast progressions -- or rather, variations of roasting time and temperature -- to finally hit on the right combination. Blonde is not merely a strategy to give Starbucks customers a new taste variety. Over the past two years, Starbucks has collected a trove of consumer research to develop what executives there call a "sensory preference" map. As Mary Wagner, head of R&D, told me one morning in

December, about a month before Blonde's global unveiling, "If I know a little bit about you, I can tell what you drink, when you drink it, how you drink it, why you drink it, and what's important in your life." In simplest terms, the sensory map shows what the global universe of coffee drinkers prefer -mild or bold; smooth or biting; woody or acidic. Starbucks drinkers, the dark roasters, fall within a certain small area of this map. But 40% of U.S. coffee drinkers prefer lighter, milder roasts. As Wagner explained, "This is huge. So we looked at it as a big opportunity to offer something for everybody." Blonde, in other words, represents the company's big -- that is, huge -- long-term ambitions and appetite for growth. Starbucks has now regained its footing after suffering a miserable few years. One explanation is that it achieved this resurgence by rediscovering its roots -- good coffee, served expertly, and with an emphasis on what Starbucks employees rhapsodize as the "human connection." But the company's rebound is more complicated, and arguably more interesting, than that. Much of Starbucks's financial rebound (in 2011, $1.7 billion in income on $11.7 billion in revenue) actually results from domestic cost-cutting -- closing underperforming branches and wrenching savings from improvements in efficiency and supply-chain distribution. At the same time, the company has been steadily expanding around the globe, especially in China. Meanwhile, much of Starbucks's reputational rebound is the result of Schultz and his company's efforts to renew a culture of entrepreneurialism and innovation that had fallen by the wayside during a mad rush for growth a few years back. Some of these efforts have taken the form of new products -- Blonde lighter roast, or Via instant coffee, which in 2011 reached annual sales of $250 million. Others take the form of community involvement, such as Starbucks's Jobs for U.S.A. program, a recent endeavor to use wristbands as a way of raising funds for job-creation initiatives in economically hard-hit communities. "I've always said there's not a silver bullet or one single thing that creates a solution," Schultz tells me during a candid conversation one afternoon in his Seattle office. Starbucks is something of a corporate paradox. The company is a multinational giant and growing, especially through branches overseas and new packaged goods in the grocery aisle. At the same time, it is able to introduce risky ideas quickly, systematically, and sometimes idiosyncratically, much like a startup -- even though it has more than 17,000 branches and nearly 200,000 employees. How? Schultz has come to believe that size is not a limiting factor. In terms of being innovative, he says, "I think scale can be an advantage. It's not about being big. It's about behavior." Starbucks's headquarters -- housed in a former Sears Roebuck warehouse by the waterfront shipping yards -- is a rambling affair that takes up seven immense floors. As you'd expect, there's a Starbucks shop in the building lobby. But there is also, less predictably, a large and bustling Starbucks deep inside the headquarters, on the eighth floor, where Schultz works. Starbucks employees often take a break at this meta-Starbucks and use their own money to drink or eat what they've been selling conceptually from their cubicles. One of the odder aspects of spending a few days at the Starbucks HQ is that someone is always asking if you'd like to have coffee at the nearby Starbucks. Meaning the one down a long corridor on the eighth floor. I first met Schultz last fall in New York, at a Starbucks in downtown Manhattan, while he was talking up the impending launch of the company's Jobs for U.S.A. program. Schultz, tieless but dressed in a pressed shirt and navy suit, was wearing a prototype of the Jobs for U.S.A. wristband that Starbucks would soon offer to customers for a $5 donation. While he was open to talking about his company's performance, what seemed more exciting to him was how the company had mobilized around an idea: to provide capital to small businesses that would, in turn, leverage the capital to create jobs. The effort was more complicated than the simple wristband would imply; it involved deep research on community lending, legal vetting, and complex marketing assessments and designs. It also involved locating a U.S. manufacturer of wristbands, not an easy feat when such trinkets are almost exclusively made overseas.

