Laurea in economia aziendale – Economics and management
Course
Human resource management
Prof.ssa Anna Comacchio
Project Work 1
Employee Compensation & Benefits: Starbucks Coffee Company.
Group Name: Americanas
Safia Abdirizak 848722
Khalilah Bruton 848451
Brianna Yeje 848551
A. A.
2013 - 2014
Table of Contents
PAGE
Starbucks Coffee Company Introduction ..................................... 3
CHAPTER
CHAPTER
CHAPTER
CHAPTER
CHAPTER
CHAPTER
CHAPTER
CHAPTER
CHAPTER
CHAPTER
1 –
2 –
3 –
4 –
5 –
6 –
7 –
8 –
9 –
10–
Vacation .................................................... 4
Income Protection ....................................... 4
Disability ............................................... 4,5
Health Insurance ......................................... 5
Employee Assistance ................................... 5
Adoption Services ..................................... 5,6
StarbucksU ................................................ 6
Partner Perks ........................................... 6,7
Economic Benefits .................................... 7,8
Professional Training ................................ 8,9
Conclusion ....................................................................... 9,10
Reference ............................................................................ 11
2
Introduction
“We built the Starbucks brand first with our people not with consumers because 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.”
Howard Schultz
Starbucks Chairman & Visionary
Since 1971, Starbucks has flourished as the largest coffee company in the
world with over 17,000 locations. The company prides itself in providing rich
customer service by employing bright and personable employees. Starbucks
has been named one of the best companies to for in numerous noteworthy
publications, such as CNN and Forbes. The determining factors are mainly
derived from the satisfaction levels from the company’s massive workforce.
Starbucks makes it their mission to hire workers who will be beneficial to the
community as a whole. To connect better with the company, Starbucks
employees are referred to as partners.
The firm instills a sense of unification amongst their partners to enable them
to strive for greater possibilities within the company. At Starbucks, partners
receive a benefits package called “Your Special Blend”, which will be
discussed throughout this paper. Partners are eligible for benefits if they
work 20 or more hours a week. Your Special Blend includes a wide variety of
perks, benefits and assistance. Starbucks offers health coverage for partners
and their dependents including medical, dental and vision. Along with health
coverage, Starbucks offers life insurance, disability coverage, vacation,
tuition
reimbursement,
employee
assistance,
and
adoption
assistance.
Starbucks also gives partners the options to grow their savings by enrolling
in a “Future Roast 401(k) Savings Plan”. Additionally, eligible partners also
have the option to purchase stocks at a discounted price due to the Stock
Investment Plan and Bean Stock programs. Inevitably, the noteworthy title
“Best Company to Work For” is a very appropriate and deserving label for
Starbucks considering the elaborate set of benefits designed for its partners.
Starbucks definitely has a strong indirect compensation with benefits such as
health insurance and paid vacation. As far base compensation, in the United
States, the Department of Labor sets federal minimum wage provisions that
states have to comply with. Federal minimum wage is currently set at $7.25;
however, some state laws provide greater employee protections. In these
instances, employers must comply with both. According to Glass Door,
Starbucks’ Barista’s typically make about $8.80 an hour. Shift Supervisors
make slightly more at $11.00 an hour, while Store Managers make an annual
of $44,990.
3
Vacation
According to Starbucks’ Your Special Blend, “vacation benefits are based on
the partner’s position, length of service and work location” (Starbucks
Assets). The graph below displays the company’s policy on vacations based
on the months of service a partner has worked.
Income Protection
Another benefit provided by Starbucks to their employees is income
protection. According to the company, “when we refer to income protection,
we mean life, accidental death and dismemberment (AD&D) and disability
insurance”
(media.starbucks.com.edgesuit.net).
If
for
some
reason
an
employee is injured on the job or is faced with a situation that renders them
unable to perform their regular assigned duties, the company will continue to
provide for the employee (under reasonable and approved circumstances) for
the duration of time they cannot work to provide for themselves. When
concerning life insurance, income protection also covers the amount of a
salaried employee’s annual income as the total of the benefits to be disbursed
to beneficiaries, and $10,000 to retail hourly employees.
