An Introspective Into the Mechanism of Starbucks’ Clockwork: Leadership Strategy

Abstract

Strong leadership strategy and efficient leadership culture are an integral part of any entrepreneurship. Predetermining the course of the company’s actions, the strategies that are going to be chosen in the relationships with the customers, and the specifics of the organizational behavior within the firm, these elements serve as the building blocks for the company’s organizational environment. Considering the example of Starbucks, its recent downfall and nonetheless, the impressive success that followed the misfortune as a result of adopting a unique leadership strategy will help prove the significance of a leadership strategy.

Introduction

Adopting the right leadership approach is not easy. Choosing a leadership culture sets the standards for the organizational behavior and predetermines the rates of the employees’ engagement, which influences the quality of the product considerably. One of the most outstanding examples of leadership culture is the one adopted by the head of Starbucks. Because of the choice of a mixture of servant leadership and persuasive leadership cultures, Schultz has managed not only to survive the recent notorious expansion crisis (Seaford, Culp, & Brooks, 2012) but also to reorganize the company a mere year later towards even more recognition and success.

Starbucks and Its Leadership Culture

Speaking of the leadership culture at Starbucks, one must mention that the company has deviated from the traditional concept of a perfect leadership style. It is common knowledge that transformational leadership is the optimum choice for any major company to arrange the work of its employees in the most efficient way possible. According to the existing sources, transformational leadership offers for much more opportunities in improving the production process through the change of organizational behavior of the employees and the change of corporate culture, since it allows for a transformation of how the employees see their work and its significance. Helping the company leader both pay enough attention to the staff and control the production process, the given approach is considered the most efficient one at present. However, Starbucks went even further in their dedication to the needs of their staff, claiming that the company adopts a servant leadership strategy.

The above-mentioned choice can be justified by the fact that Starbucks has always insisted on the significance of establishing perfect relationships between the company leader and the staff. According to the principles, which Starbucks is guided by, the company’s highest priority is the concern for the personal and professional growth of its employees. As it is stated in Behar and Goldstein’s article that studies the specifics of leadership structure in Starbucks, “At Starbucks, we value people most of all, more than we value money. From the very beginning, people have always come first. People come before profits. People come before worrying about lawsuits. People come before the coffee” (Behar & Goldstein, 2010, 20). It must be admitted that the given leadership culture has its pros and cons. One of the doubtless benefits of the given strategy is that Starbucks will always have devoted staff, who works to provide only top-quality products.

After all, it is important to develop trustworthy relationships between the members of the staff and the managers. Thus, numerous conflicts can be avoided, and the process of knowledge management can be improved considerably. With the help of the servant leadership approach, one can make sure that the contribution of each member of the staff is appreciated and that the needs and wants of every single employee are taken into consideration. Thus, better cooperation between the employees and the management can be provided. Unfortunately, the given leadership culture also has its problems, which Starbucks has already experienced, according to the results of the recent research. One of the most obvious drawbacks regarding the servant leadership style is that it takes an impressively long time for the given leadership style to have an effect. While the given peculiarity of a servant leadership style may not be the issue with the employees who have been working in the company for quite long, with the newcomers, it will take much time for the servant leadership style to influence the perspective of the former.

Team Structure of Starbucks

Starbucks also has a very peculiar team structure. Before proceeding with the analysis of the Starbucks team, it should be mentioned that there are different ways of classifying the team structure, depending on the basic principle of classification. For example, depending on the role that a company leader performs in the specified company, teams can be described as ego-less, democratic hierarchical, chief programmer, and ideal teams. Choosing the focus of the teamwork, one will be able to split the teams in existing companies into the divisional structure, matrix structure, organizational circle, etc. Starbucks, however, offers a very special case of team definition. Since Starbucks puts a major emphasis on the relationships with its staff, it can be assumed that Starbucks employs a matrix team structure.