To a certain extent, Jobs for U.S.A. illustrates how projects get moving at Starbucks: Schultz -- still the company's main instigator -- has a kernel of an idea, in this case fueled by emails he received from customers despondent about the U.S. job market. He then activates a team, even inviting members over to his house for pizza, if that helps to create a stir of urgency. Ideas at Starbucks are supposed to undergo a rigorous review process and 6 to 12 months in the company pipeline. Sometimes, too -- as was the case of Blonde (18 months in development) or Via instant (about 20 years) -- it can take far longer. "But we did this in 30 days," Schultz says, pointing to the wristband. "I'm going to use this for years as a symbol and example to our people of what's possible." A few months later, in Seattle, when I ask Schultz for a progress report, he tells me that the company has distributed 500,000 wristbands and dispersed about $2 million to more than a dozen organizations. To me, that made it only a modest success. On the contrary, Schultz says he's pleased. "I don't think I ever thought this would be the end of unemployment in America," he remarks. He points out that the initiative has already done quantifiable good. Schultz, who visits branches several times a week to chat with baristas, adds that his employees, young and frank and unafraid to vocalize a complaint, have told him they feel proud of the effort. This is not negligible. Starbucks considers a product's success not only in terms of consumer acceptance but also in terms of employee acceptance. The company's U.S. workers alone constitute a huge and influential social network. Schultz tends to see his company's recent tribulations as a case study in what can happen to a business that uses growth as a strategy rather than a tactic. For the better part of 15 years, he explains, from 1992 through 2006, "practically everything the company did produced a level of success and adulation." Yet Starbucks's consistent successes distorted its managers' view of their own creativity. As he puts it: "If Frappuccino is a hot category and you introduce a new flavor, and it moves the needle a lot, the organization comes to believe, 'That was a great thing we did.' And it imprints a feeling of, 'That was innovation.' But that's not innovation. In fact, it's laziness." The line extension of a product, by Schultz's criteria, involves little in the way of risk taking or long-range vision. And that was the problem with the old Starbucks. In trying to understand this company's response to its crisis -- the low point, one executive told me, was at the start of the recession when a host of economic commentators concurred that Starbucks coffee was an ideal thing for consumers to cut back on -- it's helpful to view the organization as having shifted from a methodical expansion of the brand to a methodical enhancement of the brand. Starbucks no longer seems to perceive its future as depending on an ability to clone its essential store concept ad infinitum. To be somewhat reductive: You can try to sell the same amount of stuff at more stores. Or you can try to sell more and more stuff at the same number of stores. These days, the overarching gestalt of the company -- demonstrated by its plans for redesigned stores, investments in innovative coffee machines, an expansion of its digital networks and rewards programs -- is striving for every branch to be both more versatile and more artisanal. It is not simple, or philosophically consistent, to sell products that are commoditized and personalized at the same time. The same goes for trying to be global and local simultaneously. Starbucks employees actually have a rejoinder to this -- they call it thinking "glocally." The something-for-everyone ethos of Blonde lighter roast, therefore, fits in with company coffees (rare Ethiopia Harrar, for instance) meant only for epicures. Standardized wall decor is complemented by the work of local artists. At Seattle HQ, these apparent paradoxes make perfect sense. Roy Street Coffee & Tea is the last stop on my afternoon tour of Starbucks's Seattle stores. My guide is Arthur Rubinfeld, Starbucks's president of global development and the company's top design guru. Roy Street is a curious place. There's no Starbucks logo and no Starbucks cups; its only apparent tie with the mother ship is an INSPIRED BY STARBUCKS note stenciled on the front door. As such, the store could be seen as a stealth effort at "local-washing" and yet another example of Starbucks's attempts to expand at the cost of indigenous neighborhood coffeehouses.