Disability
Starbucks’ disability plan covers partners who are not able to work primarily
due to an illness, pregnancy, and/or injury. The plan is split into two
categories the distinction being the length of the disability. Starbucks offers
a short-term disability and a long- term disability option. The short-term
4
disability allows partners to continue to receive partial income for up to 26
weeks depending on if they are unable to work due to a non-occupational total
medical disability. The Starbucks short- term disability plan, also, may cover
up to sixty percent of a partner’s average weekly wages, which may be
accumulating up to 200 dollars a week. Benefits for the short-term plan
usually begin after a brief waiting period.
After short-term disability ends, partners have the opportunity to seek
additional coverage if the disability persists through the long-term disability
option.
Both
salaried
and
non-retail
partners
receive
this
coverage
automatically, with Starbucks responsible for paying 100 percent of the
premium. The disability benefit is offered through the Employment Insurance,
which is provided through the federal government.
`
Health Insurance
Health insurance in Starbucks terms includes dental, medical, and vision
coverage. Medical covers anything from harmful accidents to the routine
check-ups for the employee. As stated in the online source “coverage includes
hospitalization, office visits, lab and x-rays, emergency care, prescription
drugs, mental health and chemical dependency treatment” (Global Assets).
The benefits included depends on where the employee (partner) lives and the
proximity of the health care providers in each plans network. These plans are
provided by a company called Pramera Blue cross to all in the United States
except for those located in Hawaii. For the partners located in California and
Hawaii, they have options to enroll in other plans that the other 48 states do
not have (Global Assets).
Dental is covered by the same company who provides medical insurance to
Starbucks employees, Premera Blue Cross . It covers preventative, basic and
major services. The plan also covers orthodontia. If the parnter goes to one
of the preferred dentists provided for them then the out-of-pocket expense is
less for the employee (Global Assets).
Vision coverage is offered through Vision Services Plan. It is a network of
eye- care professionals that come together to form this conglomeration. The
vision plan covers eye exams, lenses, frames, and contacts (Global Assets).
Employee Assistance
The Employee Assitance Program (EAP) provides the partners with short-term
counseling. The counseling provided is to help partners with stress related
issues, emotional difficulties, critical incidents in the workplace and other
personal concerns. It also includes financial, legal, and daily living. Daily
living includes child care, elder care, school information, etc (Global
Assets).
Adoption Services
Unlike most coffee companies, Starbucks provides financial assistance to
partners who are interested in adoption or attempted adoption of a qualifying
5
child. According to the United States Adoption
following are considered qualifying children:
•
•
•
Assistance
Program,
the
A child under age 18, including a foster child, grandchild, or a child
from overseas, but not the child of the partner’s spouse or domestic
partner
A child age 18 or older who is physically or mentally incapable of
caring for himself or herself
A child with special needs
Eligible Starbucks partners may receive reimbursement of up to $4,000 to
help pay for expenses related to the adoption of an eligible child. Partners
also receive an “Adoption Allowance”, which replaces up to two weeks of pay
for time off needed to travel to pick up an adopted child and/or to settle the
child in the partner’s home. A week of pay is calculated by averaging a
partner’s weekly paid regular hours paid over the 26 weeks immediately
preceding the adoption placement and multiplying it by the rate of pay in
effect at the time the allowance is in use. Partners are limited to a lifetime
maximum benefit of $12,000 per couple.
StarbucksU
One of the many benefits and compensations that Starbucks also offers its
employees is tuition reimbursement through a program called Starbucks U.
According to the Starbucks website, “Starbucks U will help reduce out-ofpocket expenses for your education regardless of where you are in your career
or academic journey. We offer discounts and savings on textbooks, tuition,
technology, and more” (Starbucks.com). The company offers this program as
an incentive for employees who may think they cannot afford to work full or
part-time and complete a degree or certification to join the company, and also
as an incentive to continue their education which leads to more qualified
workers, and increases an employee’s chance of moving up within the
company.
