Starbucks

Starbucks

Starbucks began its business in 1971 in Seattle’s Pike Place Market. Today it’s the world’s leading retailer, roaster and brand of specialty coffee with coffeehouses in North America, Europe, Middle East, and Latin America. Worldwide, there are approximately 33 million customers that visit a Starbucks coffeehouse each week.

Howard Schultz, Chairman and CEO of Starbucks, attributes much of their success to the employees. Schultz found it ironic that for an industry that relies so heavily on its customer service; its employees were amongst the lowest paid and had the worst benefits of any industry. He believed that if you paid more than the going wage in restaurants and retail stores and offered benefits that weren’t available elsewhere, Starbucks would attract people who were well-educated and eager to communicate their passion for coffee. He further believed that by offering these benefits, the employee turnover rate would go down and the reduction in training costs would more than cover the added cost of the benefits.

Today, Starbucks offers a benefits package that is unheralded in the industry. Employees who work as little as 20 hours per week are eligible for health care benefits that include medical, dental, vision and alternate services. Employees can also share in the company’s growth by buying stock options of up to 14 percent of their gross pay. These stock options are known to employees as “Bean Stock.” Starbucks also offers its employees a stock investment plan that allows them to buy shares of Starbucks common stock at an 85 percent discount rate. Starbucks also offers its employees an attractive 401 (k) plan. It’s called “Future Roast” and Starbucks will match from 25 to 150 percent of the first 4 percent of pay, based on length of service. They also offer tuition reimbursement for those employees looking to further their education. Starbucks will even provide up to $3,000 of financial assistance to an employee who has chosen to adopt a child.

When employees were asked why they work for Starbucks, one of their top two reasons was “to work in place where I feel I have value.” Such value is evident in Starbucks policy of not reprimanding employees for constructive criticism. As a result, many good ideas have come from store employees. In 1989, based on the recommendation from one of their employees, Starbucks added drinks with non-fat or skim milk to address the concerns of their health-conscious customers. The Frappuccion, a cold coffee drink, was also the idea of store employees. Starbucks awarded those involved with their President’s Award for sales building and gave them $5,000, a travel package and a Rolex watch.

Starbucks employees are also encouraged to report their concerns if they feel particular management decisions are not supportive of the company’s mission statement; “Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow.” Their number one guiding principle is to “Provide a great work environment and treat each other with respect and dignity.” To make sure that Starbucks lives up to the mission statement and its principles, they formed a Mission Review team. Employees can submit signed or unsigned comment cards and the Mission Review team will respond within two weeks. In addition, Howard Schultz reviews all comment cards every month.

As a result of all of this, Starbucks employees have an 82 percent job-satisfaction rate. This compares to a 50 percent satisfaction rate for all employers and 74 percent for those companies in Hewitts “Best Place to Work.” In addition to the job-satisfaction rate, Starbucks has an extremely low turnover rate of less than 65 percent, compared to the industry standard of 150-200 percent. One Starbucks store manager commented, “Morale is very high in my store among the