Assignment

Human Resource Management

Case Study Analysis on “Starbucks’ Human Resource

Management Policies and the Growth Challenge”

Guided by

Dr. Urvashi Sharma

Submitted by

Prateek Kumar Sharma

MBA-HRD

Roll No.- 36

Semester 2
Summary of the case

The present case viably features the overall human asset the executives rehearse at the espresso
monster Starbucks. In the past 45+ years, the brand has had a rich inheritance of serving dazzling
espresso refreshments to espresso fans over the globe. The organization before long understood the
requirement for not just offering the best espresso drinking knowledge to its clients, yet additionally
guaranteeing the conveyance of better human asset rehearses than its representatives.

In spite of the retail business' wide running detachment toward its representatives, Starbucks has had
the capacity to keep up its picture of a business of decision by concentrating on its human asset the
executives rehearses.

The case clarifies the difficulties the organization looked in their desires to grow their foundations over
the world. The accompanying discourse assesses the present case in the light of contemporary
hypotheses and models.

Q1. Starbucks was one of the fastest growing companies in the world. Discuss Starbucks growth over
the years and the company’s expansion plans.

Starbucks started its activities in 1971 in the city of Seattle, USA. Starbucks was begun by three
companions Gordon (Bowker), Jerry (Baldwin), and Zev (Siegl). At first, the development was moderate
and they were just able to open four stores in its first decade. In 1981, Howard (Schultz), a housewares
organization official from New York, joined Starbucks. In 1983 Howard Schultz went to Italy where he
found out about Coffee bar culture and saw an extraordinary potential in the idea of prepared to-savor
espresso a cup and thought of presenting the equivalent in United States. The idea was a colossal
achievement. Schultz was keen on expanding this idea in different stores also yet Baldwin who needed
that organization should concentrate on its claim to fame, which was the bean espresso, dismissed the
thought. Howard Schultz left Starbucks after this and opened his own coffeehouse called Giornale. In
1987 the accomplices chose to sell Starbucks with its six retail locations, cooking plant and the corporate
name. Howard Schultz got it at 3.7 million dollars and consolidated both the organizations and utilize
the name Starbucks for both the organizations at that point obtained it. Under Schultz administration
Starbucks developed quickly. By 1990 Starbucks had more than 110 stores. Amid 1990sStarbucks went
into a concurrence with United Airlines to serve espresso on flights. Starbucks likewise begun selling tea
under its auxiliary Tazo tea organization. They likewise presented espresso enhanced dessert with
Dreyers. Starbucks issued offers to open at 17 dollars. Through open issue he had the capacity to fund-
raise to satisfy his abroad development plans. It opened its first global store in Tokyo in 1996, entered
UK in 1998 and opened its first Latin American store in Mexico City in 2002. The organization has in
excess of 26,000 stores in 75 nations worldwide and is required to keep up a solid development energy
in 2017. Starbucks is drawing nearer the $4 billion income imprint and its stock has done incredibly well
in the market. Same-store deals in stores open something like a year has expanded month to month
income for more than 140 months. A few, enhancement has occurred with Tazo Tea and music. At
present Starbucks' accomplices convey 25 million or more exchanges with clients every week. So one
can presume that Starbucks developed at a quick pace. From 1971 to exhibit it has made some amazing
progress.

Q 2. Positive human resources management policies play an important role in keeping employees
motivated, and aid retention. Critically discuss Starbucks‟ human resource policies and their
contribution to developing a strong and committed workforce. What role does work culture play in
enhancing employee motivation?

As reading the case of Starbucks Corporation it is clear that the three areas where human resource
management policies focused were : Equal Treatment, Listen to the employees, Good welfare measures.