According to lifeat.sbux.com, the company’s motive for establishing the
Starbucks U reward program is for the benefit of the employee and the
company, stating: “Tuition reimbursement rewards you for your contributions,
adds to a great work environment and promotes the shared responsibility
between Starbucks and you for individual and company success. This benefit
helps to cover a portion of the cost of tuition, books and other expenses as
you advance your professional development” (lifeat.sbux.com).
Employees
who hold a position below director level can receive a maximum tuition
reimbursement amount up to $1,000 depending on their length of employment.
Employees holding positions of director, or higher, are eligible to be
reimbursed up to $500 in a calendar year. The company’s motivation is aiding
its employees in completing coursework that pertains to preparing them for a
job at Starbucks. For example, an employee can only receive tuition
reimbursement for courses and degree programs that directly pertain to
preparing for a job within the company.
Partner Perks
6
Starbucks Coffee Company provides its parnters with many programs that
motivate the employees to work there. The Thrive Wellness program provides
tools to help the partners learn about, improve, and maintain their health and
wellness. The Partner Recognition Program recognizes the employees of all
levels for their acahievments in the company. Starbucks also has a Partner
Connection Program which links people of similar interests into groups or
teams. This program promotes teamwork and helps with some of the
assosciated costs to a well-balanced life. The In-Store Merchandise Discount
llows partners to consume any coffee, tea, or milk-based beverages for free
on a work break. Also the employees get a 30% discount on purchases of
beverages, merchandise, and food. The Partner Coffee and Tea Markout
program allows partners to be eligible for a partner “markout,” for coffee and
tea products free of charge each week. This means that employees may select
one pound of whole bean coffee, one box of 12 pods, one box of VIA packets,
one box of Tazo, or one container of Tazo concentrate each week. Partner
Discounts Program offers disconuts at thousands of local businesses, national
retailers, and service prviders who provide voluntary benefit programs. For
example, this can include discounted auto, home, and pet insurance. The
Strbucks Coffeegear program is a program that gives partners a discount on
Starbucks branded apparel, promotional items, and more. The Elite Athletics
Program supports partners who are participating in atheltics at a world class
level (Global Assets).
Economic Benefits
Starbucks’ partners are eligible for profitable long-term and short-term
economic benefits to prepare for the future and invest in the present.
Starbucks offers a 401(k) savings plan and stock investment plans. As a
Starbucks partner, employees have the opportunity to invest in the company at
a discounted price. The Bean Stock program allows partners to be rewarded in
shares in the company based on their contribution to the overall success of
the firm as an employee. Each plan is analyzed further and provides a
summary of the requirements and benefits of the distinct plans.
Future Roast 401(k) Savings Plan
To be eligible for the Starbucks 401(k) plan, partners must be at least
eighteen years old and have worked at Starbucks for ninety days. The 401(k)
plan is a very beneficial option for partners to grow their savings through
pretax payroll deductions. According to the Starbucks “Your Special Blend”
package, partners who qualify for the plan may contribute from 1% to 75% of
their pay each pay period, up to the annual IRS dollar limit ($17,000 for
calendar year 2012). Moreover, partners who are at the age of 50 and older
receive a higher IRS annual limit.
One of the perks of saving through the Future Roast 40l (k) plan is the
Starbucks Match program. This particular program enables Starbucks to match
the contributing partners inputs into the savings plan. The match rate is fixed
every calendar year at either the Basic Starbucks Match or the Enhanced
Starbucks Match rate. Each November, Starbucks’ Board of Directors decide
which match rate will apply for the next calendar year. The difference
between the Basic and Enhanced match rates are displayed below:
7
Basic Starbucks Match: 100% match on the first 4% of eligible pay that a
participant contributes each pay period.
Enhanced Starbucks Match: 100% match on the first 6% of eligible pay that
a participant contributes each pay period.
Both rates, respectively, create a great incentive for Starbucks’ partners to
save through the 401(k).
