Running head: STARBUCKS
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Starbucks: A Communication Perspective
John R. Sardelli
Roger Williams University
Author Note
This assignment is being submitted on April 22nd, 2013 for Christine Promin’s LEAD
502-Communication Skills for Leadership Roles course.
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Starbucks: A Communication Perspective
In his book, Pour Your Heart into It, Howard Schultz explains his life philosophy and
Starbucks in one simple concept, “…the story of Starbucks is not just a record of growth and
success…It’s living proof that a company can lead with its heart and nurture its soul and still
make money” (Schultz & Yang, 1997 p. 5). The story of Schultz, his leadership, communication
style, and Starbucks can be summed up in one word, heart. From Schultz’s love of coffee, to
devoted staff, and committed customers who bring a loyalty seldom seen in today’s market
place, Starbucks story is, quite simply, a love story.
Founded in 1971, Starbucks opened its first retail store in Seattle’s Pike Place Market.
Starbucks name was inspired from the book Moby Dick, the romance of the high seas, and the
tradition of coffee trader’s spending life at sea (Schultz & Gordon, 2011). Today, Starbucks has
over 18,000 stores in 60 countries. In the United States alone, Starbucks has 13,279 coffee
houses (“Starbucks Coffee Company”, 2013). Their products include coffee and other hot and
cold beverages, pastries, sandwiches and other assorted snacks.
Howard Schulz led Starbucks and built the company into a global brand after purchasing
and taking the role of CEO in 1987. In 2000, he stepped down from CEO only to return in 2008
as CEO and chairman of Starbucks Coffee Company. Schultz’s reasoning for returning to the
CEO position was to transform a failing company suffering from massive self-induced financial
losses. His goal upon returning as active CEO was to rebuild a brand echoing a positive ethos to
all stakeholders during a global financial crisis. He credits the achievement of his goal to his
communication skills, relationship-building skills, and his listening skills (Schultz & Gordon,
2011).
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Starbucks mission statement reads, “To inspire and nurture the human spirit--one person,
one cup, and one neighborhood at a time” (“Starbucks Coffee Company”, 2013). The mission
statement’s language is designed to communicate Starbucks Coffee Company’s commitment to
social responsibility. Starbucks reinforces their mission statement with a list of core values
found on the organizations website and other documents the company uses to communicate with
its stakeholders. The organization’s core values are their coffee, employees, customers, stores,
and neighborhoods in which they operate. Starbucks communicates its core values by
establishing a positive work place, treating employees with high levels of respect, high coffee
delivery standards, community and environment engagement, and satisfying its customers
(Enquist, 2012).
Howard Schultz’s transformational leadership style is communicated through his broad
variety of schemata and conscious use of symbols to enhance his leadership effectiveness to
reach his goals while satisfying his follower’s needs. According to Abraham Maslow (1943)
there are five hierarchically aligned human needs that exist. Maslow’s Hierarchy of Needs is
arranged into five need types beginning with physiological then safety, belonging and love, selfesteem, and finally self-actualization needs. Unlike transactional leaders who focus their
communication efforts to lower level needs (physiological needs and safety needs) Schultz’s
transformational leadership communication style meets the motivational needs of the total
person.
Schultz believes the only competitive advantage Starbucks has as a national retail
company is its workforce. He satisfies his employee’s physiological needs by giving them a
modest paycheck. Additionally, Starbucks also offers employee healthcare packages, stock
options, and career counseling satisfying employee safety needs (security needs). According to
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StarbucksGossip.com (2013) and GlassDoor.com (2013), the average salary for a barista is
$34,500 a year. In an interview when asked about these gracious employee benefits Schultz
answered, “The desire to scrimp on these essentials helps reinforce the sense of mediocrity that
seeps into many companies. Without them, people don’t feel financially or spiritually tied to
their jobs. We are in the people development business almost as much as we are in the coffee
business” (Anonymous, 1996 p. xvi). He believes employees are working harder and smarter
because they are paid well and have a stake in the organization’s outcome (Anonymous, 1996).
