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Lori E. Solyom
Essays in Ethics
Howard Schultz: A Cup of Contractarian Coffee
Some people think Starbucks’ coffee, like the company’s founder, is too bold, too unconventional, and
costs too much. For me, it was love at first sip, and an instant curiosity about the man behind it. Raised on the
dark, pungent coffees of the Arabian peninsula, I relished a haven where I could break from my busy day for an
honest to goodness dark brew in comfy environs not redolent of bacon or burgers. Forget the fancy frappes and
the luxuriant lattes, I liked the coffee!
Howard Schultz is a man who has struggled to balance his family life and his boutique beverage empire.
He has risen to the top, promoted coffee as a way of life and fair-trade as a way of business. Schultz has
survived Starbucks’ “Guatemala-gate.” He has retired from and returned to the company he birthed out of a
humble Seattle business committed to offering consumers world class coffee.
Schultz’s caffeinated empire has been strongly molded by his personal ethical framework, one that is
deeply rooted in mutual well-being for the sake of collective benefit. Whether you take your java low fat, halfcaf, sugar-free or on ice, Starbucks’ beverages are steeped and brewed in Schultz’s interpretation of the social
contract.
Contractarianism, or the idea that we as individuals agree to live by the social mores based on equality,
was defined by British philosopher John Locke as a divine command that we “we not harm others with regards
to their life, health, liberty, or possessions.” (Friend) Locke’s definition of one’s property is the result of one’s
labor mixed his labor with the raw materials of nature. So, for example, when one tills a piece of land in nature,
and makes it into a piece of farmland, which produces food, then one has a claim to own that piece of land and
the food produced upon it. (Friend) Translate that into Starbucks language and you have Howard Schultz and
his company mixing their concepts of community and discovery with coffee beans to bring about the largest
coffeehouse company in the world. (“Starbucks Corporation “)
Schultz’s 1997 autobiographical story of Starbucks’ evolution, “Pour Your Heart into It,” is full to the
brim with his applications of natural ethics, such as any win at the “expense of employees, that wouldn’t be a
victory at all.” (Schultz, and Yang, 126) The chapter titled “People are not a Line Item” offers multiple
observations about the relationship between management and workers. Schultz explained why in an era that
many companies were cutting healthcare benefits, Starbucks found a way to increase theirs, “Treat people like
family, and they will be loyal and give their all. Stand by people, and they will stand by you.” He acknowledged
it as, “the oldest formula in business, one that is second nature to many family-run firms,” and lamented than in
the late 1980s, it seemed to be forgotten. (Schultz, and Yang, 127) Though it was unconventional and
seemingly radical move it was deliberate and intentional. “Every single American needs to have access to health
insurance full-stop,” declared Schultz. (Charles) In case the healthcare provision seems like a small concession
on the part of the coffee chain, it’s worth noting that Starbucks spends more on health insurance than it does on
coffee beans. (Iacocca 182) Schultz views the Starbucks enterprise as a team sport: “Remember: You'll be left
with an empty feeling if you hit the finish line alone. When you run a race as a team, though, you'll discover
that much of the reward comes from hitting the tape together. You want to be surrounded not just by cheering
onlookers but by a crowd of winners, celebrating as one.” (Schultz, and Yang, 337) That “we’re all in this
together” worldview makes a social contract for mutual well-being the only rational modus operandi.
And Starbucks’ employees are not the only “family” whose well-being is important to Schultz. If there
was a private struggle made public for the entrepreneurial leader, it was Schultz’s desire to balance work and
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family, something he credits his wife Sheri with helping him to perfect. (Schultz, and Yang, 340) Before
Schultz agreed to come back to become CEO of Starbucks in January 2008, “he had to get his kids' blessing” to
go back to the grind. (Serwer)
More than just making decisions based on an ethos of “not harming others,” Schultz has gone out of his
way, both individually and corporately to assist the world-at-large. Is it an innate altruism? Possibly, but a cynic
might observe that it’s easy to be altruistic when your total annual compensation tops $22 million dollars.
("Forbes.com People") Yet Howard Schultz comes across as “the real deal.”
Numerous sources quote Schultz as advising, “Risk more than others think is safe. Care more than
others think is wise. Dream more than others think is practical. Expect more than others think is possible.” A
quick internet search indicates that the originator of the mantra is most likely Claude Thomas Bissell, a
twentieth century Canadian educator, but there’s little to dispute that this is credo lived out by Howard Schultz.
