MGT 3613- 004 May 1st 2012

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Pedro Hernandez

Peter Aveiga

Woosub Shim

Mark Venegas

Nikhil Menon

The Organization

Mission Statement, Goal Industry Section and Competition Size and Location History

Pages 3-4

THE STAFFING & TRAINING FUNCTIONS

Internal & External Recruiting Selection Training & Development

Pages 5-6

THE BENEFITS/PERFORMANCE APPRAISAL/COMPENSATION FUNCTIONS

Company’s Benefits Package Performance Appraisal Process Compensation Function

Pages 6-8

ANALYZING THE ORGANIZATION Best companies to work for Recommended changes

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The Organization

Starbucks mission statement is: “To inspire and nurture the human spirit-

one person, one cup and one neighborhood at a time.”

One of the reasons Starbucks has been a success is through its goals that help

shape their company culture. Starbucks, even though their company is spread all

throughout the world, likes to treat their company as if it was just a local shop in the

neighborhood. Their international development strategy changes to different markets

globally addressing the local needs and requirements of each individual market.

Starbucks’ objective seeks to be a global company, making a difference in people live by

leveraging their brand and the coffee experience to foster human connections.

Starbucks competes in the food and beverage industry with a specialty coffee-bar

part of that industry. Starbucks stores offer a choice of regular or decaffeinated coffee

beverages ranging from the classic cup of coffee, lattes, frappuccinos; within the last few

years they have added large variety of pastries. Starbucks also plays smooth jazz as part

of its easy going, nurturing environment.

Their closest competitor is called Second cup, which is a Canadian franchiser.

McDonald’s McCafe can now be included into the conversation due to the fact that

McDonalds is known globally and now they are trying to enter and compete in the coffee

industry. Some others worth mentioning are Green Mountain Coffee Roasters, Coffee

Bean & Tea leaf, Costa coffee, Peet’s, and Caribou Coffee

Starbucks is considered the leader in the coffee bar industry globally. They have

over 11,000 locations and annual revenue of about 6.4 billion dollars. Their initial public

offering of common stock in June 1992 turned to be one of the most successful IPOs of

that year. Overall Starbucks is tied to helping specialty coffee products catch on across

the United States increasing the number of cafes in 1992 from 500 to 10,000 by 1999.

Starbucks, as of 2011, is the world’s #1 specialty coffee retailer. They have more than

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17,000 coffee shops in about 40 different countries. In the United States they have

exactly 12,781 stores open. In 2011, they had a total of 149,000 employees recorded in

their company fiscal yearend report.

Starbucks first store opened in 1971 in Seattle, Washington by three partners:

Jerry Baldwin, Zev Siegl, and Gordon Bowker. In1984, the original owners chose to buy

out the competing coffee company Peet’s. After the acquisition of Peet’s, Starbucks

began to expand quickly and opened its first locations outside of Seattle at Waterfront

Station Vancouver, British Columbia, and Chicago Illinois in 1988. By the year1992, the

company had grown to 165 stores. Currently, Starbucks competes in 55 different

countries. The first Starbucks location outside of North America was located in Tokyo,

Japan. Even though Starbucks has had much success and competes in different

international markets, they still try to continue treating their company as a family run

business. Starbucks chairman Howard Schultz has talked about making sure growth does

not dilute the company’s culture and the common goal of the company’s leadership to act

like a small company. Starbucks is also very involved in environmentally friendly causes.

Starbucks was ranked number 15 on the US Environmental Protection Agency’s list of

the Top 25 Green Power Partners for purchases of renewable energy in 2008.

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Staffing & Training Functions

Starbucks, like most companies, likes to promote from within. They have a

very formal policy when it comes to their labor force; Starbucks gives their

employees plenty of resources such as training and tuition reimbursement to

develop their employees. Starbucks’ mission includes the commitment to treat its

employees with respect and dignity, and to be a force for positive action in the

community in which it does business.

Starbucks uses an online job bank that allows everybody to see the

employment opportunities that are available within Starbucks. For their current

employees, Starbucks has “thepartnercafe.com” which is an online component part

of their career site. This allows employees to apply for higher positions and have a

job hiring manager overseeing the process which gives the employees general help

along the way.

Starbucks has many ways for finding candidates to supply its labor market

when they don’t have the adequate internal candidates or they feel the need for a

fresh look. For some of the lower level positions, Starbucks uses employee referral

and campus recruiting which are most effective when looking for large amounts of

employees without high qualifications. Since this process doesn’t tend to produce

results for some of the top-level employees, Starbucks uses head hunters to fill some

of its more qualified position.