Schultz believes in treating people like family. In his book Pour Your Heart into It,
Schultz says, “If you treat people like family you will make them loyal and encourage them to
give their all. When a company cares, it rubs off somehow on its customer who will gladly
return and keep on coming back for Starbucks coffee” (Schultz & Yang, 1997 p. 127). Howard
Schultz’s transformational leadership satisfies follower’s needs for belonging and love by
creating and maintaining a family like culture throughout the entire organization. The
organization does not refer to its staff as employees, rather Schultz and the organization refer to
their employees as partners (Schultz & Yang, 1997). A current employee review of Starbucks
culture on Glassdoor.com reads, “Love all the people I work with. Really feels like a close knit
family. Great relationships with customers” (“GlassDoor”, 2013).
Schultz fulfills his partner’s self-esteem needs by providing training, education, and
recognition programs. Coffee education and Learning to lead are just a few of the many training
and education programs Starbucks offers to its employees to help them build confidence in
themselves and the work they do (“Starbucks Coffee Company”, 2013). Starbucks offers over
eighteen employee recognition programs providing feedback to its partners promoting
motivating behaviors increasing the degree of attachment, happiness, and their willingness to
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stay with the organization. Journalist David Schepp interview with Marissa Andrada Senior
Vice President of Global Partner Resources at Starbucks Coffee Company reveals that Starbucks
employs 150,000 partners. Globally they hire over 140 partners a day, more than 85,000
partners a year. The hire rate is due to the massive daily expansions of Starbucks opening coffee
houses around the world. Only a small percentage of the new-hires are to replace employees
who no longer work for the organization (Andrada, 2012). In the interview Andrada said, “The
company's employee-churn rate is roughly half that of the average retailer” (Andrada, 2012).
Schultz leadership satisfies partner self-actualization needs, the last need on Maslow’s
Hierarchy of Needs by listening and constantly seeking information and feedback from his
partners to articulate his vision. Often Schultz sends emails and makes personalized phone calls
to store locations asking for advice and feedback on products, procedures and processes
(Brookmire, 2012). When employee’s inner core values are recognized and adapted to Starbucks
operations partner self-actualization needs are achieved.
Hackman and Johnson (2010) outline five characteristics transformational leaders
possess. Schultz displays all five characteristics in his leadership communication style. He is
creative, interactive, empowering, passionate, and a visionary. Schultz takes an innovative and
foresighted approach in the way he communicates to stakeholders. He consistently challenges
the status quo while seeking out new ideas, products, and processes. Internal and external
stakeholders view him as being masterful in his ability to articulate and define new ideas and
concepts. Shultz empowers by encouraging stakeholder participation and involvement. One
example on how Schultz seeks feedback from both internal and external stakeholders is through
mystarbucksvisit.com a web-based interactive forum where stakeholders can make suggestions
and vote on them (Daft, 2010). Schultz also displays a high degree of passion for Starbucks. He
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routinely speaks of his love for Starbucks which prompted him to return to CEO in 2008. This
passion and enthusiasm for Starbucks motivates others to perform to the highest degree. Lastly,
of the five characteristics of transformational leaders per Hackman and Johnson (2010) the most
important trait is vision. Schultz successfully communicates his desirable and obtainable vision
so all stakeholder groups arrive to share meaning of where the organization is headed. His
effective communication of his vision attracts commitment, energizes people, creates meaning
for followers, establishes a standard for excellence, and bridges the present with the future
(Hackman & Johnson, 2010).
Besides transformational leadership, Shultz possesses traits of charismatic leadership
characteristics. House and Bass (1976) behavioral model of charisma suggests that charismatic
leaders possess unique leader behaviors, follower relations, and elements of the charismatic
situation. Many of the traits of the behavioral model of charisma are closely associated with the
characteristics of transformational leaders. Howard Schultz possesses all three of these traits.
Charismatic leaders display behaviors for a strong need for power. Charles Schultz
communicated his strong need for power when he regained control of Starbucks operations in
2008. In 2008 Schultz felt the company was drifting away from its mission moving towards
average and ordinary performance and decided to return as acting CEO to transform the
organization into a high performing organization. He believed the main cause of his
organizations problems stemmed from thirteen years of success and unrestrained growth and
development (Schultz & Gordon, 2011). He notes Starbucks was living in the past, not looking
to the future, focusing their attention on staying complicit with Wall Street. The organization
was focusing on the stock price, price to earning ratio, and other aspects of producing long term
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value to the shareholder with a new mission not the mission Schultz created (London Business
Forum, Howard Schultz on Leadership).