Bean Stock
In 1991, Starbucks introduced the Bean Stock program. This equity reward
program enables partners the opportunity to share in the financial success of
the company through Starbucks stock. Every year, the Starbucks Board of
Directors evaluates the company’s performance, cost of the program and how
many shares are available to grant to eligible partners. To be qualified for
the Bean Stock program, partners must be employed by Starbucks as of May 1
of the fiscal year preceding the grant date, and must have been paid for at
least 360 hours during the fiscal year. Starbucks partners who are in higher
positions, such as a director, are not eligible for Bean Stock. However, they
have the option to be eligible for equity awards under the Key Employee
Stock Plan.
Stock Investment Plan (S.I.P.)
A few years
presented a
opportunities
through their
after the introduction of the Bean Stock, in 1995, Starbucks
Stock Investment plan that has provided Starbucks partners’
to purchase company stock each quarter at discounted prices
regular payroll deductions.
As stated in the “Your Special Blend” package, “partners become eligible
after 90 days of employment and after being paid for an average of 20 hours
per week during the three months preceding the quarterly offering. Partners
may elect to contribute 1% to 10% of their base pay each pay period.” (Your
Special Blend)
Professional Training
Lastly, Starbucks provides its employees with comprehensive professional
training. While other companies may train employees in the necessary
procedures for fulfilling their job requirements, and the employees may
consider it an unpleasant aspect of the job, Starbucks employees actually
benefit from the training that they receive. This is because the preparations
are not just basic tools to perform one specific duty, Starbucks trains all of
its employees comprehensively, starting from the fundamentals and finishing
with the specifics. This type of training can increase an employee’s overall
set of skills, and can be added to one’s resume of capabilities so in the long
run, the company is not just providing training in skills pertaining to a
particular job, but equipping employees with knowledge and skills that are
beneficial when moving up the corporate ladder, and that they can use
throughout life. The skills that a Starbucks employee gains through
comprehensive professional training are the building blocks of the training
8
that the employee will receive if they one day become managers or go on to
hold other upper-level positions within the company.
For example, a typical training for a Starbucks employee includes learning
about “coffee history, knowledge and preparation, memorization of recipes of
all different drinks, weighing beans, opening coffee bags properly, and
twenty-four hours of on-the-job training within a one to two week
period…customer and retail training which entail how to sell an espresso
machine, explain the different drinks to the customer…[and] preparing the
drink to the customer's specifications” (ezinearticles.com). When Starbucks
employees are ready to acquire higher job positions within the company or
outside of the company elsewhere, they will be well prepared. For example,
“baristas were trained in using the cash register, weighing beans, opening the
bag properly, capturing the beans without spilling them on the floor, holding
the bag in a way that keeps air from being trapped inside, and affixing labels
on the package exactly one-half inch over the Starbucks logo. Beverage
preparation occupied even more training time, involving such activities as
grinding the beans, steaming milk, learning to pull perfect (18- to 23-second)
shots of espresso, memorizing the recipes of all the different drinks,
practicing making the different drinks, and learning how to make drinks to
customer specifications.
There were sessions on how to clean the milk wand on the espresso machine,
explain the Italian drink names to customers, sell an $875 home espresso
machine, make eye contact with customers, and take personal responsibility
for the cleanliness of the coffee bins” (mmhe.com). When analyzed at surface
level these tasks may seem to be geared specifically toward the job
description of a barista, however these tasks instill skills of precision and
accuracy, as well as customer relationship building, sales, and marketing
skills in the employee. When pursuing another career path the employee is
able to credit Starbuck’s comprehensive professional training for their growth
in the areas of retail sales, customer service, and professionalism. The same
is true for employees in higher-ranking positions within the company such as
managers who “attended classes for 8 to 12 weeks. Their training went much
deeper, covering not only the information imparted to baristas but also the
details of store operations, practices and procedures as set forth in the
company's operating manual, information systems, and the basics of managing
people” (mmhe.com). Upon changing retail position, an employee will have
four weeks of training to become a shift supervisor, upon becoming an
assistant store manager they will be trained for eight months. When they
become a store manager, employees receive eight weeks of training. In order
to become a district manager the company will train an employee for 15 weeks
and offer them courses in management and resolving conflicts. The training
imparts valuable human resource management skills, store management skills,
and also the skills to be able to train other individuals (all trainees are
trained by former managers who have received the same training).
