Lori E

Solyom 1

Lori E. Solyom

Essays in EthicsHoward Schultz: A Cup of Contractarian Coffee

Some people think Starbucks coffee, like the companys founder, is too bold, too unconventional, and costs too much. For me, it was love at first sip, and an instant curiosity about the man behind it. Raised on the dark, pungent coffees of the Arabian peninsula, I relished a haven where I could break from my busy day for an honest to goodness dark brew in comfy environs not redolent of bacon or burgers. Forget the fancy frappes and the luxuriant lattes, I liked the coffee!Howard Schultz is a man who has struggled to balance his family life and his boutique beverage empire. He has risen to the top, promoted coffee as a way of life and fair-trade as a way of business. Schultz has survived Starbucks Guatemala-gate. He has retired from and returned to the company he birthed out of a humble Seattle business committed to offering consumers world class coffee. Schultzs caffeinated empire has been strongly molded by his personal ethical framework, one that is deeply rooted in mutual well-being for the sake of collective benefit. Whether you take your java low fat, half-caf, sugar-free or on ice, Starbucks beverages are steeped and brewed in Schultzs interpretation of the social contract.

Contractarianism, or the idea that we as individuals agree to live by the social mores based on equality, was defined by British philosopher John Locke as a divine command that we we not harm others with regards to their life, health, liberty, or possessions. (Friend) Lockes definition of ones property is the result of ones labor mixed his labor with the raw materials of nature. So, for example, when one tills a piece of land in nature, and makes it into a piece of farmland, which produces food, then one has a claim to own that piece of land and the food produced upon it. (Friend) Translate that into Starbucks language and you have Howard Schultz and his company mixing their concepts of community and discovery with coffee beans to bring about the largest coffeehouse company in the world. (Starbucks Corporation )

Schultzs 1997 autobiographical story of Starbucks evolution, Pour Your Heart into It, is full to the brim with his applications of natural ethics, such as any win at the expense of employees, that wouldnt be a victory at all. (Schultz, and Yang, 126) The chapter titled People are not a Line Item offers multiple observations about the relationship between management and workers. Schultz explained why in an era that many companies were cutting healthcare benefits, Starbucks found a way to increase theirs, Treat people like family, and they will be loyal and give their all. Stand by people, and they will stand by you. He acknowledged it as, the oldest formula in business, one that is second nature to many family-run firms, and lamented than in the late 1980s, it seemed to be forgotten. (Schultz, and Yang, 127) Though it was unconventional and seemingly radical move it was deliberate and intentional. Every single American needs to have access to health insurance full-stop, declared Schultz. (Charles) In case the healthcare provision seems like a small concession on the part of the coffee chain, its worth noting that Starbucks spends more on health insurance than it does on coffee beans. (Iacocca 182) Schultz views the Starbucks enterprise as a team sport: Remember: You'll be left with an empty feeling if you hit the finish line alone. When you run a race as a team, though, you'll discover that much of the reward comes from hitting the tape together. You want to be surrounded not just by cheering onlookers but by a crowd of winners, celebrating as one. (Schultz, and Yang, 337) That were all in this together worldview makes a social contract for mutual well-being the only rational modus operandi.

And Starbucks employees are not the only family whose well-being is important to Schultz. If there was a private struggle made public for the entrepreneurial leader, it was Schultzs desire to balance work and family, something he credits his wife Sheri with helping him to perfect. (Schultz, and Yang, 340) Before Schultz agreed to come back to become CEO of Starbucks in January 2008, he had to get his kids' blessing to go back to the grind. (Serwer)

More than just making decisions based on an ethos of not harming others, Schultz has gone out of his way, both individually and corporately to assist the world-at-large. Is it an innate altruism? Possibly, but a cynic might observe that its easy to be altruistic when your total annual compensation tops $22 million dollars. ("Forbes.com People") Yet Howard Schultz comes across as the real deal.

Numerous sources quote Schultz as advising, Risk more than others think is safe. Care more than others think is wise. Dream more than others think is practical. Expect more than others think is possible. A quick internet search indicates that the originator of the mantra is most likely Claude Thomas Bissell, a twentieth century Canadian educator, but theres little to dispute that this is credo lived out by Howard Schultz. Giving back to the community has always been a huge focus for Starbucks, Schultz explained, each year we strive to create new ways to become more involved in the neighborhoods where we do business. With the launch of the California Giving Program, Starbucks has the opportunity to partner with some of the most amazing non-profit organizations in all of California that work to build stronger communities by nurturing kids and inspiring grownups. (BNET: CBS Business Network) Starbucks is not just concentrating its good works to neighborhood causes. This big-hearted corporation has reached out overseas. We are as passionate about our commitment to our communities as we are about achieving financial success. By creating this program with the China Soong Ching Ling Foundation, which has done so much good work for children, we will provide tools and teacher training that will help children in rural China build brighter futures, Schultz informed a restaurateurs trade magazine. (QSR Magazine)

