HRM at Starbucks Coffee

Starbucks Coffee, the largest coffeehouse company this is general perception that known by others but who knows the reason behind how Starbucks name created. Starbucks name was found in the first publish of “Moby Dick” book.In 1971,Starbucks open its first outlet is in Washington (USA). In 2005, Jim Donald took the posts but was asked to resign after sales decreased in 2007, was replaced byHoward Schultz, the current President and CEO. Now, Starbucks has self-declared as the world’s leading dealer, roaster and brand of speciality coffee with more than 13,000 outlets in 39 countries. The stores sell espresso drinks coffee, tea, coffee mugs, blended drinks, small bites and other coffee accessories. Starbucks created a division called Starbucks Entertainment to market music, film and even books using the “Hear Music” brand.Ice cream and coffee that are under Starbucks are sold at grocery stores. The prices of Starbucks Coffee productssignificantly higher than the market average.

Starbucks Coffee offers benefits to partners and employees, including vision, health and dental insurance. This causes Starbucks able to offer friendly and helpful staff to helpcustomers in questions or problemsregarding to the coffee or service. Due to the customer service provided is good, it attractcustomers to the stores. Stock option grant available, as is 401k with matching to employees who work 20 hours a week or more.( Harris, 2007) The citizen voted Starbucks for best place to work in the States as it ranks at the 11th place. (Fortune magazine, 2005)

Human Resource Management

For company’s success employees are vital. They are public face of company and their hands passes through every single dollar of sales.  Howard Schultz thinks that employees can break or make a company. If an employee has a positive interaction with customer, definitely customer will be come back. Vice versa, customer is gone. It’s important for Starbucks to hire and recruit the right person,train well, motivate and retain them. Therefore, the company should give satisfying jobs, appropriate work schedules, a positive work environment and fair compensation and benefits. To gain competitive advantage these activities are essential of Starbucks’s strategy to deploy human resources. Human resource management (HRM)is the process an organization takes actions to attract, develop, and retain quality employees. (“Human resource management,”1997)

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Values and Principles

Certain key values and guiding principles used in Starbucks culture by Howard Schultz and senior executives. Schultz is against franchisingto ensure the quality of products is controlled. He opposed about not selling artificially flavored coffee beans-“We will not pollute our high-quality beans with chemicals”. Howard did not want the company to enter into supermarket sales so that the quality of the beans would be under control.

Starbucks’ management was rather strict about importance of pleasing customers. Every employeehas to undergo trainings so that when it comes to critical moment, they will act based on right mind and to ensure customers are fully satisfied. The motto “just say yes” used to every customer requests. Employees were trained to be out spoken and speak with their open minds. Senior executives give the right to employees to voice out their idea or opinion on Starbucks.

Job Analysis

To develop HR plan, HR managers that knowledgeable with jobs that Starbucks needs performed. Information about a given job is organized by Starbucks through a job analysis to identify the skills, task and responsibilities that are require as well as the abilities and knowledge needed to perform it. The information collected for the job analysis use by managers through preparing two documents:

1. Lists the duties and responsibilities of the position (job description)
2. Lists the qualification (knowledge ,skills) and abilities that need to perform the job (job specification )

(“Job analysis”, 2006)

Selection of Employees

Employee Selection is essential as for hiring the right men. Effective selection is evaluated by their skills and qualifications. Effective selection can only be done when requirement meets the line. By picking best applicant for the job, the organization will get good performance of employees. Moreover, there will be lesstruancy and employee turnover problems in organization. By employing the right applicant, the company saves money and time. During selection procedure,proper screening of candidates takes place, testing for the entire potential candidate who applied for the given job (“Employee Selection Process,” 2012).

In order to differentiate Starbucks from competitors, Starbucksuses their employees for example baristas to create the ‘Starbucks Experience’.”To have the right people hiring the right people.” was Starbucks’ recruitment motto.

The aspects that Starbucks looks for in employees are like adaptability, reliability and the capability ofteam working. Starbucks often specified the qualities that looked for in employees upfront in its job positions, which allowed prospective employees to evaluate themselves to a certain extent (“Starbucks’ Human Resource Management,” 2005).