Conclusion
After extensive research on the Starbucks Coffee Company it can be
concluded that the company offers its partners copious amounts of benefits
9
and compensations to ensure employee satisfaction, which in turn creates a
thriving atmosphere. The company provides generous vacation time and sick
leave to its partners because the company knows that time off aids in the well
being of its partners. Along with providing paid sick time for employees the
company also grants income protection to its partners who experience
hardships such as disability, accidental death and dismemberment. The
company understands that its employees are its most valuable assets therefore
when they encounter such disasters the company is there to back them up.
Starbucks provides health insurance that covers medical, dental, and vision to
make sure the partners are covered for all their health needs. Starbucks also
provides the Employee Assistance program to help employees deal with any
issues through short-term counseling. The company provides partners with the
option to seek out adoption services by reimbursing the partners with up to
$4,000. Additionally, partners may also be eligible to receive “Adoption
Allowance” that will cover up to two weeks of pay for needed time off.
Starbucks wants its employees to be as qualified as possible therefore they
provide tuition reimbursement to the partners seeking education in degree
programs that relate to their job.
The company offers many programs to its partners so that they can create a
well-rounded workplace. These programs include the Thrive Wellness
program, the Partner Connection program, the Partner Discounts program, and
many more to ensure satisfied employees. Starbucks Coffee Company offers
three main economic benefits. These include the Future Roast 401k Savings
Plan, the Bean Stock, and the Stock Investment Plan. The 401K differs from
competitors because Starbucks has a matching program where depending on
the board of directors decision on which plan to enforce that particular year,
Starbucks will match the partners contribution to their 401K plan by a certain
rate. The Bean Stock and Stock Investment Plan both welcome partners into
the financial sector of Starbucks by allowing them to purchase stocks at a
discounted price. By receiving the comprehensive professional training
provided by Starbucks, employees gain a wide variety of skills that aid them
in creating a successful work environment that can also be added to their
personal resume for the future. All in all this research proves that Starbucks
is a company that supports its partners in all aspects to ensure a strong
workplace environment, thus, creating a strong future for the company as a
whole.
10
References
"Starbucks Corporation." Starbucks Case Study. The McGraw-Hill Companies,
1997. Web. 19 Feb. 2014.
<http://www.mhhe.com/business/management/thompson/11e/case/starbuc
ks-2.html>.
Stanock, Michelle. "Starbucks - A Customer Service Mecca."
Ezinearticles.com. N.p., 23 Feb. 2011. Web. 6 Mar. 2014.
<http://ezinearticles.com/?Starbucks---A-Customer-ServiceMecca&id=5986752>.
Starbucks Corporation. "Starbucks Tuition Reimbursement Program."
Lifeat.sbux.com. N.p., 1 Aug. 2006. Web. 6 Mar. 2014.
<http://lifeat.sbux.com/NR/rdonlyres/FB31ADAF-D465-468C-A81A18C0AC290517/0/TuitionReimbursementPoliciesandProceduresPlanDescr
iptionAug12006.pdf>.
Starbucks Corporation. "U.S. Total Pay." Edgesuit.net. Starbucks Coffee
Company, 2009. Web. 6 Mar. 2014.
<http://media.starbucks.com.edgesuite.net/dotcom/media/pdf/YSB_Guid
e%205-11-09.pdf>.
Starbucks Corporation. "Working at Starbucks." Starbucks Coffee Company.
Starbucks Corporation, 2014. Web. 09 Mar. 2014.
<http://www.starbucks.com/careers/working-at-starbucks>.
"Starbucks Salaries." Glassdoor. 10 Mar. 2014
<http://www.glassdoor.com/Salary/Starbucks-Salaries-E2202.htm>.
"U.S. Adoption Assistance Program." Letter to Partner. 25 Jan. 2007.
<http://lifeat.sbux.com/NR/rdonlyres/8E18A19E-ECB2-436C-916A443ADE37818A/0/AdoptionAssistance...>.
"Your Special Blend."
11
<http://assets.starbucks.com/assets/7343fbbdc87845ff9a000ee009707893
.pdf>.
12