Within Starbucks, at least, the store is viewed more benignly as a laboratory for high-end products. Thus, there are a number of Clover machines here, each costing upward of $10,000, which produce a single cup of high-quality coffee through a special French-press-like process. Starbucks bought the Clover company in 2008 and is now rolling out the machines around the world. Each machine is connected to the Internet and a central databank, managed by Starbucks, that instructs the machine on the optimal brew time of different blends. Even if you have the money, you can't buy one (though celebrities often call the company to try). Clover now exists for the enhancement of the brand and as a part of "the theater of experience," as Rubinfeld puts it, of its new or redesigned stores. What's ultimately most intriguing about Roy Street is the feel of the place. It is chic and comfortable, like a boutique hotel lobby. And it is big, about 3,600 square feet, which has demonstrated to Starbucks executives that they can create exceedingly large spaces and manage them efficiently. Finally, it's versatile. Rooms can be partitioned off for independent-film screenings or concerts while a slightly futuristic Starbucks scene exists nearby. At Rubinfeld's suggestion, we pause to take a look around. A few students are doing homework; some businessmen are taking a meeting; a woman sips wine at the bar, while a man next to her pokes at a charcuterie plate of local, handmade cheese and salamis. The barista is fiddling with a new machine, a Clover for tea that can adjust its brew temperature for different leaf blends. Roy Street is the most extreme example of the company's experimentation. It's also testing wine, beer, and premium-food offerings in five markets, as well as other subtle changes in decor or lighting, and how they might affect a branch's atmosphere and receipts. These are all efforts to realize a fundamental goal: to boost store business beyond the breakfast rush, which still constitutes the bulk of the company's revenue. And in Roy Street, in particular, Rubinfeld believes, Starbucks has the answer. As we observe the scene, he leans over and whispers, "You could be here from 6 a.m. to midnight." As Starbucks was struggling to mount a turnaround between 2007 and 2010, there seemed a belief, at least on Wall Street, that the company's best days were behind it. Schultz was publicly advised that to save the company, Starbucks should lower prices and cut health benefits to employees. He did neither. While he did shutter branches and roil his management ranks, what seems most striking is that the company invested in new ideas rather than cut back. The next great challenge, Schultz explains, involves the company's deepening involvement in health and wellness. "I think despite the growth and development and the size of the company," he tells me, "we're still in the early days of what Starbucks might become." Later this year or early next, Starbucks will integrate a new line of fruit and vegetable juices and new healthy foods into its stores. But even before then, Schultz will oversee a risky (and related) endeavor. "We are opening a whole new retail store," Schultz says as he reclines on a large couch in his office. Behind him, a wall of windows frame the Seattle rail yards and, in the distance, Puget Sound. The test concept, he adds, is operating in a secret place in this very building. "Could I see it?" I ask. "No, you can't," he says, laughing. "But we're going to create a brand-new retail concept around health and wellness that's never been done before. Because we think we can create a national retail brand." Schultz's appetite for risk is all too apparent here -- and innovators often meet with failure. Several times during my visit to Seattle, I tasted some of the juices, currently sold under the Evolution name, that Starbucks is testing for launch. Some are conventional and appealing, tangy mixes of mango and orange; others come fresh out of the Starbucks R&D lab and taste, at least to my palate, like they come fresh out of the Starbucks R&D lab. For lunch, would you drink 12

ounces of neon-green liquid kale sweetened with apple juice or spiced with a ginger kick? When I ask Schultz whether Starbucks might be straying too far from its core, he says, "Well, you have to ask: What is the core?" Starbucks is not a tech company, he points out, nor is it an apparel company. "We have 40-plus years of acquiring real estate and designing and operating stores all over the world. We understand how to elevate and romanticize an experience built around a beverage. And we think we can do that again on a platform of health and wellness, and elevate the nutritious value of what fresh fruit and vegetables can be in a world that is longing for educational tools to eat and live healthier." The company can, he vows, "bring that to life in a way that has not been done." Schultz is a very good salesman. He gets you curious; he wants you to buy in. He assures me that the concepts for the two new health and wellness stores, which will debut this spring in Seattle, are "stunning." Obviously, he sees a market. More to the point, he sees a mission. Schultz effectively contends the distinction is not relevant; Starbucks has enjoyed the biggest profits in its 43-year history by pursuing both. And he sees this as logical rather than paradoxical. "Profit as a singular goal is a fairly shallow aspiration, and it's not enduring," he says. "I've always said that you can't create long-term value for the shareholder unless you create long-term value for the employees and the communities you serve." In Schultz's view, companies with a social or environmental mission simply get rewarded. "And those companies that are unwilling to participate in improving and enhancing the communities they serve and the employees they employ," he adds, "will be in the penalty box. And they should be." Still, embracing new and risky endeavors -- or making a consistent effort to balance business with social involvement -- is not the only explanation for why Starbucks has bounced back. You can get the feeling, talking to Schultz, that if you asked him to make you a macchiato, he could (and would) walk you over to the Starbucks store near his office, but that he'd also lecture you on why one espresso technique is superior to another and why the coffee machines at Starbucks are now built at a lower height, at his insistence, so the barista can chat and make eye contact. To that end, innovation is pointless unless you sweat the details. When Schultz and I met in downtown Manhattan, we had spoken for about an hour before we shook hands and said goodbye. I walked toward the door, but before leaving I looked back. The Starbucks boss -- now comfortably a billionaire -- was wiping a spill from the table with a napkin. Then he stood up to bus his mug to the counter. On the way, though, he paused: He had noticed an empty coffee cup that someone else had left behind, and so he grabbed that, too.

