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Starbucks Recruiting, Compensation, And Benefits

Starbucks Recruiting, Compensation, And Benefits

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Categories:Types, Business/Law
Published by: Kiki 'Khadija' Rizki on Dec 20, 2011
Copyright:Attribution Non-commercial


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Starbucks Recruiting,Compensation,and Benefits Analysis
December 7, 2011By:
Andrew Rucker,Kayla Villayvanh,
Megan Lanagin,Savitrii (Kiki) Rizki,and Zea CollentineManagement 311: Managing Human Resources
Professor Vandra Lee Huber
Foster School of Business, University of Washington
Our paper examines Starbucks’ human resource management practices related to
recruiting, hiring and compensation, benefits. Our study focuses on the recruiting practices for
Starbucks’s core competency teams in the United States: the coffee divisions –
those workingdirectly to create and re-create profitable brewed beverages. These are the product people inheadquarters, and the baristas and store managers in the customer frontline. We have excluded,however, employees at roasting plants, and any suppliers. In order to understand the relationshipbetween human resource practices and company goals we have first looked at the shifts in CEOleadership as well as a SWOT analysis of Starbucks as a whole. We then take a closer look atcompensation and benefits, recruitment and hiring, and lastly a SWOT analysis of human resourcespractices.
Orin Smith succeeded Schultz as CEO in June 2000. In the ten years prior to his position asStarbucks CEO, Mr. Smith held a number of executive positions at Starbucks. As discussed inChapter 5 of 
Human Resource Management,
there are several advantages to relying on internalsources. Not only does the firm know the applicant, but the applicant knows the firm. Before hewas CEO, Mr. Smith held positions as executive vice president, chief financial officer, and chief 
operating officer. Under Smith’s leadership as CEO, growth and earnings remained strong.
When Mr. Smith retired in 2005, Jim Donald was hired as the CEO. Mr. Donald became oneof the first Starbucks executives to be hired from the outside. This marked a transition for Starbucksfrom internally developed executives to external involvement (Gray). In many cases, recruiting fromthe outside can be a way to strengthen the company and introduce new ideas. However, while Mr.
Donald was CEO, share prices dropped 48% during a six-month period. Investors were impatientand dissatisfied.
In 2008, Howard Schultz returned as CEO. Mr. Schultz’s focus was slow expansion, close
unprofitable stores, and fast track international plans (Adamy). In 2010, Mr. Schultz urged fellowbosses to hire more people. Starbucks has plans to open hundreds of new stores in the UnitedStates and elsewhere. Mr. Shultz challenges companies to create jobs. In 2011, Starbucks plannedto create
more than 3,500 new jobs in the United States (Howard’s Way).
Worker complaints from Starbucks’ baristas in the past couple of years have resulted in
negative publicity for Starbucks. Recently, an outburst from an employee that worked at aCalifornia Starbucks went viral on Youtube. The employee in the video complained about impolitecustomers and dissatisfaction at work. The video has over 900,000 views. Other complaints thathave caused negative publicity for Starbucks are comments from part-time employees that theyhave no guaranteed number of work hours per week, and complaints that the wage is barely abovethe minimum wage (Starbucks Baristas 8).
Starbucks has a wide geographic presence that is continually strengthened by expansion.Starbucks has operations in more than fifty countries. Company-operated retail stores in the US andinternational markets accounted for 84% of total net revenues in the 2010 fiscal year. Currently,Starbucks is focused on a stronger presence in Brazil, Central America and Asia. In Brazil, Starbucksacquired a Brazilian coffee company; in Central America, Starbucks entered an agreement with
Central America’s largest multi
-brand franchise operator to open Starbucks stores throughoutCentral America; and in Asia, Starbucks has a new partnership with Tata Coffee (Datamonitor 5).
Research and development of new products allows Starbucks to strengthen its productportfolio. The R&D department of Starbucks develops new food and beverage products as well asnew equipment. In 2009, R&D created the VIA Ready Brew coffee and sales from the VIAReadyBrew coffee contributed $22 million to net revenue in fiscal year 2010 (Datamonitor 8).
Recalls on products have harmed Starbucks’ brand image. Such recalls
include products withpeanut butter, glass water bottles, and grinder blades. Most recently in January 2011, Starbucksrecalled glass water bottles due to concern that the bottle could shatter when the stopper wasinserted or removed. Similarly, grinders used by baristas in the stores were recalled since thegrinder could fail to turn off or turn on unexpectedly. The grinder recall took place in2009. Continual recalls threaten the value of the Starbucks brand and could cause a decline inproduct demand (Datamonitor 8).

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