Case Study Star Bucks

“If you want 10 days of happiness, grow grain. If you want 10 years of happiness grow a tree. If you want 100 years of happiness, grow people.” -Harvey Mackay.

Introduction to Starbucks • Company started in 1971 in Seattle, Washington • Largest coffeehouse in the world • Grew from 55 stores in 1989 to over 16,226 stores in 44 countries in 2008 • Products sold include: - beverages - pastries - whole coffee beans - coffee-related retail items

• Revenue - US$ 9.411 billion (2007) • Employee – 172,000 (2008)

Human Resource Management and the Growth Challenge Human Resource Management Ø Ø Ø

Fortune “Best Companies to Work For” survey – in January 2005 Employee friendly policies and supportive work culture Benefits program to part time workers

Challenges Ø Ø

Retention on Rapid Expansion Program Possible problems

Howard Schultz

“Treat people like family , and they will be loyal and give their all.” *In 2002, top 25 Managers of the Year by Business Week magazine *In 2004,“Time 100,“ Time magazine's list of the most influential people of the 20th Century

Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles as we grow

*Provide a great work environment and treat each other with respect and dignity

*Embrace diversity as an essential component in the way we do business *Apply the highest standards of excellence to the purchasing, roasting and fresh delivery of our coffee *Develop enthusiastically satisfied customers all of the time *Contribute positively to our communities and our environment *Recognize that profitability is essential to our future success

Recruitment and Training • Starbucks’ recruitment motto-” To have the right people hiring the right people” • Training program-’ First Impressions’ • Coffee making –Science at Starbucks • Three basic star skills§ § §

Maintain and enhance self-esteem Listen and acknowledge Ask for help

Recruitment and Training • Additional training to managers § Details of store keeping § Practices and procedures in Company operating manual § Basics of managing people § Outside training programs and seminars

Corporate objectives strategic plans, vision, and values

What business should we be in?

Business unit strategies How do we win (gain competitive advantage) in those businesses?

HR strategies

How should HR help us win? Strategic compensation decisions

Strategic Choices on Compensation

Compensation systems

Employee attitudes and behaviors

Competitive advantage

Strategic Compensation Decisions • Objectives • Alignment • Competitiveness • Administration

The Strategic Compensation Decisions Facing Starbucks 1. Objectives: How should compensation support business strategy and be adaptive to the cultural and regulatory environment? Starbucks objectives: – – –

Grow by making employees feel valued. Recognize that every dollar earned passes through employees’ hands. Use pay, benefits, and opportunities for personal development to help gain employee loyalty and become difficult to imitate.

The Strategic Compensation Decisions Facing Starbucks 2. Alignment: How differently should the various types and levels of skills be paid within the organization? Starbucks: – De-emphasize differences. – Use egalitarian pay structures, cross-train employees to handle many jobs, and call employees partners.

The Strategic Compensation Decisions Facing Starbucks 3. Competitiveness: How should total compensation be positioned against our competitors? What forms of compensation should we use? Starbucks: – Pay just slightly above competitors. – Provide health insurance and stock options for all employees (including part-timers). – Give everyone a free pound of coffee every week.

The Strategic Compensation Decisions Facing Starbucks 4. Administration: How open and transparent should pay decisions be to all employees? Who should be involved in designing and managing the system? Starbucks: – As members of the Starbuck’s “family,” our employees realize what is best for them. – Partners can and do get involved. – “your special blend”

Employees benefit programs • Health benefits : Insurance coverage • Employee ownership program(ESOPs) • Bean stock plan : stock options to part timers • Flexi time schedules • Onsite fitness programs

Employees benefit programs (continued)

• Child care and elder care assistance • Working solutions • Partner connection • Perks : 30% discount and free coffee every week

Retention • • • • • •

Retain small company atmosphere Spirit of friendliness Starbucks experience Encourage innovativeness Self managed teams Awards (warm regards, MUG, bravo & spirit of friendliness)

Work Culture and Motivation • Work Culture Providing great work environment was integral part of mission statement •

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Reinforcement of mission statement •

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Mission Review Programme

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No capitalization of job titles

• Motivation Awards, calling them ‘partners’ •

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Motivated Employee

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Motivation leads to innovation •

Example: Frappuccinos, a popular cold coffee, was a result of the ideas of few employees •

Challenges •To maintain its image after expansion •Human resource cost was very high •High HR cost may get reflected in increased price of beverages •Complain of loosing its attractiveness as the size was Increasing •Increased awareness amongst other retail companies about the importance of HR policies leading to increased competition

THANK YOU Presented By: Gaurav Dhananjay J. Prabhu Gautam S.V. Geetanjali Upadhyay Hari Krishna Deep Kiran