Preserving the Counter Culture. Authors: Weber, Gretchen Source: Workforce Management; February 2005, Vol. 84 Issue 2, p28-34, 6p Physical Description: Table ; Illustration ; Portrait Document Type: Corporate Profile Contains biographical material Subjects: Schultz, Howard; Donald, Jim; Chain coffeehouses; Employee recruitment; Employee retention; Coffeehouses NAICS Codes: 722213 Snack and Nonalcoholic Beverage Bars SIC Codes: 5812 Eating places Keywords: Coffee bars -- International aspects Starbucks Corporation -- Human resource management Abstract: At Starbucks, competitive wages and generous benefits have made frontline recruiting a smooth operation to date, but the explosive worldwide growth accompanying the company's success means that the coffee giant faces a tremendous challenge of finding enough quality employees to keep customers coming back to its stores. A detailed analysis of the Starbucks recruitment approach and how it plans to meet future challenges in this area is provided. ISSN: 15475565 Accession Number: 510462417 Database: Business Abstracts with Full Text (H.W. Wilson) Translate Full Text: Preserving the COUNTER CULTURE AUTHOR: TITLE: SOURCE: Weber, Gretchen Preserving the COUNTER CULTURE Workforce Management 84 no2 28-30, 32-4 F 2005

SEVEN MORNINGS A WEEK, Starbucks CEO-designate Jim Donald makes eight important phone calls. As president of Starbucks North America, he contacts five of the 550 Starbucks district managers in North America, each of whom oversees 10 stores, to check in for a minute or two. Then he dials three Starbucks stores at random to say thank you to employees and ask for feedback. But as the Seattle-based coffee giant grows globally by more than four stores and 200 employees every day, the surprise phone calls from the top brass are also a calculated strategy for maintaining the small-company atmosphere that Starbucks hopes to retain despite its explosive rate of expansion. Donald, who will replace outgoing CEO Orin Smith on March 31, says that keeping the feel of the company small while it mushrooms in size requires a mindset that must start at the highest levels. "We (are) going 100 miles an hour," says Donald, the former head of supermarket giant Path-mark Stores Inc. who joined Starbucks in 2002. "We're growing at 20 percent a year. We've got to be able to reach into this organization and say, 'How's it going?' and 'Good job!' If any company doesn't have the time to talk to people on the front lines, then you might as well close it up, because it's not going anywhere." Starbucks, of course, is going everywhere. But even if there are enough customers in the world willing to pay as much as $5 for a cup of coffee to fuel Starbucks' aggressive expansion,

questions about its ability to successfully recruit and staff its workforce remain. Can a company so dependent upon the personalities of its employees possibly find enough qualified and desirable candidates to greatly increase its current workforce of 85,000 in the coming years and still maintain its brand? How can it maintain its reputation for high-quality customer service and the unique feel that made it successful in the first place? Despite its legions of well-trained, friendly employees and the undeniable popularity of the whole Starbucks coffee experience, there are those who don't think the company can continue to grow indefinitely. H.D. Brous & Co. analyst Barry Sine says that while Starbucks touts its customer service as exceptional, he doesn't believe the consumer experience is very different from other high-end retailers. Nor does he think it's enough to carry what he believes is an unsustainable rate of growth as the company continues to expand beyond highly concentrated big-city hubs and into more rural areas where premium prices might not be as well-received. Despite Starbucks' popular brand and its good employee benefits package, Sine thinks that staffing could become more difficult as unemployment declines and competition for good employees increases. "In a recession you can always find people," Sine says. "but now with the economy booming again, that will make it more difficult to find the right people." Even Donald, who has experienced rapid expansion as a former Wal-Mart executive, says that finding enough good people to fill the swiftly growing number of positions is a genuine concern. "My biggest fear isn't the competition, although I respect it," he says. "It's having a robust pipeline of people to open and manage the stores who will also be able to take their next steps with the company." Currently, there are more than 8,900 stores in 35 countries, and in October, the company raised its total eventual worldwide retail target from 25,000 stores to 30,000, which will include 15,000 stores in the United States alone. And its eye-popping growth rate--1,344 new stores in fiscal 2004 and a target of 1,500 new stores for fiscal 2005--is boosting the bottom line. Revenues grew 30 percent from $4.1 billion in fiscal 2003 to $5.3 billion for fiscal 2004, which ended in October. When calculated on a comparable 52-week basis for both years, the company reports a 27 percent increase in revenues. While new store openings are certainly the source of much of that increase, even existing-store sales jumped more than 13 percent and 8 percent in November and December, respectively, of fiscal 2005.

