Starbucks Refuses to Eliminate Employee Benefits

Posted by on March 29, 2010 in Business News [ 2 Comments ]

Today barely anything for the American workforce is guaranteed or instituted to protect them by their companies. In this economic crisis companies are sometimes forced to cut into employee benefits and health care packages just to remain a functioning company. While removing employee health care benefits would definitely save a company money, it does so at the expense of the hardworking employee. One company who could have easily limited employee benefits but chose not to is Starbucks Coffee Company.

In an interview with CNN CEO of Starbucks Howard Shultz discussed the pressures placed on him to limit the employee benefits his company provided.  Shultz stated that a shareholder of the company called him and tried to convince him to eliminate the health care benefits Starbucks provides their employees which would save the company over $300 million dollars.

Shultz refused to cut the benefits stating “we can’t take our company where it needs by doing it on the back of our people.” Despite constant pleas on the health care matter Shultz remained adamant. By agonizing the company’s employees he said “we would’ve lost our soul.” Instead Shultz worked within his company and shareholders to develop new strategies to bring in revenue.

Shultz created a mentality that everyone needs to share in the companies success, from the employees, to founders, to customers and shareholders. Starbucks decided one way to bring in more revenue while also bettering customers experience could be done by updating their stores.

Starbucks was founded almost 40 years ago and Shultz said updating the chain meant figuring out how Starbucks is relevant to this day and age. He also wanted to establish that if Starbucks was being opened today in modern day America, what could his company do differently?

This progressive and retrospective thinking is what led Starbucks to the creation of their concept stores. Starbucks opened the first trial concept store on Roy Street in downtown Seattle. What makes concept stores different from regular Starbucks is they stay open later, offer alcoholic beverages like beer and wine, and provide a wider variety of food selection.

“Roy Street” as the Seattle concept store has come to be known is operating at this point as a trial run because Shultz feels the company grew too fast and wants to tailor tailor based on the neighborhood and customer base.

When customers were asked by CNN about Roy Street they replied “we don’t love Starbucks, but we love it here” proving maybe Shultz has it right by slowing down the expansion of his chain because it yields higher customer satisfaction.

Starbucks is employing creative social media practices to bring customers into these new stores through, Twitter, and Facebook. These social media marketing websites provide a medium where customers can contact the brand. Starbucks social media efforts have launched Starbucks to the number one consumer brand on Facebook.

Shultz said traditional marketing is changing, and engaging customers in the brand needs to be a significant investment, and if done correctly can correlate to significant returns in revenue. Starbucks social media competence might be the way to build their new line of instant coffee VIA as the company attempts to tap into this $21 billion dollar industry.

VIA’s immediate success in the United States prompted Starbucks to launch the product globally beginning with Britain and Japan. VIA’s success according to Starbucks is the quality which allows customers to have their favorite coffee no matter where they are, in the store or at home.

While Starbucks is embarking on a wide variety of projects, Shultz assures with each venture the company’s “values and ideals are staying the same.” Starbucks’ innovative attempts to bring revenue in will never be at the cost of the employees. Shultz says a company willing to sacrifice their employees might win, but it will be short lived.

While ‘bucks’ might be in the company name, Starbucks founders refuse to let a buck affect their employee satisfaction, creating a thriving successful working environment for both.

2 thoughts on “Starbucks Refuses to Eliminate Employee Benefits

  1. Pingback: Unleash the Entrepreneurs? « Tragic Farce

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