Like transformational leaders, charismatic leaders possess follower relational
communication skills targeting follower hopes, frustrations, and fears while also creating a sense
of excitement and adventure (House & Bass, 1976). When Schultz returned as CEO he
immediately crafted and posted an open letter to all stakeholders on Starbucks website. He
understood the transformation about to take place would affect many internal and external
stakeholder’s lively hoods and dreams. In his letter, Schultz communicated a reminder of the
passion he had twenty five years ago when he started Starbucks and how he still has that same
passion in creating a new and improved Starbucks. The message was clear and straight to the
point sending the message that Schultz believed in the power of the Starbucks brand and mission
(Schultz & Gordon, 2011). His first internal memo since returning to CEO was titled, “The
Commoditization of Starbucks” (London Business Forum, Howard Schultz on Leadership). The
goal of the memo was to create higher levels of sensitivity between himself and the organization
(London Business Forum, Howard Schultz on Leadership). Every memo he wrote since his
return to CEO ended with the same word showing the passion and confidence he had in moving
ahead in overcoming any hurdles that stood in his way. The word was onward (Schultz &
Gordon, 2011). Additionally, many internal memos he wrote often acclaimed employees for
their latest decision making on management and leadership changes. Other internal memos
contained reminders of his new vision strategy and actual focuses which was fixing the US
business, reigniting the emotional attachment with customers, and making long-term changes to
the foundation of the business (Schultz & Gordon, 2011).
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Schultz also possesses elements of the charismatic situation. House and Bass’s (1976)
define a charismatic situation as the presence of stress within a group. Schulz communicated this
charismatic leadership trait when he took over the position of CEO at Starbucks in 2008.
Starbucks needed help and Schultz emerged as the leader that would guide them through their
transformation.
Howard Schultz uses power to influence others by modifying their attitudes and
behaviors to achieve his goals and merit his leadership classification. Hackman and Johnson
(2010) define power as “the ability to influence others” (Hackman & Johnson, 2010 p. 159). The
researcher’s uncovered five sources of powers that leaders use in their communication strategy
which are coercive power, reward power, legitimate power, expert power, and referent power.
Howard Schultz transmits all five sources of power in his communication style.
Schultz’s uses coercive power by demoting staff that underperform. He effectively uses
this type of power in his communication to Starbucks employees laying out expectations of the
tasks they perform and the consequences of not obtaining task goals. Leaders who use coercive
power must follow through on the consequences of not meeting leadership expectations.
Employee reviews posted on Glassdoor.com reveal that a high percentage of assistant store
managers who have been promoted to store management positions are demoted back to assistant
management positions because of lack of meeting store manager requirements (“GlassDoor”,
2013). Schultz utilizes this power in pursuit of gaining employee obedience but the long term
effects on the follower is lower task satisfaction, destroys trust and commitment, and drains
physical and emotional energy (Hackman & Johnson 2010).
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Howard uses reward power by delivering value to his followers. Tangible value Schultz
provides is heath care, employee bonuses, store discounts, and other employee fringe benefits.
Intangible values are the warmth and supportive Starbuck culture he created. Employees find
these rewards desirable and motivate them to achieve excellence within the organization. The
negative effect of Howard’s use of reward power is it is not consistently linked to high task
performance (Hackman & Johnson 2010).
Hackman and Johnson (2010) define leader legitimate power as leader’s ability to use
their role, title, or rank to prescribe their followers behaviors. The higher the position, title, or
rank defines the degree of legitimate power the leader has. Schultz successfully utilizes this
culturally sanctioned power to effectively gain follower obedience and help his organization
function efficiently. Since Howard is the CEO of Starbucks, his followers follow his lead
because he carries the title of CEO. The downfall of legitimate power is it demises over time
(Hackman & Johnson, 2010).
Unlike legitimate power which focuses on the position rather than the person, expert
power focuses on the person rather than the position. Hackman and Johnson (2010) explain that
leaders can possess and utilize both sources of power and play one power of the other. Schultz
has experience in buying, building, and transforming the Starbucks organization from a failing
organization. This experience has earned him the right of “expert status” in the coffee shop
industry. Of the five sources of power Schultz utilizes, expert power is the one he relies on most.
Like legitimate power, expert power has the potential to diminish over time if over used by the
leader who possesses it (Hackman & Johnson 2010).