BUILDING THE STARBUCKS EXPERIENCE Ask Starbucks executive about the company's recipes for success, and they will tell you unequivocally that it's the people, or "partners," as Starbucks calls its employees. They will tell you that Starbucks doesn't just sell coffee, it sells an experience. And that experience, they will say, is completely dependent upon the attitudes and abilities of the partners on the front lines who greet and serve more than 30 million customers globally every week. The most loyal of its regulars return for their lattes and Frappuccinos 18 times a month. By providing consistent, positive customer interactions between partners and customers, Starbucks has become part of a daily routine for millions of customers. "It's definitely a profitable strategy," says Dave Pace, the company's executive vice president of partner resources. "When a customer comes in and the person behind the counter says hello and maybe greets you by name, you feel a connection you don't find with most retailers

anymore. It makes you feel welcome, and it makes you want to come back." This strategy of selling an entire Starbucks experience has made the company one of the great growth stories of the last 15 years. In 1990, there were just 84 Starbucks stores. Now there are more than 100 times that number. Since 1992, when the company went public at $17 a share, there have been four stock splits. The stock ended trading in mid-January at $56 a share for a market cap of $22.7 billion. Sharon Zackfia, an analyst at William Blair & Co. in Chicago who follows Starbucks, doesn't think the company will have trouble with staffing even if it continues to grow at its current rate. She says that despite the huge number of employees that must be hired in the coming years to sustain the expansion, the growth rate hasn't changed much from previous years: 1,339 new stores in 2003, 1,177 new stores in 2002 and 1,208 in 2001. "They've already passed the risk point," she says. "It's always a challenge to find good people, but Starbucks isn't ramping up any faster than they were, and they've always been successful in hiring--because they pay for it." The staffing strategy at Starbucks is simple, says Sheri Southern, vice president of partner resources for Starbucks North America: "To have the right people hiring the right people." And because Starbucks has garnered a reputation as a good employer--(it was ranked 11th overall on the just-released 2005 list of Fortune's Best Places to Work and was No. 2 among large companies on the same list), "it's not hard to recruit at this company," Southern says. "People want to work here. We're very fortunate that way." Experienced store managers--typically even at new stores--make initial contact with potential employees through job fairs, in-store advertisements, the company Web site and word-ofmouth. When a store is about to open in a new community, an informal meeting is often held in a town library or similar central location and serves as an opportunity for the new manager to introduce the company and notify locals about job opportunities, Southern says. In large markets, the fairs are more organized and held more frequently. Last year, for example, there was a hiring fair every Wednesday afternoon for two hours in a Mill Valley, California, store, and a similar fair on the first Wednesday of every month at a store in San Diego. All job fairs are posted on the company's Web site. Starbucks also supplies interview guidelines to hiring managers to help them ask questions that reveal whether or not candidates have the core skills necessary for the job. The guidelines provide lists of behaviors that outline the ideal employee for each position. By using software developed by Taleo, an enterprise staffing management technology company, Starbucks has the ability to maintain a database of hundreds of thousands of candidates who have applied for jobs online and answered a variety of basic informational and skills-based questions, says Diane Pardee, senior vice president of corporate marketing and communications at Taleo. With this technology, Starbucks has a swift and systematic way to both screen out candidates and staff up stores quickly. The Starbucks brand is well-known enough for applicants to self-select to some degree, Southern says, but the company encourages this self-selection by stating upfront on its Web site and in its hiring advertisements what kind of employees are wanted: people who are adaptable, dependable, passionate team players.

