Running head: RECOVERY STRATEGIES 1

Recovery Strategies

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Recovery Strategies

A company’s public image and reputation is a critical aspect, such that companies want

to avoid negative publicity at all costs. A company’s values and missions serve to inform the

public how the company seeks to operate. Therefore, the company must strive to maintain its

values and direct its efforts towards achieving its mission. Negative publicity is often related to

unfair labor practices, unethical behavior, and workplace discrimination. When such issues

occur, they damage an organization’s reputation, which calls for the management to identify and

implement a viable recovery strategy. A recovery strategy is vital in helping the company limit

the negative exposure and ensure that the company continues operating according to its mission

and core values.

The purpose of this paper is to identify legal issues and charges brought against the

company and the company's approach to managing and recovering from these charges. The paper

will also include an analysis of the company’s recovery strategy.

The Legal Issues and the Charges Brought Against the Company

Starbucks is an American multinational chain of coffeehouses with its headquarters in

Seattle, Washington. Being the world's largest coffeehouse chain, Starbucks is a major

representation of the U.S.'s second wave of coffee culture. Starbucks has a coffeehouse in at least

every state, in that regardless of which state one is in, they are likely to find a coffeehouse in the

neighborhood. The company's founding brought about a third place between work and home

where one can relax while enjoying a cup of coffee. From the start, Starbucks has been about

beyond just coffee, aiming to inspire and nurture the human spirit.

The company has always aimed to impact people and communities positively, with its

purpose going beyond profits. However, a while back, the company was caught between lousy
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press all over social media and the news. The bad press was about the arrest of two African

Americans at a Philadelphia Starbucks. Donte Robinson and Rashon Nelson were seated at a

Philadelphia Starbucks, waiting for a business meeting. While there, they requested to use the

restroom, but an employee at the coffeehouse refused their request since they had not bought

anything (Stevens, 2018). They were then asked to leave, and when they declined, an employee

called the police, who arrested them. The white male who had scheduled a business meeting with

the two questioned the police and the coffeehouse on the reason for their arrest.

The employee called for the police accusing the two men of trespassing and not leaving

when they were asked to. They felt threatened due to the men’s skin and decided to involve the

law enforcers. Despite the arrest, Starbucks did not press any charges against the men, and they

were released. A recorded video of the arrests on a white customer's cell phone caused outrage

from people around the country who saw the arrest as a form of race discrimination. The video

went viral that same day, and the company received a lot of backlash for racial profiling (Avila et

al., 2019). The result was a week of protest and threats by customers to boycott the company’s

services. While the two resolved not to take the matter to court, they settled for $1 each and

called for the launch of a $200 000 grant to support high school who aspired to become

entrepreneurs.

The Philadelphia mayor, Jim Kenney, later revisited the incident stating that it

exemplified what racial discrimination looked like during that time. He held that the incidence

brought about a lot of pain in the city and its resurfacing results in high financial and emotional

costs and significant legal risks to those involved. Also, the prosecutor’s office in Philadelphia

reviewed the case and found no evidence that the men had committed a crime (Associated Press,

2018). Attorney Stewart Cohen, who represented the two men, stated that they were illegally
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profiled, pointing to Title II of the Civil Rights of 1964. The Act prohibits racial discrimination

in restaurants, theaters, hotels, and other accommodation facilities. This incidence of racial

profiling against customers makes one wonder how the company could be treating minority and

colored employees.

An example is a lawsuit filed in March 2018 by a Starbucks barista claiming racial

discrimination by her manager. Howard, who is black, claims that she was hired as a barista by

Starbucks in 2016, and her manager immediately subjected her to discrimination. She claims that

her manager accused her of not working quickly enough and not being welcoming to customers.

Howard also claims that her manager commented on her bald head and facial expressions and

told her that she did not need the job or the money. Despite complaining to the management

about the discrimination, she states that it continued until she became pregnant. The management

kept ignoring her complaints and later fired her when she requested for maternity leave. The suit

also says that her non-African Americans were not treated the same way.

Borrowing from both scenarios, it is clear that racial profiling was a common issue with

Starbucks for both customers and employees. The scenarios presented legal and financial

implications for the company and emotional impacts for those involved. While the company's

management denied any discrimination against the barrister, they accepted their fault following

the arrest of the two men. The C.E.O. reported that they launched thorough investigations of

their practices to ensure that it does not happen again. He stated that the video showing the arrest

of the two men was very hard to watch and that the actions therein were not representative of the

company's mission and values (Associated Press, 2018). While the C.E.O. apologized on

Twitter, he also met with the two victims and gave a face-to-face apology for their undeserved

arrest.
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Starbucks’ Approach to Managing and Recovering from the Issues brought against it.

