Running head: OBJECTIVE FOUR – BEHAVIOR AND CULTURE
Objective Four – Behavior and Culture – Education
Compensation and Benefits at Starbucks
Kayla Conklin
McDaniel College
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OBJECTIVE FOUR – BEHAVIOR AND CULTURE
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Objective Four – Behavior and Culture – Educational
Compensation and Benefits at Starbucks
In the Compensation and Benefits Design course in the Human Resources Development
(HRD) program, I was required to examine the benefit offerings of a publically traded
organization of my choice. For the project, I selected Starbucks Coffee Corporation as my topic
as I had previously worked there for many years. This paper will demonstrate my competency in
understanding the concepts of organizational behavior and culture, as well as, the unique features
of organizations to provide interventions appropriate for an organization’s strategic plan. To
show my mastery, I will reflect on the PowerPoint presentation I created for the Compensation
and Benefits Design project.
Since their initiation in 1971, Starbucks has strived to set themselves apart from other
food service organizations in the industry. A large part of their success can be attributed to their
ability to create a corporate culture that consistently aligns with their mission and guiding
principles. Through the use of benefits, compensation, and company policies, they are able to
carry out their strategic plan to create happy, motivated employees in order to increase
production and revenue.
The number one guiding principle at Starbucks is to treat every employee with respect
(“Starbucks company profile,” n.d.), which they achieve in several ways. At Starbucks, every
employee is called a “partner” regardless of position (Hammers, 2011). They do this to attempt
to eliminate the bureaucratic feel that most corporations of this stature have. This gives the
impression that every partner holds the same worth in the organization, and has equal
opportunity to make an impact. This simple word choice can make the difference in an employee
feeling as if they are connected to the organization or like a blip on the corporate radar. Partner
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benefits offered at Starbucks reflect this same egalitarian perspective. Since 1988 Starbucks has
offered full medical benefits to anyone who works at least 20 hours a week, which is what they
consider to be part-time (“Your special blend,” 2012). They were one of the first organizations
to offer the same benefits to part-time and full-time employees (Hammers, 2011). This benefit
sets them apart from their competition, but also gives employees a feeling of value and meaning
to the company.
To further the feelings of connectedness and importance, Starbucks encourages
employees to submit a query to their Mission Review anytime they feel the corporate mission
statement is not being upheld. The organization reads, and responds, to each submission
(“Starbucks corporation: Case,” 2011). This company procedure aims to give employees the
power to hold Starbucks accountable in maintaining alignment between practices and their
mission/vision.
Another guiding principle of Starbucks that is reflected in their incentives and procedures
is to contribute to communities and the environment (“Starbucks company profile,” n.d.).
Starbucks puts major emphasis on volunteering and giving back to the community, so it would
make sense that they offer relevant benefits. The organization allows up to two paid days off a
year for employees to participate in local charities (Hammers, 2011). Starbucks will also donate
$10 for each hour their employees volunteer at a non-profit or charity organization (Hammers,
2011). These benefits tie into their corporate mission to “nurture and inspire the human
spirit…one neighborhood at a time” (“Your special blend,” 2012). In addition, they offer a
financial assistance program called the “CUP (Caring Unites Partners) Fund” which allows
partners to contribute to through payroll deductions (“Your special blend,” 2012). This fund can
be used by any partner in the company when they are faced with various hardships or
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circumstances like a natural disaster, chronic illness, or loss of a family member (“Your special
blend,” 2012). This program further enhances the notion that Starbucks strives to be a good
corporate citizen by encouraging employees to participate in giving back to others and the
community.
Starbucks attempts to maintain social responsibility through their business practices.
Studies support the idea that employees will be more committed to an organization, and the
overall performance of the organization, if corporate social responsibility is upheld (Ali,
Rehman, Ali, Yousaf, & Zia, 2010). One study in particular suggests that socially responsible
organizations create “belongingness and pride” among employees, which keeps them motivated
and committed to work hard for the organization’s success (Ali et al., 2010). This is the type of
culture that Starbucks has created.