GETTING THEM, KEEPING THEM

Pace says that what draws people to work at Starbucks locations around the world from Portland to Paris--and what keeps them there once they are hired--are the practices and the culture the company has developed as a result of an intentionally strong mission and values statement that emphasizes creating a respectful and positive work environment. Pace, who held executive positions at Pepsico Inc., Tricon Global Restaurants and i2 Technologies before joining Starbucks, says that the company is well aware that having satisfied employees translates into greater profits in the long run. Starbucks works hard to select the right employees at the outset, to keep lines of communication open throughout the organization, and to reward and retain employees with an above-minimum-wage salary. Its comprehensive health benefits for full and part-time employees and their same-sex or opposite-sex partners includes medical (hypnotherapy and naturopathy are covered), dental and vision coverage, tuition reimbursement, stock options, vacation and a 401(k) plan. In 1987, Starbucks became one of the first retail companies to offer part-time employees the same benefits package that full-timers are offered. And while Starbucks does not disclose the cost of various line items, with a workforce that is 64 percent part-time, the cost of this policy is significant. In fact, chairman and chief global strategist Howard Schultz told BusinessWeek Online in October that in the next two years, Starbucks will spend more on employee health care costs than it does on coffee. Currently, the company covers about 75 percent of the costs of health care coverage for its U.S. employees, and Schultz cites these costs as one of the reasons for the 11-cent price increase on beverages launched in October. Starbucks pays an average of $1.20 for each pound of the 200 million pounds of coffee the company roasted in fiscal 2004. Given this equation, Starbucks will most likely spend well over $200 million in employee health costs in the coming years. Starbucks won't release information about what it pays its employees, but a spokesman for the company says that salaries and hourly wages are above minimum wage and that they vary regionally across markets. Fortune reported in January that Starbucks pays the most common hourly job, "coordinator," $35,294 a year; the most common salaried position, store manager, receives $44,790 a year. A randomly selected partner at a Starbucks in a suburb of Boston says she was recently hired at a rate of $8 per hour, which is $1.75 above that state's minimum wage, and a partner at a Starbucks store in the Pacific Heights section of San Francisco says the starting salary at his location is $8.62 an hour, which is slightly above the city's minimum wage of $8.50 per hour. But even this company, one that touts its commitment to being an employer of choice and prints its mission statement on the back of business cards, doesn't spend money on employees out of the goodness of its corporate heart. Offering competitive wages and good benefits, coupled with an intense training program, is a calculated strategy designed to fuel company expansion and generate greater profits in the long run by maximizing the potential of its frontline employees. And Pace says that even if the company were to hit hard times, this strategy of aboveaverage investment in training and rewarding employees isn't going to change. "We're not giving these benefits to our employees because we're a successful company," he says. "We're successful because we're giving to our people. We believe it's a fundamental way to run our business. We're in business and we need to deliver to our shareholders. The difficult decision is, Do I spend money and risk profitability, or do I make cuts? We go with what's best for

the long-term health of the organization. "What's different about us is that we round on the side of the partner." Donald adds that the company's most important investment is its partner base. "And that investment is returned in stability. In order to sustain growth, you have to have a stable base. There is a direct correlation between the success of Starbucks and the stability and tenure of our employees. Without partner stability, we couldn't grow so fast." The strategy is working. Donald says the turnover rate for Starbucks store managers is about 20 percent and that the turnover rate for partners is about 80 percent. Analysts put the average turnover rate for employees in the quick-service restaurant business at about 200 percent. A 2003 Starbucks Partner View Survey conducted by the company found that of the majority of partners polled, 82 percent stated they were satisfied or very satisfied with Starbucks. "Starbucks has always understood that human resources is a fundamental cog in their business, and if they're going to sell a premium product, they need to offer premium service as well," analyst Zackfia says. "They've invested in their workforce time and time again, and it's been critical to their success as a company." Starbucks doesn't release numbers on how much it spends on employee training, but the company does say that it spends more on partner recruitment and development than it does on advertising, which cost the company $68.3 million in fiscal 2004. Every new store employee in North America starts work with a 24-hour paid training module called "First Impressions." This is a standardized curriculum taught primarily by store managers. It focuses on coffee knowledge and how to create a positive customer experience. A team of 32 training specialists constantly updates the curriculum and works with store managers to ensure consistent and effective training throughout North America, Southern says. Managers and assistant store managers take a 10-week retail management course. Computer, leadership and coffee knowledge classes, as well as diversity training, also are available to partners. At the corporate level, many new employees start their Starbucks careers with immersion training. These programs, which require employees to work in a Starbucks store to learn the business, vary in length depending upon the position, and are designed to give non-frontline partners a true experience making beverages and interacting with customers. One media relations manager at corporate headquarters started his job at Starbucks recently with six weeks of classroom and in-store training, and he says the investment in him by the company was the best thing that could have been done to prepare him for his new job. Corporate employees are encouraged, but not required, to work a shift in a store at the holidays to help them stay in touch with the front lines of the business. This kind of flow of communication among different segments of the company is just what staying small is all about, Starbucks executives say. And as long as it can retain the consistency of that feel, the sky just may be the limit for the specialty coffee chain. John Pearce, professor of strategic management and entrepreneurship at Villanova University, says that it's the millions of little personal interactions every day that keep the company successful. By rewarding its employees well, with a package that includes health insurance, stock options and a free pound of java a week, Starbucks ensures that each partner has a vested financial interest in the success of the company every day, motivating them to make those little customer interactions all the more positive.

