January 10th, 2018
Starbuck’s Strategic human resource management case study
Company Background and Business
Starbucks Corporation (Starbucks) is a premier roaster and retailer of specialty coffee headquartered in Seattle but conducts business in more than 50 countries (Starbucks Corporation 2011a). It has its roots in Seattle’s Pike Place Market where it opened its first store in 1971 and in 1987, II Giornale, founded by Howard Schultz in 1985, acquired Starbucks’ assets with the resultant entity being named Starbucks Corporation (Starbucks Corporation 2011b). The entity continued expanding and became a public corporation following the completion of initial public offering in 1992, with its stock trading on the NASDAQ national market as SBUX (Starbuck’s Corporation 2011b). Subsequently, the entity has achieved growth by opening new stores, acquisitions and expansion to foreign countries (Starbucks Corporation 2011b). At the end of October 2010, the entity operated 8,833 stores (6,707 in the U.S. and 2,126 in international locations) while it had licensed 8,025 stores (4,424 in the U.S. and 3,601 in foreign countries) (Starbucks Corporation 2011, p. 3).
The entity’s core business is offering regular and decaffeinated coffee beverages in its stores (coffee shops). Its mission is “to inspire and nurture the human spirit – one person, one cup and one neighbourhood at a time” (Starbucks Corporation 2011c). However, to meet customer demands such as the trend towards consumption of healthier foods, the entity also offers fresh food products such as pastries, sandwiches and salads; juices and bottled water (Starbuck Corporation 2011a, p. 4). It also sells beverage-making equipment and accessories. The success of Starbucks is partially due to the customer experience it creates in its stores, which allows it to charge premium prices for its coffee. For instance, a watering-down of customer experience following overexpansion resulted in unfavourable performance in 2007 as noted in a 2008 Economist article. Starbucks’ human resource continues to play a critical role in ensuring such expected service is sustained.
Organisation and Functions of Starbucks Human Resource Department
Starbucks human resource department is organised into three sections corresponding to the three regions (Asia Pacific, Europe/Middle East/Africa and Americas) into which the entity has divided its operations. The overall head of the human resources department, designated as the executive vice president, partner resources, forms part of the senior leadership team and reports directly to the entity’s CEO (Starbucks Corporation 2011d). Currently, Kalen Holmes, a graduate in psychology with a master’s and doctorate qualification in organization psychology and a wealth of experience in HRM in other organisations, holds this position (Starbucks Corporation 2011d). Below her, three managers oversee the operations of human resource departments in the three regions. A weakness in the organisation of the department however arises with the lack of effective coordination of the HR departments in various regions, which would alleviate potential differences in effective practices in stores at different locations regions. In one report, for instance, it is noted that partners who are transferred or on temporary assignment to other stores face difficulties adapting to the new location, at times requiring retraining at their new locations (Evans & Hansen 2010). Such a scenario evidences a lack of coordination that impedes effective preparation of employees to work in different locations.
The Starbucks HR department’s goal, as evident from the goals listed in the annual report (Starbucks Corporation 2011a), is to enhance the experience of the employees in order to achieve the entity’s goal of building an international model that generates scaled and profitable growth. Such a goal is met through various roles that the department plays. In its career centre, the HR department’s role is for instance evident in recruitment and training of staff to meet the quality expectations at the entity (Starbucks Corporation 2011e). It makes job descriptions to attract the suitable candidates for the positions in which the entity needs to recruit new personnel. Other roles of the HR department in Starbucks, as evident from job descriptions for various jobs advertised in the department, include investigating employment-related claims and ensuring compliance with labour legislation in the jurisdiction in which the entity’s operations exists (Starbucks Corporation 2011f). Further, the department is involved in advocacy on behalf of the employees (partners) and plays an active role in resolution of problems that the employees face at their workplace (Starbucks Corporation 2011f).
In the role of career advancement, the department has been involved in setting up criteria for advancement within the organisation. The criteria for positions apart from shift supervisor, store manager, assistant store manager and barista, include a requirement for one to have served in the current position for at least one year and have shown improved performance for a period of 6 months (Starbucks Corporation 2011g). With respect to compensation, the department is involved in developing compensations plans integrated into the Starbucks Total Pay package, referred to as “Your Special Blend” which includes developing pay schemes and benefits that employees enjoy (Starbucks Corporation 2011e; Starbucks Corporation 2011f). Such roles indicate that the HR department at Starbucks still performs traditional, administrative, roles identified with the HR profession (Lawler 1995; Kane & Palmer 1995).
The human resource department at Starbucks also plays a strategic role in the organisation. In one of the advertisements for a partner resources manager vacancy, the entity for instance identifies that the desired candidate needs to have the knowledge to facilitate succession planning, learning and development, and career development (Starbucks Corporation 2011f). As change partner, the HR department was for instance involved in the downsizing approach following the return of Howard Schultz into CEO partnership. To avert labour conflicts, the entity for instance established more productive positions to offer as much as 70 per cent of the employees who were affected by closures of some of the entity’s stores (Allison 2009). Such a role helped the entity to retain critical talent that enhances the entity’s competitiveness with heightened competition. Such requirements imply that the department engages in strategic roles aimed to boost the organisation’s capacity to meet the dynamic challenges it faces in the current business environment. Go to part three here.