Starbucks Coffee
Presentation by: Group 8
Shivangi Sharma
Ridhya Bansal
Thiago Araki
Kyra Lalwani
Zarafshan Rizwan
Introduction
- Italian-style American coffeehouse chain
- Founded in Seattle, Washington in 1971
- Largest Coffeehouse company in the world
- 25,000 stores in more than 70 countries
- Mission Statement: "To inspire and nurture the human spirit- one person, one cup, and one neighborhood at a time"
Starbucks: The Early Years
- Jerry Baldwin, Zev Siegel, & Gordon Bowker opened the first store in Pikes Place, a touristy area in Seattle
- Customers were encouraged to learn how to grind the beans & make brewed coffee
- They sold bean and coffee makers.
- The store did not offer fresh brewed coffee sold by the cup
- The store was an immediate success
Howard Schultz
- Business man from New York visited Starbucks in 1981
- Offered a job at Starbucks in September of 1982
- Schultz vision for Starbucks:
- Bring the concept of Italian Bar to the US
- Expand the company
- Starbucks owner did not share the same vision
- Schultz left Starbucks to open IL Giornale, a coffee bar based on what he saw in Italy
- Two year later, Schultz bought Starbucks for $3.8 Million
Summary
Summary
- Program to help employees earn college degree at the Arizona State University through an online program.
- Starbucks will cover 100% tuition (tuition ranges from $3,000-$10,000).
- More than 50 programs are available.
- Employees are not obligated to stay in the company after graduation.
- Only 54% of the employers offer undergrad tuition but want employees to take job related courses.
- Of their 135,000 employees in the US, about 70% are in college.
https://youtu.be/281TUpUHrjY
Why is Starbucks doing this?
- It believes the expense is worthwhile because this benefit supports a strategy of employee retention (differentiates it from other employers).
- The value of the benefit entices employees to stay the company (continue in executive positions) and hopes that even graduates who move on will promote Starbucks as a great place to work.
- Social Responsibility assumed by Starbucks - CEO of the company Mr. Howard Schultz talks about the "the fracturing of the American Dream" and position tuition reimbursement as a way of taking action
Problems
- Online course completion rates are low- not everyone is comfortable learning in that kind of a setting.
- Arizona State University online tuition rate is high relative to national averages for instate college tuition.
- adding to the cost of the company
- The criteria to enter the program is very vague and not explicit.
- Not something everyone will benefit from- what if you don’t want to do it ?
- Workers in licensed Starbucks stores — rather than company-operated stores — are not eligible for the Starbucks plan.
Case Question I
Case Questions
How well do you think Starbucks tuition reimbursement program meets the criteria for selecting employee benefits?
- Cost Benefits
- Organizational Objectives
- Employees Expectations
Case Question II
If you had been advising Starbucks, would you have recommended that it introduce the reimbursement plan or instead raise hourly wages?
- Cafeteria style benefit
- increased flexibility
- Increased utilization of resources
Recommendations
Recommendations
- Cafeteria Style Benefits allow employees to choose the benefits they want
- Employees can work with HR professionals to discuss what benefits work best for them
- The degrees offered by Arizona State University might not be sufficient for the employees to choose from
- Not all employees are eligible for the reimbursement program
Employee Benefits
- Federal Benefits:
- Social Security
- Workers Compensation
- Family/Medical Leave
- After 3 months of employment:
- Health
- Dental
- Vision Insurance
- After 1 year of employment:
- 401k Retirement Plan
- Paid Time Off (PTO)
- Vacation
- Free beverages during breaks
- Pound of coffee beans each week
Employee Retention
- Relatively high turnover rate of 65% for full-time employees in 2018
- Enticing benefits allow employees to continue to work there
- Flexible work schedules and relaxed dress code
Reasonable Accommodation
- Being able to accommodate for individuals with disabilities
- Wearing watches is not part of dress code, but allowed if it monitors heart rate
- Opened a store of all deaf employees at Gallaudet University, Washington D.C., where they speak through sign language