Hiring process information for an interview (Starbucks)

Interview

To make good hiring, interviewing candidates is the best way to gather the necessary information. Resume provides a basic outline of an applicant’s knowledge, experience and skills. Interview allows Starbucks to get more detailed information such characteristic, personality, confidential, expectation of interviewer, knowledge of the company to past experience in the coffee shop industry, work ethic and so on as to whether this candidate is suitable for Starbucks. (“Hiring process information”, 2012)

Building a Top Management Team

Effective management team are needed in growing companies. Many businesspeople believe there is only room for one leader, but a strategically built management team can be an efficient way to delegate leadership to business-specific experts (Mitchell, 2012). Jobs are demands matching to people’s strengths to form a management team. That means responsibilities are given to people based on skill level. “Don’t give yourself an impressive title and job unless you’re right for the job.”(“Build Your Management Team,” 2011).

With potential experienced employees, Schultz continued to secure Starbucks’ top management team. In 1994, Orin Smith was promoted to president and chief operating officer. The Starbucks executives are Dave Olsen, Howard Schultz, Orin Smith and Howard Behar which helps strengthening the company’s values, culture and principles. Additional executives were hired and were sent into different department like marketing, store supervision, human resources, finance, and information system. Schultz is specific of adding people into the board of directors with experience in expanding its retail chain and valuable perspectives.

Training of Employees

Training is essential for organizational development and success. With proper training, an employee will be more efficient and productive.

There are 4 training basics:

1. Training is given to new applicant. It teaches them with basic organizational knowledge. Such as, goals, rules and regulations, vision and etc.
2. The existing employees are retaught to gather their knowledge.
3. If any change technology, training is given to handle with those changes.
4. Trainings are given when employees get promoted to share the responsibilities.

(“Training of Employees,” 2012).

Putting in systems to recruit, hire, and train baristas and store managers to accommodate with fast growth. In screening candidates for new positions, Starbucks’ vice president for human resources used some simple guidelines.

Every partner or barista hired for a retail job has to undergo intensive training before working. The training class topics even include coffee history and customer service. Their workshop motto is “Brewing the Perfect Cup.” Basic Starbucks retail skills are taught too. Barista are even taught to satisfy customer special requirements.Everyone is trained and three guidelines for interpersonal skills: (1) Increase self-esteem, (2) Always attentive and (3) Ask for assistance.

Trainees have to attend intensive classes. Their intensive training consists of knowledge of store operations, procedures, supervising people.Qualification to be a trainee must have experience or at least store managers. Part of their main objectives was to enforce the company’s values, principles, and even knowledge of Starbucks history and coffee.

Before every retail Starbucks opens, they will start recruiting 8 to 10 weeks before opening. An experience team will be sent to newly opened stores to train the employees. (“Starbucks Hungary,” 2012).

Compensation and welfare of the employees

Howard Schultz always thinks about his employees and partner. Different types of monitory and non monitor benefits programs are introduced by him in order motivate the employees so they can offer full to the Starbucks. Part time and full time staff are enjoying the benefits. A flexibly, work-life balance, health insurance,vision insurance and dental is being offered to his employee. He offered the elderly care program for their parents and company shares with the name of ‘BeanStock’ to employee. CUP Fund is a program that helps employees with financial support during times of hardship or crisis and a Total Pay package which offers discretionary bonuses. To motivate the employee these incentives were design so they can satisfy customer and Starbucks. It also helps Starbucks to retain competent, high performing employees and high employee satisfaction rate.Schultz’s rationale was that they will treat your customers well if you treat your employees well.

Planning

Planning is a management function that assesses the environmental management to set goals and map out future activities to achieve those goals.

The process which Starbucks assure that they have the right kinds and number of people at the right times in the right places, people who are efficiently and capable of effectively completing those tasks will help the organization to achieve its goals called Employment planning. Employment planning then translates the organization’s goals into an HR plan that allow the organization to achieve these goals. The process can be condensed into 2 steps

1. Assessing current and future human resource needs
2. Developing a plan to meet those needs

Organizing

Organizing is a management function that determines how the company’s human, financial, physical, information and technical resources developed and coordinated to perform tasks to achieve objectives.

Organizing is something vital for Starbucks. Job analysis is an organizing process because information about a given job organizes by Starbucks through performing a job analysis to identify the responsibilities, skills and tasks that it entails and the abilities and knowledge that needed.

Starbucks retain competent, high performing employees, managing employee performance and developing an appropriate compensation and benefits program play a role in this organizing process.