Starbucks is not blind to the fact that happier employees mean increased profits for the
organization. Providing the benefits described previously makes employees feel value,
appreciation, and worth, which in turn leads to them be more satisfied. These satisfied
employees may put forth more effort to ensure the financial stability of their organization, which
can lead to better customer service and consumers who will return (Spreitzer & Porath, 2012).
Casey Cunningham, the president of a leading organization in the mortgage industry, argues that
culture is the most important factor in organizational success, but is the most overlooked
(Cunningham, 2012). Cunningham states that leaders tend to focus on issues like retention,
business models, and profitability because they are measurable topics (Cunningham, 2012).
Culture is intangible and is difficult to act on with certainty. Starbucks seems to buy into this
notion as they continue to make business decisions through the lens of their mission and guiding
principles, so their culture is not disturbed.
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Data shows that the efforts made by Starbucks to fulfill their strategic plan appear to be
successful. A Hewitt Associates survey was conducted to determine job satisfaction at Starbucks,
and they concluded with an 82% satisfaction rate. To put this into perspective, the average job
satisfaction rate for all other employers combined was 50% (Hammers, 2011). Even among
Hewitt’s “Best Place to Work” employers, the average satisfaction rate was 74% (Hammers,
2011). Turnover data from Starbucks also adds to the argument that employees are satisfied with
the organization. A study conducted in 2011 reported a turnover rate of 82% at Starbucks. While
this number seems high, it is 120% lower than the industry average (“Starbucks corporation:
Case,” 2011). This shows that employees at Starbucks are staying with the organization longer
than employees of their competitors. One could argue that the lower turnover rate is a result of
the corporate culture Starbucks has created through the interventions previously described.
Starbucks has been able to create a positive influence over their bottom line by increasing their
revenue. In 2012, their financial report showed a $1.7 billion increase in net revenue from the
previous year (“Starbucks company profile,” n.d.). Clearly, the interventions that Starbucks has
in place are working, and they have been able to maintain pleased employees who are more
productive as their revenue increase demonstrates.
Throughout the HRD program I have been exposed to courses like Organizational Theory
and Behavior, and case studies such as, Bloomberg, Meg Whitman at eBay, and Sears which
have provided me with knowledge about the effects of corporate culture on an organizations
success. This learning environment has given me confidence that I can apply my skills to any
situation in my professional career. I now know that anytime an organization has procedures,
policies, or practices that do not align with their mission or vision, there will be some
disconnects that will affect the bottom line. I have been exposed to superior examples of culture
OBJECTIVE FOUR – BEHAVIOR AND CULTURE
like Starbucks, as well as dire instances like Sears from the Organizational Development and
Change course case study. I have since been able to identify cultural issues at my own
organization, which have led me to explore interventions like an employee recognition program
for my practicum project and a revision of our corporate mission. I will continue to analyze my
current organization through a strategic lens to make necessary interventions to ensure optimal
performance.
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OBJECTIVE FOUR – BEHAVIOR AND CULTURE
References
Ali, I., Rehman, K., Ali, S., Yousaf, J., & Zia, M. (2010). Corporate social responsibility influences,
employee commitment and organizational performance. African Journal of Business
Management, 4(12), 2796-2801.
Cunningham, C. (2012). Cultures determine success. Mortgage Banking, 72(4), 105.
Hammers, M. (2011). Starbucks is pleasing employees and pouring profits. Retrieved from
www.workforce.com/article/20031003/NEWS02/310039973/starbucks-is-pleasing-employees
and-pouring-profits.
Spreitzer, G., & Porath, C. (2012). Creating sustainable performance. Harvard Business
Review, 90(1/2), 92-99.
Starbucks company profile. (n.d.). Retrieved from http://globalassets.starbucks.com/assets/9a
6616b98dc64271ac8c910fbee47884.pdf.
Starbucks corporation: Case study in motivation and teamwork. (2011, October 01). Retrieved from
http://businessstudents.weebly.com/uploads/6/3/6/5/6365205/teamwork_case_study_
_starbucks.pdf.
Your special blend: Rewarding our partners. (2012). Retrieved from http://assets.starbucks.com
/assets/7343fbbdc87845ff9a000ee009707893.pdf.
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