In the wake of disaster, you can count on the Red Cross, but you can also count on Schultz and the resources of Starbucks. We are deeply saddened by the tremendous loss of life and devastation caused by Hurricane KatrinaStarbucks has a long tradition of striving to bring together people and communities where we do business. We extend our heartfelt condolences to the bereaved families and many others impacted by this natural disaster; our prayers and thoughts are with all the families who have lost loved ones. The commitment went beyond corporate. For Schultz it went deeper, I feel a personal connection to each of our several hundred Starbucks partners and family members, as well as the community of neighbors they serve, who are victims of this disaster. Today, I am announcing a $1 million personal contribution from my family foundation to support the relief efforts. (Kulthol) In August 2010, Starbucks approached the $5 million mark on Katrina relief. (Chisholm, and Edelman)Schultz has applied his ethical framework to the money, as well as the relationships. Business is about results, not just for the well being of the chairman, president and CEO, or even the employees, but for the good of stakeholders. I believe that the best way for an entrepreneur to maintain control is by performing well and pleasing shareholders even if his or her stake is below 50 percent, wrote Shultz. That risk is far preferable to the danger of heavy debt, which can limit the possibilities for future growth and innovation. (Schultz, and Yang, 57) His methodology for career longevity has been straightforward: Every step of the way, I made a point to underpromise and overdeliver. In the long run, that's the only way to ensure security in any job. (Schultz, and Yang, 95) And Schultz has imposed his ethic over the organization structure of Starbucks, as is evident in his explanation of the companys restructuring Management's proposal to declassify the Board demonstrates Starbucks Board of Directors commitment to good corporate governance practices. The Board believes that the annual election of directors is a primary means for shareholders to influence corporate governance policies and hold management accountable for implementing those policies. ("Free Library")Much of Starbucks success can be presumed to be a result of Schultzs genuine leadership. Hes established a code of conduct for Starbucks suppliers. (Schultz, and Yang, 298) The first of the companys Six Guiding Principles is treat each other with respect and dignity. ("Starbucks Corporation Corporate Social Responsibility Fiscal 2005 Annual Report: Beyond the Cup" 2)

Throughout the partner web communications at Starbucks.com there are repeated admonitions to keep doing good together. His ethical practices are dictated by both policy and example to Starbucks management, transmuted to the employee corps, and the cup of contractarian well-being flows over onto the consumer public. Several different Starbucks publications, including the 2007 annual report, feature the following quote from CEO Schultz: We establish the value of buying a product at Starbucks by our uncompromising quality and by building a personal relationship with each customer. ("Starbucks Corporation Corporate Social Responsibility Fiscal 2007 Annual Report: Our Commitment to Ethical Coffee Sourcing" 3)Schulz believes that the positive results from this for-the-good-of-all sincerity are no accident. He has observed that, In this ever-changing society, the most powerful and enduring brands are built from the heart. They are real and sustainable. Their foundations are stronger because they are built with the strength of the human spirit, not an ad campaign. The companies that are lasting are those that are authentic. (Schultz, and Yang, 248) This is a fixed set of ethics for Schultz, immutable, unchanging. Values dont wither as sales grow, he avers. (Schultz, and Yang, 277) To quote Howard Schultz, Starbucks represents something beyond a cup of coffee. ("Starbucks Corporation Corporate Social Responsibility Fiscal 2005 Annual Report: Beyond the Cup" 1) Schultz is correct; Starbucks is the fruit of the labor of an ethical leader who has worked out his ethical framework on a corporation, its management, suppliers, employees, consumers and community members. And all things considered, its still a pretty darned good cup of coffee.Works CitedCharles, Ann. "Spoken Like a True Leader--Ten CEO Quotes to Live By." FC Expert Blog. FastCompany.com, 03 Feb 2011. Web. 20 Jul 2011.

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Iacocca, Lee. Where have all the leaders gone? 1st. New York, NY: Scribner, 2007. 182. Print.

Kulthol, May. "Starbucks Makes Initial $5 Million, Five-Year Commitment to Long-Term Relief and Recovery Efforts for Victims of Hurricane Katrina; First $1 Million to Go to the American Red Cross Disaster Relief Fund." Starbucks Investor Relations. Starbucks Coffee Company, 08 Sep 2005. Web. 20 Jul 2011.

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Schultz, Howard, and Dori Jones Yang. Pour Your Heart into It: How Starbucks Built a Company One Cup at a

Time. 1st. New York, NY: Hyperion Books, 1997. Print.

Serwer, Andy. Starbucks fix: Howard Schultz spills the beans on his plans to save the company he founded. CNNMoney 18 Jan 2008: n. pag. Web. 20 Jul 2011. .

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Starbucks Serves Up Statewide Grants; Company Launches California Giving Program; California Non-Profit Groups Encouraged to Apply. BNET: CBS Business Network. Business Wire , 15 Feb 2006. Web. 20 Jul 2011.

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Starbucks to Support Rural Education in China. QSR Magazine. Journalistic Inc., 14 Feb 2006. Web. 20 Jul 2011. .

. Waller, Jason. John Locke (1632-1704). The Internet Encyclopedia of Philosophy. The University of Tennessee at Martin, 17 Apr 2001. Web. 20 Jul 2011. .