If you are selected to interview with Starbucks, you can expect to have

two to four interviews with a hiring manager, team mates, cross-functional business

partners and other decision makers depending on the position you’re applying for.

Starbucks does not require drug testing or medical exams; there is the autonomy for

a branch location to do drug testing, but that’s within the discretion of the particular

Starbucks which is stated in hiring process.

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Starbucks has a 24 hour 9-block training program. The store manager and

the learning coach, which is an established barista, provide guidance, while the

partner takes on the self-guided modules. 16 hours are dedicated to bar practices,

machine use and drink standards which are led by the learning coach. Once training

is complete they receive a “Barista 100 Certification”.

Starbucks structures their training program in 3 categories. On-the-

job learning is 70%, Learning through other 20%, and Formal learning 10%. There

are a variety of programs emphasized for continual learning in Starbucks such as

their Coffee Master Program, which trains barista to be a coffee and tea authority in

the store. Their use of a blended training approach consists of in-store training,

online portal work and classes, both which have given Starbucks a competitive

advantage when it comes to training their employees.

Starbucks, like many other companies today, likes to promote from within

and to achieve this they have a tuition reimbursement program. Starbucks

employees must be at their position for a continuous length of service as of January

1st each year of the maximum calendar year reimbursement.

Below director level:

less than 36 months $500 per year

36 but less than 60 months $750 per year

60 months or more$1,000 per year

Director level and higher are $500 a year and length of service doesn’t apply, the

reason being is that there are limits that Starbucks can provide for well

compensated employees according to the IRS. The tuition reimbursement plan

covers the cost of tuition, books, class-required supplies and required fees, such as

exam or lab fees, charged to students for the approved courses.

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THE BENEFITS/PERFORMANCE APPRAISAL/COMPENSATION FUNCTIONS Starbucks benefits include health coverage, income protection, reimbursement

accounts and other programs such as Tuition Reimbursement, an Employee Assistance

Program, Commuter Benefit Program and Adoption Assistance. Starbucks’

comprehensive medical plans include coverage for hospitalization, office visits, lab and

x-rays, emergency care, prescription drugs, and mental health and chemical dependency

treatment. What’s intriguing is that Starbucks has a variety of healthy living information

available to each partner. Partners become eligible for benefits on the first day of the

second month after they have been paid for at least 160 hours by the last Friday of a two

month period. To continue eligibility for benefits coverage

A partner must be paid a minimum of 240 hours in each calendar quarter. “Paid

hours” are all hours for which a partner has been paid on pay dates that fall

between the first and last day of the quarter.

Employees may cover themselves and their dependents. Eligible dependents include a

spouse, same- or opposite sex domestic partners, and eligible dependent children.

Starbucks provides simple life insurance coverage benefits for eligible salaried and

nonretail hourly partners’ equal to one times annual base pay. Retail hourly partners may

purchase life insurance in flat dollar amounts of $10,000, $25,000 and $50,000. Partners

may also purchase life insurance coverage for their spouse or domestic partner and

dependent children at competitive group rates. These are all paid through payroll

deductions of the employee.

Starbucks has a 401k retirement plan called Future Roast 401k. The employee has

to be over the age 18 and must have been working for Starbucks for 90 days. Partners can

contribute 1% to 75% of their pay each pay period up to the annual IRS dollar limit of

$16,500 or $22,000 for people over 50. Starbucks has two plans of either the “Basic

Match” of 100% on the first 3% of eligible pay, 50% of the next 2% of eligible pay or the

“Enhanced Starbucks Match” which is a 100% match on the first 6% of eligible pay.

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Employees are immediately 100% vested in their entire account balance under the Future

Roast 401k. This includes all employer match, 401k and any rollover account balances.

Starbucks has a very straight forward paid-time-off policy. Salaried and non-retail

hourly employees are eligible for sick pay after 90 days of employment. Full-time

partners accumulate up to 40 hours of sick pay per year and retail hourly partners are not

eligible for sick pay. Starbucks vacation benefits depend on their position and the length

of service. Retail Hourly

Months of Service 0-12 12-36 36-60 60+

Hours of Annual Vac. 0 40 80 120

Salaried and Non-Retail Hourly

Months of Service 0-36 36-60 60-120 120+

Hours of Annual Vac. 80 120 160 200

Starbucks has a Family/Medical leave policy; their requirement is that a partner

must have been continuously employed by Starbucks for at least 90 days and actively

working during that time. If eligible, a partner has up to 12 weeks of Family/Medical

leave in a 12-month period. According to Starbucks, a Family/Medical leave must be

made at least 30 days in advance unless the reason for the leave is sudden and

unexpected. Reasons can be:

• Due to a serious health condition that prevents a partner from working, including

on-the-job injury;

• Due to pregnancy or childbirth;

• To care for a family member with a serious health condition; or

• To stay home to care for a newborn child, newly adopted child or newly placed

foster child.