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Lastly, Shultz uses referent power in his communication with his followers. Referent
power is role model power (Hackman and Johnson, 2010). Followers of Schultz admire the
positive ethos he projects as a person and leader. According to Glassdoor.com, employee
reviews of Howard Schultz indicate employees have high degrees of affection, esteem, and
respect for him (“GlassDoor”, 2013). Shultz relies on this power as well as expert power over all
other powers in his leadership. Hackman and Johnson (2010) suggest that referent power is not
as effective in gaining obedience as coercion, reward, legitimate or expert power. Schultz
understands this and utilizes all five types of power to successfully run his organization.
Starbucks customers want to be seen as sophisticated, smart, and economically
successful. Starbucks built their brand around these three customer desires and continue to alter
and evolve their brand communication strategy in an ever changing global society (Simon,
2009). In addition to meeting customer desires in his brand image, in his book “Pour Your Heart
into It” Schultz shares Starbucks research findings indicating people come to Starbucks for a
refreshing timeout from the outside world. He explains that every Starbucks store is carefully
designed to enhance the communication quality of everything the customers see, touch, hear,
smell, and taste. This is the reason why Starbucks does not sell soup, sliced pastrami or cooked
food. Starbucks wants the customer to smell coffee only (Schultz & Yang, 1997). They also
offer a perfect cup of coffee. If you are unhappy with your beverage, Starbucks will replace the
unconsumed portion with a replacement beverage of your choice (“Starbucks Coffee Company”,
2013). Starbucks also provides entertainment, wireless internet, a community online, mobile
application, and the Starbucks reward card in their communications effort to romanticize
customer experiences around their beverages and snacks (Schultz & Yang, 1997).
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Schultz also utilizes the three manifestations of love which include: self-love, romantic
love, and philanthropic love to communicate the Starbucks brand to potential and current
customers. Starbucks provides self-love to its customers by selling ease, self-indulgence, and
relaxed luxury. In store signs and displays describe products as “Evokes another world”,
“Awakens the mind and sooths the soul,” and “People who use soymilk in their drinks can be
proud of their virtue, intelligence and good scene” (Ruzich, 2008 p. 434). Starbucks also
carefully uses language to satisfy self-love in the names they choose for their beverages. Product
names like hot chocolate with extra whip and steamed latte were specifically designed to satisfy
customer self-love needs (Ruzich, 2008).
In an interview centered on Starbucks use of language as a marketing strategy, Schultz
explains how Starbucks introduces customers to fine coffees the same way stewards introduce
fine wines to their customers (Baker, 2006). In their efforts to appeal to the self-indulgent and
the romantic type of consumer, Starbucks in-store and company website describe product items
as being powerful and exotic, elegant and intriguing, bold and earthy, and rich and complex with
depth and sweetness (“Starbucks Coffee Company”, 2013). Starbucks also names products to
attract the romantic in contrast to product names designed to appeal to customers search is satisfy
self-love. One Starbucks beverage named to appeal to the romantic is the exotic espresso
macchiato (Ruzich, 2008).
Starbucks understands that its customers are not just consuming their coffee but also
support causes. To appeal to philanthropic love Starbucks commitment of origin statement
reads, “Every time you purchase Starbucks’ coffee you’re also making a difference helping to
improve people’s lives and encouraging conservation where our coffee is grown” (“Starbucks
Coffee Company”, 2013). Starbucks donates more to the Cooperative for Assistance and Relief
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Everywhere (CARE) a leading foundation who fights global poverty than any other U.S. based
organization. Starbucks understands the commodities market and openly admits to paying a
premium for its coffee to help their farmers make a profit to help support their families and
community. Starbucks global program titled, Coffee and Farmer Equity (C.A.F.E) provides
avenues for farmers to access credit and operates social development programs in coffee
producing countries (Ruzich, 2008). Starbucks also partner with mega superstars like the rock
band U2 singer bono and his fight for an aids free generation (“Starbucks Coffee Company”,
2013).
Howard Shultz’s transformational leadership communication style successfully built a
well-known global brand. By staying true to and communicating through his vision, mission and
core values, Schultz illuminates an authentic leadership ethos viewed by his followers. His
authentic ethos is the catalyst for high levels employee productivity, unconditional customer
devotion, and profits. Schultz understands for Starbucks to remain agile in a world where the
demands of society constantly change, he must listen and adhere to the voices of all stakeholders
while staying true to his core beliefs. If Schultz continues to lead Starbucks as an innovative,
agile, learning organization his company will continue to move onward as a provider, employer,
and investment of choice.
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