Leading

Leading is the management function that energizes employees to contribute their best individually and in collaboration with others. Leading or directing is the process of trying to influence others to achieve organizational goals. People who are responsible for specific tasks task manager is designed to motivate and to help them achieve their goals and thus the common goals of the organization (Schultz, 1997). 

The process by which efforts are directed, energized and sustained toward attain a goal is motivation. Motivation has three key elements

1. Direction
2. Energy
3. Persistence

According to Maslow’s hierarchy of needs theory is within every person

Motivation and Maslow’s hierarchy are linked together. For example, incentives given by Schultz to employees will motivate them because it fulfils individual’s need as shown as hierarchy table.

Questions and Answers

Q1. What seem to be the most important things leading to the success of this company?

There are many small companies developed to larger and famous companies in this worldwide, they do not rely on luck but they have their own strategy to success which includes how well they perform PLOC function in their organization. Starbucks is growing in the international market. When people see a logo which is green and has a twin-tailed mermaid, what goes into their mind? Those people definitely will think of Starbucks due to the companyis becoming a leading global company by making a difference in people’s lives all around the world.

The management of Starbucks apply the philosophy of the CEO, Howard Schultz, which is “treat people like family and they will be loyal and give their all” that becomes one of the factors which leads the company success. Not only full time staff he introduced benefits, but also to those part time staff. To motivate the employees to work hard for the company to succeed, the employees are offered with flexible work schedule, health insurance, and treat the employees with respect. The company shares offered to its employee by the CEO with the name of ‘Bean Stock’. With these benefits offered, the employees give the best service to the customers because customers are the important asset of the company by providing a training and development program for employees to fulfill the requirement of their customers.

The second factor leading to the company to succeed is the company has innovation to create new types of coffee or new drinks to attract more customers, increase the company’s profit and allow the company to have an upper hand in the market. The benefits given to the staff cause the staff to give everything to the company including their innovation. As an example, the latest product of Starbucks in the market is salted caramel mocha. Starbucks not only sell coffee and juice blend, they sell food which are pastries and cakes to allow the customers to have some tea break.

B. What do you see as the major challenges facing by this company over the next five years?

Although Starbucks is success in managing human resources which cause it to succeed in the international market, challenges still has to face and overcome it to allow the company to success continuously. Starbucks has a lot of competitors but Starbucks is still over them. However, Starbucks has a major competitor currently or maybe in the future which is McDonald’s McCafes. Dunkin Donuts is not consider the major competitor of Starbucks because there is a few outlets in Malaysia and those outlets are located in Kuala Lumpur only. On the other hand, Starbucks has 115 stores all over Malaysia which is much more than Dunkin Donuts. For McCafes, although it has only one outlet in Damansara, it still well known and people are going there to try the coffee and muffins. Thus, McCafes might be rival competitor in future.

In additional, McDonald’s uses Starbucks high price directly against the company in their marketing campaigns, 75% of its profits are based on its coffee products and other specialty beverages (Starbucks Corporation, 2010). It means that every time the price of coffee rises Starbucks will take a direct hit. On the other side, McDonald’s focus first on food and then only coffee, thus makes the company less vulnerable to the rise of coffee prices around the world.

Findings

Starbucks employees play an important role to success. “We built the Starbucks brand first with our people, not with consumers.We believed the best way to meet and exceed the expectations of our customers was to hire and train great people, we invested in employees.”(Schultz, 1986).Starbucks provides welfare for the employees. “Schultz’s rationale was that if you treat your employees well, they will treat your customers well.” (Associated Press, Sept 2005).Hence, in order to make the company success, Starbucks offers all full-time and part-time employees to enjoy the benefits such as high wages, full health care. Moreover, Howard Schultz offers company shares to employees and elderly care program for their parents. Lastly, a program called the CUP Fund which helps employees with financial assistance for the one who are in financial crisis and even bonuses. These incentives are used to motivate employees to treat customer and company right as the company treats them well. The pros of this management using by Starbucks is to help to reduce Starbucks’s employee turnover. Starbucks employees tend to be young and healthy which keeps the cost of health benefits low. Due to the low-partner turnover, the training cost has been reduced and it will indirectly increase the income of the company. Besides, in 1997, researcher showed that he average customer went back 18 times per month (Schultz and Jones, 1997). The low-partner turnover may contribute to customer loyalty and customers developed a relationship with the baristas serving coffee. The cons of the implementation of the strategy is that the eligibility of the employees to receive the benefits. The employees in Starbucks can only eligible for benefits on the first day of the second month after they have been paid for at least 160 hours by the last Friday of a consecutive two-month period. (Canada, Effective October 2005) It may lead to the long-time working for the employees and finally they will resign and choose to work for a company with less benefit and less working hours.