Starbucks has an Employee Assistance Program which is available currently to all

U.S. partners and their eligible dependents. In this program, it provides short-term

counseling for stress related issues, emotional difficulties, critical incidents in the

workplace, and other personal concerns including financial, legal and daily living (a

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resource on child care, elder care, school information and more). Starbucks also provides

financial assistance to partners who have chosen to adopt. One of the great things about

Starbucks is their adoption assistance programs. Starbucks employees that are eligible for

Starbucks benefits may receive reimbursement of up to $4,000 to help pay for qualified

expenses related to the adoption of an eligible child. What Starbucks also does, in

addition to that, is give the employee two weeks of pay in order to give the employee

time to pick up the child and let them settle in.

Starbucks does performance appraisals every six months and the amount of raise

is determined by the score received by the reviews which is up to 3%. Their purpose of

the appraisals is employee development. If the partner comes up short in any areas, the

partner and the store manager work together to devise an improvement plan. Their

method is based on all the caveats of what Starbucks calls the “Success Profile” for the

position one currently is in. The success profile is like a job description and an employee

can score 1-4 on categories in 10 areas. 1= needs improvement, 2= meets expectation,

3=meets and often exceeds expectations, 4= consistently exceeds expectations. The

success profiles can be found on the Starbucks website or can be provided by the manger

upon request.

The base pay is determined by the completive market pay rate for one’s position,

experience and job reviews. Bonuses are achievable by meeting certain business goals for

eligible positions. The bonuses are based on employee level and base pay. For example, a

barista can receive a $100 bonus per quarter its store reaches its objective.

Starbucks has what they call “Bean Stock” which gives a broad base of partners

the opportunity to own Starbucks stock. To be eligible, partners must be employed by

Starbucks as of May 1 of the fiscal year preceding the grant date and paid for at least 360

hours during the fiscal year. Partners in a director position or above are not eligible for

Bean Stock, but instead are eligible for equity awards under the Key Employee Stock

Plan. Each year, Starbucks Board of Directors considers the company’s performance and

may grant equity awards to eligible partners. The size of the award a partner may receive

depends on three main factors:

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• Starbucks success and profitability for the fiscal year

• A partner’s fiscal-year base wages

• The exercise (or grant) price

Analyzing the Organization

While every company would like to be included in Fortune’s "Best Companies To

Work For", it takes a specific approach to be part of such an assembly. When analyzing

the criteria to be included as one of the "Best ", several factors should be taken into

account. Many of the top companies found in Fortune’s esteemed list have demonstrated

a certain generosity when it comes to their most important asset, their employees. While

some may offer generous salaries, others may offer flexible work schedules. While some

may offer excellent health coverage, others may offer other perks, or benefits. Many of

the companies have more peaceful, laid-back environments where stress diminishes. The

bottom line remains that all of the companies on the list have at least one of the above

mentioned factors incorporated within their company - some even strive to have nearly

all such factors included. The front-runner this year is the internet and computer software

giant, Google (ranked at #4). Google is well known to have a favorable work

environment with many perks awarded to their employees. During these difficult

economic times, Google has maintained its strong presence with tremendous growth year

after year and proving to be one of the most influential companies in the world.

While Starbucks may not be at the top of the list, they certainly made the cut.

Currently listed at 98, Starbucks has a history of generosity towards their employees and

also corporate social responsibility. Several of the benchmarks for being one of the “best

companies to work for” can be found at Starbucks. These include, but are not limited to,

comprehensive benefits packages, health care benefits, liberal leave policies and

employee assistance programs. They are also known for their philanthropic ways and

reaching out to communities domestically and abroad. While many shareholders and

investors have been increasing pressure on executives to lower health care costs – CEO

Howard Schultz said it was completely out of the question. This pressure stems from

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fiscal issues, largely due to problematic economic times. However, recent reports indicate

a significant increase in net income, which came as a surprise to many.