Indeed, when considering the specifics of how the teamwork in Starbucks is organized, one must mention that the company’s strategy is to combine the functional division and the product-based one, with the necessity to report to two people at the helm. As a result, the company displays a very well-developed hierarchy, with every employee being assigned a specific function and very strict control taken over the entire production and knowledge management processes. The principle of hierarchy employed at the Starbucks Company can be viewed as both a very reliable and at the same time a rather old-fashioned approach. Speaking of the negative aspects of the hierarchy structure employed in the Starbucks Company, one must mention that it allows very little wiggle room for the staff to make decisions concerning a specific task.

On the one hand, it may be assumed that total control is a part of the company’s plan. By adopting the hierarchy team structure, Starbuck’s leader can delegate powers to specific people, control the company processes and be aware of the slightest changes within the enterprise, which is especially important for a company of the scale and size of Starbucks. However, it is also worth bringing up the aforementioned principle of an organizational strategy implies that the leader does not trust the employees enough to offer them enough power and, therefore, prefers to take full control over the entire production process, which can be viewed as a contradiction to the previously mentioned employee-targeted leadership style. Hence the key problem regarding the Starbucks strategy concerning the organizational structure and the policy towards the staff emerges. While the company aims at breaking new grounds in the relationships among the staff and the company leader, it still does not consider its employees reliable enough to undertake the decisions that influence the company tangibly. At present, the given issue seems a major problem regarding the company’s organizational strategy.

HRM Strategies at Starbucks

In his attempt at making Starbucks a landmark in the history of companies’ development, the leader of the enterprise also adopts a very curious human resource strategy. There is no need to stress the significance of the ability to choose the right people and assign them to the right tasks. Therefore, the right strategy for choosing employees from the available candidates and assigning these employees with the corresponding tasks must be adopted. As a rule, in the given process, mistakes are unavoidable, since it is hard to decide from the very start whether the specified person is going to perform well in the chosen setting. The Starbucks Company, however, found a very efficient means to solve the above-mentioned problem. To start with, it is necessary to stress that, as the most recent data shows, Starbucks uses a combination of HRM strategies to obtain the maximum effect. The situational approach seems the most reasonable in Starbucks’s case since the market in which the company operates has witnessed an impressive change lately, i.e., the use of the so-called capsule coffee.

Only attempting to produce capsule coffee at present, Starbucks is, therefore, in the environment of stiff competition, which means that the company should be especially careful about the choice of employees and the means to upgrade the skills of its current staff. As it has been stressed above, employees are the Starbucks Company’s key priority along with its customers. Consequently, the HRM strategy used by the company can be described as the approach that allows for creating the environment for its employees’ personal and professional growth, where each of the company’s staff is treated with due respect and dignity. It is also essential to stress that Starbucks encouraged diversity in the workplace. Thus, it can be assumed that the company does everything possible to prevent instances of discrimination on any basis in the workplace, be it discrimination based on race, gender, or religious beliefs. As a result, the Starbucks Company is considered one of the most progressive companies of the XXI century for a very legitimate reason. To describe the approach that the company adopts in its HRM practice, the following elements must be mentioned: benefits, recruitment, training, performance appraisal. It is hard to overrate the importance of each of the components. To depict the company’s approach towards employees’ recruitment and training, one must bring up the company’s guidelines known as the Six Principles:

• Make sure that each of the employees has been provided with a decent work environment and is treated with dignity and respect;
• Providing diversity in the workplace as the basis for equal opportunities for people in business;
• Applying the highest standards concerning the production values and process, as well as other related services;
• Meeting the customers’ demands and making certain that every single customer is satisfied with the service quality and thrilling them into becoming Starbucks’ clientele;
• Creating the environment that works for establishing a strong and integrated community of employees;
• Recognition of profitability is one of the elements that are essential for the company’s further success in the specified market.

The above-mentioned list focuses on the development of trustworthy relationships between the company leader and the employees. Even with a specific emphasis put on the company’s performance in the last postulate, it is clear that Starbucks’ key priority is to build a strong and reliable link between its employees and managers, as well as support the professional growth of the staff. Thus, it can be assumed that Starbucks invests in each employee, training the latter and encouraging his/her progress, while the employee offers the company his/her services, which improve gradually. The given approach cannot be denied its effect on the company’s performance – the more an employee is trained, the better (s)he performs. The given strategy, however, also has several disadvantages, one of which concerns the time, effort, and money that the company is likely to waste in case of an HRM mistake. Unless the human factor is eliminated from the company’s HR department, mistakes in assigning the wrong people with the wrong positions will continue, which is quite natural. For Starbucks, with its devotion towards each employee, however, several HRM mistakes in a row might turn out fatal, since the resources spent on training, coaching, and encouraging.