Starbucks also uses Human Resource Planning (HRP) to attract, develop and retain quality employees. The organization employs talented employees through selection process. The selection process consists of certain steps. For Starbucks, the most essential part of evaluating a candidate is through interview. The aspects that employers looks within the employees are characteristic, personality, confidential, expectation of interviewer, knowledge of the company history in the coffee shop industry, work ethic and so on. With this interview, employers are able to understand more or knowing sets of skills of each individual candidate. With this Human Resource Planning (HRP), it aids the company to prepare ahead of time for vacancies rather than solving in a complicated manner when an employee decided to resign unexpectedly. This prepares Starbucks for future opportunities such as business growth and expansion. Another pro of Human Resource Planning (HRP) is having career-development. Identifying potential capable company leaders, company will help them to grow. For an instance, Starbucks has a program called “New Partner Orientation and Immersion”. What it does is giving an extensive program to increase the quality of Starbucks core values; build knowledge of business and retail operations; create awareness about Starbucks benefits programs and introduce partners to their key internal stakeholders. (DeniseBrandenberg, eHow Contributor)

Besides, the recruitment method used by Starbucks which is interview contains advantages and disadvantages. Traditionally, the interview has been the main means of evaluating the right candidates for a job. Almost all organizations use the interview at some stage in their selection process. Similarly, most applicants expect to be interviewed. Personal characteristics as practical intelligence and interpersonal and communication skills can assessed by interviews. The interview can be used for answering applicants’ questions, selling the organization and negotiating terms and conditions. Contrarily, it is doubt that interview can really evaluate correctly on the ability at work, work skill and relevant experience of the employees. (Build an Interview, 2008) A further problem with interviews is that factors that are not related to the job such as clothing, color, ethnic origin, gender, accent, physical features or a disability influence the decision. There is also evidence that interview is relatively simple and such a fast method to collect data information that able to get in applicants’ resume or curriculum vitae might never obvious even on a written form. (Build an Interview, 2008)

Conclusion

Starbucks’ popularity grew so fast that nothing like it was seen before. Starbucks has self-declared as the world’s leading dealer, roaster and brand of specialty coffee with more than 13000 outlets in 39 countries. It created a business out of good quality employees, reliable partnership connections, community involvement, public responsibilities and superior services. All these factors together with its history and background contributed to Starbucks’ success in business. Although there are many boulders and conflicts, Starbucks has ways to deal with it because it’s good management. Starbucks number one priority is to always satisfy customers. Firstly, they listen attentively to everything the customers have to say and try their best to please them. This to gain the customers trust and respect its importance to ensure company’s survival as customers is the main source for company’s income. A company as flexible and unique like Starbucks able to perform at peak and climb to the top.

What we have learned from this assignment, Starbucks success due to many factors. Firstly, Starbucks hires good employees. Employees are important; they can break or make a company. Therefore Starbucks only hire and recruit the right person, train them well, motivate them to try their best and retain them to gain competitive advantage, Starbucks deploy human resources. Like other companies, has Human Resource Management to attract, develop and retain only good and suitable employees. Starbucks’ management stressed about the importance of pleasing customers. Employees are trained to be more independent, taking daring measures if necessary, to make sure customers are fully satisfied-the theme is to “just say yes” to customer requests.

Other factors for Starbucks success are due to value and principles. There are certain key values and guiding principles used in Starbucks culture by Howard Schultz and senior executives.”To build a company with soul” isthe basis value in the effort that Starbucks pursuing the perfect cup of coffee ceaselessly. The company also have strict quality control for its product and will never use artificially flavoured coffee beans.

Moreover, Starbuck slow employee turnover rates. With Starbucks compensation and welfare provided to all employees, it satisfies the employee’s needs. Schultz believes that customer satisfaction is directly proportional to employee’s satisfaction.

Lastly, we realize the use and importance of Human Resource Planning (HRP). With the use of HRP, it can improve the utilization of human resources, achieve economies in hiring new workers. Importance of HRP are able to maximize use of manpower, to anticipate additions of problems, to determine training levels and works and know the cost of manpower.