Equal treatment: It is one of the important issues which need to be addressed in the planning process.
Equal treatment at the work place means that the employer may not treat anyone differently to
other employees. In the case we see that, the managers in Starbucks treat each employee equally
and all of the staffs are called ‘partners’. It helps to narrow the gaps between managers and employees.
Every employee deserves fair and equal treatment and respect in the work place, it helps to create
friendly working environment. So, if equal treatment addressed in the planning process it will help a
company to maintain a good management system and create a much closer and more familiar
atmosphere than other places.

Listen to the employees: Listening to the employees can be another important issue which needs to
address in the planning process. Sometimes business faces ricks when they fail to address this concern.
In the case we see that, Starbucks wants it’s every employee to join in making and developing plans,
then work together in achieving their goals. As a result, their policies and principles are communicated
between all staff, and there occurs no limitation in employees’ personal opinions. Listening to the
employees’ means giving them great importance which can motivate and encourage them to
concentrate on their work effectively.

Good welfare measures: Good welfare measures is an issue where employees are offered welfare
policies like medical insurance(including health, vision and dental), commodities discounts, house rent
etc. In the case we observe, all employees of the Starbucks, including informal personnel, are offered a
great deal of welfare policies. Moreover, the partners who work over 20hours a week are entitled to
benefits. So, this issue needs to be addressed in the planning process to motivate the employees.

All these policies helped in the retention as well as the motivation the employees in the organization.

The Starbucks’ organizational culture as established by the management of the company also played a
role in the helping the company to recruit and retain the top performing employee in the organization.
According to Maithel, et al., (2012, p.71) the organization culture plays in important role in ensuring that
the organization achieves their objectives. The Starbucks organizational culture was rooted in its mission
statement which stated that the main objective of the company to ‘provide a great work environment
and treat each other with the respect and the dignity’. This mission statement played a critical role in
maintaining the high commitment model of management. In order to enhance the mission statement
the management of the company ensured that each of the employee were given a mission statement
copy. In relation to this most of the company decision were made based on the on the guiding principle
in the mission statement.

What were the main human resource challenges that Starbucks’ faced in the early 2000s? Was the
company’s stand towards its human resource costs justified? Do you think Starbucks’ will be able to
find the right kind and number of people for its future expansion? Justify your answer.

Although Starbucks is success in managing human resources which cause it to succeed in the
international market, challenges still has to face and overcome it to allow the company to success
continuously. Starbucks has a lot of competitors but Starbucks is still over them. However, Starbucks has
a major competitor currently or maybe in the future which is McDonald’s McCafes. Dunkin Donuts is not
consider the major competitor of Starbucks because there is a few outlets in Malaysia and those outlets
are located in Kuala Lumpur only. On the other hand, Starbucks has 115 stores all over Malaysia which is
much more than Dunkin Donuts. For McCafes, although it has only one outlet in Damansara, it still well-
known and people are going there to try the coffee and muffins. Thus, McCafes might be rival
competitor in future.

The main challenge that Starbucks has faced on a human resource front has been that of finding and
retaining the right quantity and quality of employee workforce to cater for future growth. Over the
recent past, issues that have been raised include (but are not limited to): examination of human
resource management policies in the context of a large service-oriented company; study of importance
of employee retention at Starbucks in comparison with human resource costs; understanding the
relationship between work culture, employee motivation and positive human resource management
policies that promote these; recognizing the value of motivated and committed employees in the
service-based industry that Starbucks operates in; and examining the human resource challenges faced
by Starbucks in its current and future expansion campaigns.