SAS, which is ranked #1 in this list of “best companies” for the second year in a

row, has many perks and benefits that Starbucks could take into consideration for their

own improvement. SAS is a company that stresses health and wellness by providing

employees with a list of incentive programs and to help ensure their workers are in the

best shape mentally, physically, and psychologically. Starbucks also emphasizes health

through its “Thrive Wellness” program which provides their workers with the tools and

information to help them learn the status of their own well-being and give them ways to

improve and maintain that wellness. Starbucks presently does not have the healthy living

incentive programs like SAS does. Employees of SAS can join the “Commit to Quit”

program helping their members to quit smoking and provides prizes such as movie tickets

or gift cards determined by the length of time one has actually quit. They also have a

“RFC Miles” program which rewards their employees based off a mileage program from

walking, running, swimming, and biking (swimming distance provides the most “RFC

miles” since you burn the most calories from this activity).

Whole Foods Market is another top company (ranked at #24) that Starbucks could

model some of their benefit programs after. Starbucks already offers paid time off but

only to those who have worked more than one year (except salaried and non-retail

workers who will receive 80 hours of vacation for their first year of service). As for

Whole Foods, their employees begin to start racking in the PTO based on the number of

hours they work. While both companies similarly get to use PTO hours for vacations,

holidays, and personal days, Whole Foods workers can use the hours accumulated or let

them roll over into the next year if not used while Starbucks PTO hours must be used

during the present year of service.

NetApp, a data-storage firm out of California, ranks #5 amongst these top

companies and contains many beneficial programs and benefits to help entice people to

join their organization. They both have many of the same programs but differ a bit in

some categories. For instance, Starbucks offers tuition reimbursement and so does

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NetApp but it’s the extent that differentiates one as a bit more advantageous. Starbucks

offers up to $1000 of reimbursement per year depending on one’s length of service

(which starts at the one year mark). While NetApp can cover tuition costs up to $5250

per year for accredited coursework for qualified applicants. They also offer a variety of

free professional development resources for their employees as they continue their

careers with the company. Starbucks may be able to improve their ranking by possibly

offering more tuition reimbursement to workers with executive potential and positive

drive helping them to advance up the ladder of the organization. In order for this to be

possible, they may need to look for other sources of revenue or lower top executives

wages to provide these funds to help compete with these higher end companies.

Another company whose benefits are worth mentioning is the toy creator, Mattel

Inc. As far as all the benefits that are given, they are pretty similar to Starbucks in many

ways (medical, dental, disability). One difference that proved interesting was Mattel’s

“school related absence” paid time off program. Full-time employees are allowed 16

hours of paid time off to participate in school-related events. Since Mattel is a company

that makes toys for children, it makes since that they would allow members of the

company put children first. Employees can use these hours to volunteer at school events

even if they are not their own children. Starbucks’ PTO programs allow them one day per

six month period from July 1-January 1 and must be taken with the following six-month

period.

Cisco is another successful and top-ranked (#20) company in America that

continues to bring in more and more revenue every year. Compared to Starbucks, it has a

larger amount of available internships that are up for grabs each year. According to each

of their own websites, Starbucks asks that you check your local university to see if there

are any offered in that area. Cisco’s website has a long list of different departments with

internships that are ready to be applied for by anyone in the midst of graduation from

engineering to marketing to finance. Starbucks might be able to better compete with

companies like Cisco, in terms of “best companies to work for”, by providing more

internships for people on the verge of entering the business world.

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Sources

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2) Hanson, Andrew K. Starbucks: Continual Training. Rep. University of Portland, 13

Apr. 2010. Web. 5 Apr. 2012. <http://www.akhansen.com/docs/StarbucksCont

Training.pdf>.

3) "Starbucks Corporation." Starbucks Case Study. Web. 29 Apr. 2012.

<http://www.mhhe.com/business/management/thompson/11e/case/starb ucks-2.html>.

4) "Starbucks CorporationSeattle, WA United States (NASDAQ: SBUX)."

Starbucks Corporation. Web. 29 Apr. 2012. http://www.hoovers.com/ company/Starbucks _Corporation/rhkchi-1.html>.

5) Starbucks Tuition Reimbursement Program. Rep. Tuition Reimbursement. Starbucks.

Web. 15 Apr. 2012. <http://lifeat.sbux.com/NR/rdonlyres/FB31ADAF-D465-

468C-A81A-18C0AC290517/0/TuitionReimbursementPoliciesand

ProceduresPlanDescriptionAug12006.pdf>.