“Giving back to the community has always been a huge focus for Starbucks,” Schultz explained, “each year we
strive to create new ways to become more involved in the neighborhoods where we do business. With the
launch of the California Giving Program, Starbucks has the opportunity to partner with some of the most
amazing non-profit organizations in all of California that work to build stronger communities by nurturing kids
and inspiring grownups.” (“BNET: CBS Business Network”) Starbucks is not just concentrating its good works
to neighborhood causes. This big-hearted corporation has reached out overseas. “We are as passionate about our
commitment to our communities as we are about achieving financial success. By creating this program with the
China Soong Ching Ling Foundation, which has done so much good work for children, we will provide tools
and teacher training that will help children in rural China build brighter futures,” Schultz informed a
restaurateurs’ trade magazine. (“QSR Magazine”)
In the wake of disaster, you can count on the Red Cross, but you can also count on Schultz and the
resources of Starbucks. “We are deeply saddened by the tremendous loss of life and devastation caused by
Hurricane Katrina…Starbucks has a long tradition of striving to bring together people and communities where
we do business. We extend our heartfelt condolences to the bereaved families and many others impacted by this
natural disaster; our prayers and thoughts are with all the families who have lost loved ones.” The commitment
went beyond corporate. For Schultz it went deeper, “I feel a personal connection to each of our several hundred
Starbucks partners and family members, as well as the community of neighbors they serve, who are victims of
this disaster. Today, I am announcing a $1 million personal contribution from my family foundation to support
the relief efforts.” (Kulthol) In August 2010, Starbucks approached the $5 million mark on Katrina relief.
(Chisholm, and Edelman)
Schultz has applied his ethical framework to the money, as well as the relationships. Business is about
results, not just for the well being of the chairman, president and CEO, or even the employees, but for the good
of stakeholders. “I believe that the best way for an entrepreneur to maintain control is by performing well and
pleasing shareholders even if his or her stake is below 50 percent,” wrote Shultz. “That risk is far preferable to
the danger of heavy debt, which can limit the possibilities for future growth and innovation.” (Schultz, and
Yang, 57) His methodology for career longevity has been straightforward: “Every step of the way, I made a
point to underpromise and overdeliver. In the long run, that's the only way to ensure security in any job.”
(Schultz, and Yang, 95) And Schultz has imposed his ethic over the organization structure of Starbucks, as is
evident in his explanation of the company’s restructuring… “Management's proposal to declassify the Board
demonstrates Starbucks’ Board of Directors commitment to good corporate governance practices. The Board
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believes that the annual election of directors is a primary means for shareholders to influence corporate
governance policies and hold management accountable for implementing those policies.” ("Free Library")
Much of Starbucks success can be presumed to be a result of Schultz’s genuine leadership. He’s
established a code of conduct for Starbucks suppliers. (Schultz, and Yang, 298) The first of the company’s Six
Guiding Principles is “treat each other with respect and dignity.” ("Starbucks Corporation Corporate Social
Responsibility Fiscal 2005 Annual Report: Beyond the Cup" 2)
Throughout the partner web communications at Starbucks.com there are repeated admonitions to “keep
doing good together.” His ethical practices are dictated by both policy and example to Starbucks’ management,
transmuted to the employee corps, and the cup of contractarian well-being flows over onto the consumer public.
Several different Starbucks publications, including the 2007 annual report, feature the following quote from
CEO Schultz: “We establish the value of buying a product at Starbucks by our uncompromising quality and by
building a personal relationship with each customer.” ("Starbucks Corporation Corporate Social Responsibility
Fiscal 2007 Annual Report: Our Commitment to Ethical Coffee Sourcing" 3)
Schulz believes that the positive results from this for-the-good-of-all sincerity are no accident. He has
observed that, “In this ever-changing society, the most powerful and enduring brands are built from the heart.
They are real and sustainable. Their foundations are stronger because they are built with the strength of the
human spirit, not an ad campaign. The companies that are lasting are those that are authentic.” (Schultz, and
Yang, 248) This is a fixed set of ethics for Schultz, immutable, unchanging. “Values don’t wither as sales
grow,” he avers. (Schultz, and Yang, 277)
To quote Howard Schultz, “Starbucks represents something beyond a cup of coffee.” ("Starbucks
Corporation Corporate Social Responsibility Fiscal 2005 Annual Report: Beyond the Cup" 1) Schultz is correct;
Starbucks is the fruit of the labor of an ethical leader who has worked out his ethical framework on a
corporation, its management, suppliers, employees, consumers and community members. And all things
considered, it’s still a pretty darned good cup of coffee.
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