 To promote a good working company culture, Starbucks has dealt with human resource issues
to building management levels that span beyond training. On various company tiers such as
management, the company culture has been encouraged to value the roles of various
stakeholders in ensuring company good is adhered to. This also includes attracting and retaining
top talent at any level with clear requirements for each role. Among this is the issue of
leadership at Starbucks. Like any managerial role, managers at Starbucks are advised on how to
treat their management capabilities as worthy assets. Leadership by example is encouraged with
managers being more for the purposes of outstanding team management as opposed to
achieving rigid business goals.
 Further company culture promotion is encouraged through enhancing proper communication
among the entire company workforce. Those in managerial positions at Starbucks usually
enforce platforms of mutual respect among all the company members both in direct relations as
well as any other form of communication between them. Expectations of various roles within
the organization are clearly laid out and further participation is encouraged. This gives a
platform to all employees who tend to be reserved in fear of criticism for their ideas by those in
authority.
 Competency issues are also dealt with as part of human resource matters that are critical to the
company. By proper observation of the individual effort that each member at Starbucks puts in
their work, further areas of development can be recognized and promoted. The skills of each
individual are aligned towards the overall business strategy that also includes setting goals
towards further company growth. This is usually done through providing coaching to the
employees and receiving their feedback to gauge how they fit into the business strategy at
Starbucks.
 Measurement and rewards is another way that Starbucks promotes human resource
improvement. This is done by recognizing each individual’s efforts and innovativeness and
rewards them by a measure of the level of alignment to overall company and brand goals.
Through this method of public recognition, all employees are promoted to a culture of working
together to promote strong organizational capability which leads to human resource and overall
company development.
 Starbucks has gone to other numerous lengths to ensure that human resources management is
maintained not only at acceptable standards but at higher levels than those of its competitors.
Through the motivation and commitment enhancement tools described above, Starbucks has
ensured that those employees selected and maintained work at their maximum potential. The
company also ensures that these policies are reflected on the commitment that each company
member, and the organization as a whole, demonstrates not only to the employees but towards
the customers that remain loyal to Starbucks.
 To ensure that selection process of employees is effective, the company has promoted programs
that encourage hard working individuals as potential members of the organization. This has
been demonstrated through the recruitment motto which has usually been ‘To have the right
people hiring the right people.’ The close scrutiny to the potential employees has been a further
testimony of the organization promoting what it refers to as the ‘Starbucks Experience’ which is
usually an effecttive working culture which is evident in the services it provides to its customers
especially through its frontline staff.
 Among the qualifications for hire that Starbucks promotes are dependability, adaptability and
the potential for team work. On having obtained the necessary workforce, Starbucks promotes
its human resources efforts by investing on training them in skills promoting job efficiency. This
comprehensive training ensures that issues are dealt with both on an individual as well as an
overall organizational level that promote a challenging, enjoyable and rewarding working
experience. The investment that Starbucks takes into this effort has paid out not only in the
 recognition that it gets but also from the opportunity that employees are offered. These include
skill development, goal planning and achievement, and career growth. These are also coupled
with an inspirational workforce that expands individual opportunity expansion that is beneficial
to both the employee and the potential customer.
 To further its efforts into catering for the human resources issues faced by the company,
Starbucks contracted Convergys Corporation, which is a human resources organization, to
provide its operations with human resource administration and payroll services. The major goal
behind this effort was to oversee the employee benefits services which would ensure a single
global platform for all Starbucks human resource services. This would further ensure that these
issues were in line with the programs that Starbucks had in place towards rapid global
expansion.
 The other challenge faced by Starbucks as stated above is in its rapid expansion program
whereby it has to maintain its image as a positive employer in all regions of operations. Related
to this is the challenge of finding the right number and kind of people that promote the
company goals that support this program. Ensuring that motivation of its employees would be
maintained through a good working culture as the numbers under the company payroll is thus
critical to growth and expansion efforts. However, Starbucks has risen above the challenges in
its generous demonstrations of human resources policies which are usually costly investments
to curve its niche as a financial leader in its operating environment. Thus the high costs of
human resource programs and related benefits have paid out and this can be seen by observing
the increase in the company’s profitability.

According to me, Starbucks would be able to attract the right kind and number of people for its future
expansion plans as the company relied on getting the right people to hire the right people makes effort
to retain them. Also the company’s culture played a huge role in the recruitment process. They would
focus on qualities like dependability, adaptability and ability to work in a team.