Starbucks: Motivation and Effectiveness

Regardless of the aforementioned drawbacks in the shield of the company’s HRM practices, it must be admitted that the general course of Starbucks concerning the leadership strategy, the team structure, and the chosen HRM approach is rather efficient and refreshing in the light of the fact that most companies adopt a transformational leadership style at present. In contrast to the latter, Starbucks clearly states that it does not aim at reinventing the employees’ perspective of teamwork, which means that the employees are not going to be put into a stressful environment. Therefore, the chosen track works perfectly well as the means to create an engaging environment for the employees. The corporate values involve professional development of the employees, and the HRM strategies are aimed at investing into the current employees as much as possible, making sure that the current staff, who is presumably already expert in their jobs, will evolve professionally so that the company could use the services of experts.

The fact that Starbucks invests in its employees and allows for their professional growth instead of using their potential thoughtlessly, as most present-day companies do, is alone outstanding. Thus, it can be assumed that Starbucks’ approach towards its human resources is the company’s greatest asset. It is quite impressive that the company manages to translate the demands of the employees into the principles of the corporate HR strategy. The key advantage of the approach chosen by the company is that it motivates the employees not merely for a change, but conscious progress and encourages them to develop professionally, at the same time keeping them willing to contribute their newly acquired skills and knowledge to the company for the benefit of the latter. As Baker et al. (2008) explain, conscious motivation is the first step towards success: “A typical recipe for motivation calls for a mixture of persuasion, encouragement, and compulsion. Yet the best leaders, we suspect, need no recipe: They get people to produce great results by appealing to their deepest drives, needs, and desires” (Baker et al., 2008, 51).

Concerning the Negative Effects of the Leadership Strategy

However, Starbucks also displays several negative tendencies that might hinder the company’s progress. As it has been mentioned above, the fact that the company invests so much into the employees’ development makes it extremely vulnerable towards the employees who do not see themselves as members of a team and prefer shifting from one company to another in search of better terms of employment. In a nutshell, the company’s key problem is that it does not reinvent the employees’ perception of teamwork; instead, it adapts towards the employees’ requirements to a reasonable extent. Nevertheless, chances are that even such types of employees will learn the benefits of working for the Starbucks Company and change their motivations. Another considerable drawback of the leadership strategy chosen by the Starbucks Company is that when pushed too far, nit starts conflicting with the company’s interests, i.e., efficient production and selling. According to the recent news, Starbucks has already faced a crisis when trying to conquer new markets and abandoning its initial strategy of putting the employees before the company.

As the reports say, after the experiment mentioned above failed, the Starbucks Company resumed striving for its employees’ professional growth. Therefore, it must be admitted that the leadership strategy chosen by Starbucks presupposes that the company must take care of the expansion and the personal and professional needs of the employees, which is a rather complicated task. That being said, the key drawback of the chosen leadership approach is that it does not allow for radical changes, which the company is likely to benefit from since these changes might affect the employees negatively, which the company’s policies are strictly against. It is worth mentioning that Starbucks has already faced the dilemma concerning the economic growth versus the needs of the employees, which resulted in choosing the latter. As the given example, shows, Starbucks is far from providing an exemplary leadership strategy; however, to the company’s credit, Howard Schultz, the Starbucks leader, has created the only enterprise where the needs of the staff are pout before the needs of the company and yet managed to enjoy tremendous success.

Enhancing, Redesigning, Improving: Suggestions

Judging by the description of the company leadership culture and the team structure above, Starbucks is on the right track with its innovative policy and the original approach, yet it could use some recommendations concerning how the company is organized and the employees are controlled. Speaking about the elements that need to be enhanced, one must mention the necessity to make the elements of persuasive leadership in the company clockwork less noticeable. While one must admit that the choice of persuasive leadership as a complementary strategy to the servant leadership is very reasonable, the latter allowing the leader to pay an equal amount of attention to the needs of the employees and the needs of the company, it is desirable that the company should use the persuasive leadership strategy more actively. The enhancement of persuasive leadership will help set the course for future growth and at the same time boost the employees’ performance rates.