Can Starbucks triple in size, spread farther around the globe and still retain its identity? The answer may come down to how much human beings continue their love affair with coffee. But with the number of stores, sales and job applicants growing every day, the value the company places on investing in people is not in question.

ADDED MATERIAL INTERNATIONAL FLAVOR The coffee giant, which is growing at a rate of four new stores each day, has a presence in more than 30 countries, including such far-flung locales as, Shanghai, China; Paris; Lima, Peru; and, of course, the company's headquarters of Seattle. WHAT'S BREWING OVERSEAS AS PRESIDENT OF STARBUCKS INTERNATIONAL, Martin Coles says that making sure that the customer experience translates appropriately across cultural lines is an unqualified must. "We'll expand more slowly than we have to rather than over-expand and compromise the quality of the experience our customers get," he says. Coles won't reveal what Starbucks spends on employee development in order ensure top customer service around the world, but he will say that the efforts to recruit, train, compensate and retain employees overseas are so huge that together they compose one of the biggest expenditures in the multibillion-dollar company budget. Training, for example, typically includes flying new "partners," as employees are called, to company headquarters in Seattle for intensive training and to other locations for store experience and an additional eight weeks of instruction. Whenever the company enters a new market, Starbucks brings new partners to Seattle for six to 12 weeks of training on topics ranging from business practices to how to produce and roast coffee, Coles says. This kind of commitment is, of course, expensive. That's why some skeptics think that the Starbucks expansion overseas is unsustainable. Barry Sine, an analyst at H.D. Brous & Co., says he doesn't think staffing will be a problem in overseas markets like China and Europe, but that the company has an uphill battle for customers. "Starbucks is an American imitation of a European concept," Sine says. "To try to sell that back to the Europeans, that's a real marketing challenge." In Austria, proud capital of coffeehouse culture, the company planned to have 60 stores, beginning with one opening a month last year. But as 2005 begins, the total number in Austria is eight stores, all in and around Vienna. That's down from 10; two didn't make it. While Starbucks International has struggled for profitability since 1996, when the first 12 overseas stores opened in Japan, fiscal 2004 may have marked a turning point. Total international revenues were up 31 percent, pushing the balance to a slight profit for the first time. For now, the international expansion is going full steam ahead. Starbucks opened 413 new international stores in fiscal 2004, bringing the total number of Starbucks outside the United States to 2,437 locations in 33 countries as of October. Two months

later, there were nearly 100 more international stores in countries as diverse as Chile, Turkey and Korea. Coles says that the long-term target of 15,000 international stores is attainable and cites China as the next big market and Europe as "an open book." PART-TIME WORKERS LAG IN BENEFIT COVERAGE THERE ARE NEARLY 25 million part-time workers in the United States, and they lag behind full-time employees in benefit coverage. But at Starbucks, where 64 percent of the staff is part-time, all employees working at least 20 hours per week have equal access to benefits. Percentage of Percentage of U.S. full-timers with access 68

U.S. part-timers Type of benefit Retirement Health care * Medical * Dental * Vision Paid holidays Paid sick leave Life insurance Disability insurance (short-term) Bonus and stock options Employer-assisted child care 20 13 8 37 24 10 14 28 8 with access 27

84 56 35 89 70 63 47 52 16

Authors: THE ASSOCIATED PRESS Source: New York Times; 7/12/2011, p5, 0p Document Type: Article Subjects: Europe; Africa; Starbucks Corp.; Expansion (Business); Business development; Business planning Abstract: Starbucks said on Monday that it would realign its top management jobs to help advance its international growth. The company said it would divide responsibilities for its business into three global regions: Asia, the Americas and a region containing Europe, the Middle East and Africa. Starbucks, the coffee giant, now has two units, the United States and international. [ABSTRACT FROM PUBLISHER] Full Text Word Count: 395 ISSN: 03624331 Accession Number: 62543342 Database: Business Abstracts with Full Text (H.W. Wilson)