With the negative social media attention, news, and boycotts that Starbucks faced due to

racial profiling and discrimination, the management sought to implement strategies to help them

recover. The company’s management clearly understood that the initial step in dealing with any

crisis is to avoid worsening the situation. The company accomplished this consideration by

recognizing the incident as a threat to its reputation and issuing an equivocal apology to the

public and the victims. The C.E.O. flew to Philadelphia to meet Robinson and Nelson and

apologize to them in person (Avila et al., 2019). He ensured that he did not shift the blame

elsewhere but took ownership of the events and crisis.

The other strategy that Starbucks implemented to recover from the crisis was a policy

change. Starbucks had a policy that only customers who bought from the coffeehouse were

allowed to use the restrooms. Consequently, when Robinson and Nelson requested to use the

restroom at the Philadelphia Starbucks, the employee denied their requests since they had not

bought anything (Stevens, 2018). The management acknowledged that insisting that one must

buy or face forceful removal from the shop is not a welcoming gesture. As a result, they changed

the policy to allow anyone from the public, including non-customers, to use the restroom. This

policy change would serve to alleviate racial profiling among the employees in their judgment

when giving access to the restroom.

Lastly, Starbucks provided racial bias training as a strategy to recover from the bad

reputation it had gotten following the arrest of the two men. Starbucks closed all its stores

nationwide for the training, with the closure costing $16.7 million in lost sales (Avila et al.,

2019). This closure allowed the company to demonstrate to the public, customers, and partners

that it was committed to alleviating racial profiling among the employees. During the training,
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the company provided the employees with guidebooks to engage in sensitive conversations

surrounding race (Avila et al., 2019). Employees worked individually and in groups, discussing

the meaning of bias, identity, and race. They also focused on scenarios that might lead to racial

bias against customers and how to deal with such scenarios. At the end of the training, they

committed to working towards better habits when dealing with their customers and colleagues.

Starbucks sought help from different human rights and cultural activists groups to

develop a training curriculum and implement the training. While the training led to the closure of

all the stores, it proved to be worthwhile. The training helped the company convince the public

that it was committed to remaining racially sensitive and ensuring that incidences of racial

profiling did not happen again (Avila et al., 2019). Through the training and the commitment to

change the situation, the company managed to recover from the issues raised against it.

Starbucks was also able to recover and maintain lasting, mutually beneficial relationships with

key stakeholders and customers, thus improving the business’s chances of survival.

An Analysis of the Company’s Approach to Managing and Recovering from the Issues and

Charges Raised.

Starbucks did a commendable job identifying and implementing approaches to manage

and recover from the issues raised regarding racial profiling and discrimination. The company

began by acknowledging the crisis and its threat to its reputation. Starbucks also gave

unequivocal apologies to the public, consumers, and the victims of discrimination without

attempting in any way to shift the blame elsewhere. By closing its stores and providing training

to all employees, Starbucks showed its commitment towards alleviating racial profiling and

ensuring that such incidences do not happen again (Avila et al., 2019). The training helped the
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company salvage its reputation as it left a strong impression of a company that chose to forego

profits to ensure fair treatment of consumers, employees, and the community.

As a part of a company’s management team, I would use the same strategy as used by

Starbucks to handle the recovery. I would begin by acknowledging that there is a crisis and bring

all stakeholders on board towards finding a solution. I would also ensure the racial bias training

is across the board and not just where the incidence occurred. By providing training for

employees nationwide, Starbucks showed transparency with all its stakeholders and sent a

message across all stores that employees needed to change their habits. Starbucks also

implemented the strategy based on actual incidences, which placed them in a better position to

handle future situations that may arise.

Conclusion

When issues occur that damage an organization’s reputation, they call for the

management to identify and implement a viable recovery strategy. By successfully managing and

recovering from crises, a company can maintain lasting relationships with the stakeholders.

Companies need to take complaints from employees, consumers, and other stakeholders

regarding racial profiling and any other form of discrimination seriously and eliminate such acts.

References
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Avila, M, Parkin, H& Galoostian, S. (2019) "$16.7 Million To Save One Reputation: How

Starbucks Responded Amidst a Racial Sensitivity Crisis," Pepperdine Journal of

Communication Research, Vol. 7(4).

Stevens, M. (2018). Starbucks C.E.O. Apologizes After Arrests of Two Black Men. Retrieved

September 6, 2021, from https://www.nytimes.com/2018/04/15/us/starbucks-

philadelphia-black-men-arrest.html

Associated Press. (2018). Black men arrested at Philadelphia Starbucks feared for their lives.

Retrieved September 6, 2021, from

https://www.theguardian.com/business/2018/apr/19/starbucks-black-men-feared-for-

lives-philadelphia