While Starbucks has proven that a company can put the needs of the employees and the interests of consumers ahead of the needs of the firm and still be unbelievable successful, it is still clear that after the above-mentioned crisis, the company could use a redesign of its leadership approach: “Starbucks presents itself as being subject to the demands of consumers who ultimately dictate the corporation’s ethical behavior through their consumer power” (Fridell, 2009, 86).

Even though Starbucks has made caring for employees its trademark strategy, after the losses taken in the course of the expansion endeavor, the company must focus on making for these losses. For once, Starbucks should adopt a more loose leadership strategy, therefore, making the leadership culture less stringent. As it has been stressed above, at present, the company strives for the benefit of the employees, yet the leader has complete control over every single process, which may give reasons to suspect that Schultz does not trust his employees enough. The contrast between the company’s willingness to provide the employees with a decent environment and the insultingly little trust that Schultz puts in them may lead to spoiling the relationships between the leader and the latter. Therefore, it can be suggested that the leadership culture should be redesigned towards a more lenient attitude to the company staff.

Conclusion and Recommendations

There is considerable room for improvement in the Starbucks Company. As has been mentioned above, the firm has recently recovered from its unlucky over-expansion experiment. In the light of the given fact, it could be expected that the company should be extremely careful in its next steps. Schultz, however, does not believe that there is time to sit twiddling the thumbs while the rivals are promoting new capsule coffee. Starbucks faces the threat of losing its popularity, which means that new steps are to be taken despite the recent shock (Business Source Complete, 2011). It is rather remarkable that the company has managed to get back to its normal course and even compensate for the losses so swiftly. Even though the means chosen for the given improvement left much to be desired (i.e., shutting stores left several people unemployed), it is worth admitting that Starbucks survived the crisis rather successfully. However, at present, the company could use some improvements as well. To start with, it is crucial to admit that some of the systems within the Starbucks Company do not work as well as they might seem to.

While Schultz’s being currently preoccupied with new growth plans is rather reasonable, seeing how the company is experiencing another surge of growth, he also pays close attention to the rates of employee engagement in the company’s business. As a result, some of the issues regarding the company’s growth might be overlooked as Schultz focuses on the relationships among the employees and the corporate climate. It is important to keep in mind that the two processes, i.e., the personal and professional growth of the employees and the economical extension of the company have very few points of contact. Therefore, it will be reasonable to assign the heads of the Starbucks affiliates with promoting the corporate values among the employees, as well as evaluating the chances of the company on a local level, while the company leader will be left with checking the factors that contribute to the company’s growth, as well as the ones that may hinder it. To be more exact, Starbucks must consider the means of delegating the responsibilities from one company member to another one in the most efficient way possible. As a result, an efficient knowledge management system will be required. It is essential that the company information should be available to every member, and that every member should be informed of the latest changes within Starbucks. It can be assumed that, with the introduction of transparency into the company, the possibility of idea theft will be eliminated and the employees will be willing to share their suggestions concerning the company and production process more eagerly.

Reference List

Baker, L. M. et al. (2008). Moving mountains. In Harvard Business Review (Eds.) Harvard Business Review on the persuasive leader. Cambridge, MA: Harvard Business Press.

Behar, H. & Goldstein, J. (2010). It’s not about the coffee: Leadership principles from a life at Starbucks. The Journal of Quality and Participation, 33(1), 20.

Business Source Complete (2011). Starbucks’ quest for healthy growth: An interview with Howard Schultz. McKinsey Quarterly, 2, 34–43.

Fridell, C. (2009). The co-operative and the corporation: Competing visions of the future of fair trade. Journal of Business Ethics, 86, 81–95.

Seaford, B. C., Culp, R. C., & Brooks, B. W. (2012). Starbucks: Maintaining a clear position. Journal of the International Academy for Case Studies, 18(4), 35–36, 49.