Starbucks Reorganizes For Growth. Section: Business/Financial Desk Starbucks said on Monday that it would realign its top management jobs to help advance its international growth. The company said it would divide responsibilities for its business into three global regions: Asia, the Americas and a region containing Europe, the Middle East and Africa. Starbucks, the coffee giant, now has two units, the United States and international. Three company executives have been appointed to lead the new regions. Howard Schultz, chief executive of Starbucks, said the change would help maximize its opportunities in growing markets like China, Brazil and India. Starbucks, which is based in Seattle, has nearly 11,000 stores in North America and almost 6,000 elsewhere. It had a major slump in the recession after changing consumer habits and a rapid overexpansion. It slowed growth, cut jobs, closed stores and reorganized. Sales in cafes have rebounded, and the company is expanding its overseas and consumer products businesses. The United States still generates most of its revenue. Nearly three-fourths of the $10.7 billion Starbucks brought in during its most recent fiscal year was from the United States. But Mr. Schultz said international business eventually would produce at least half the company's revenue. Starbucks is one of many consumer products companies looking overseas for growth as the middle class expands abroad. One of the biggest prizes in pure growth is China, Mr. Schultz said in an interview. Starbucks said it also planned to expand in India this fiscal year and in Vietnam the next year. John Culver, who leads the company's international business, will be president of the China and Asia Pacific region. Cliff Burrows, president of Starbucks United States, will head the Americas region, which

encompasses the United States, Canada, Mexico and Central and South America. Michelle Gass, president of Seattle's Best Coffee, was named president of Starbucks' Europe, Africa and Middle East region. Other changes announced Monday include transferring responsibility for Seattle's Best to Jeff Hansberry, head of the company's global consumer products and food service business. Annie Young-Scrivner, global chief marketing officer, will also oversee its Tazo tea business. Starbucks said it would continue to push its consumer products, such as Via instant coffee, under the new management structure. The company said the transition would be complete by September. Late Edition - Final ~~~~~~~~ By THE ASSOCIATED PRESS

Authors:

Dunning, Matt Tsikoudakis, Mike Veysey, Sarah Source: Business Insurance; October 3 2011, Vol. 45 Issue 38, p26-26, 1p Document Type:Feature Article Subjects: Employees -- Dismissal of Keywords: Starbucks Corporation -- Environmental issues Abstract: The article offers information on a song composed by performed by former Starbucks employee Christopher Cristwell concerning his frustration with the environmental initiatives of the firm. ISSN: 00076864 Accession Number: 525521904 Database: Business Abstracts with Full Text (H.W. Wilson)

Starbucks cans singing barista for video rant Many gripe about their jobs, but one California man set his complaints to music and then hit a sour note with his employer. A former Starbucks employee was so riled by customers who frequent the Chowchilla, Calif., shop where he worked that he was moved to write and perform a song in tribute to his frustration, donning only his underwear and his company-issued green apron. The song and accompanying video, posted on YouTube and picked up by the satirical website StarbucksGossip.com, went viral, collecting more than 720,400 views since July. The employee, 25-year-old Christopher Cristwell, was promptly fired, according to an ABC News report. "Hello, rich white lady. I already know what you want, you want a skinny vanilla latte, young debutante. Well, that drink won't make you skinny. You've got to work for that. And, just in case you're wondering, I just called you fat," Mr. Cristwell sings over an acoustic guitar. Other targets of his scorn include customers who order multiple time-consuming breakfast sandwiches despite the long line of other patrons gathering behind them and would-be customers angrily banging on the storefront window after finding the shop closed for the day. In a follow-up video, complete with a second song, Mr. Cristwell said he harbors no ill will toward the company and understands the reason for his termination. "Just so you know, I loved my job. I loved my boss and coffee too," he later sings. "I will miss every minute I spent with my Starbucks crew." Christopher Cristwell's musical rants about his Starbucks customers posted online got him fired from his job. ~~~~~~~~ Contributed by Matt Dunning; Mike Tsikoudakis and Sarah Veysey