Starbucks' Human Resource Management Policies and the Growth Challenge
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Case Details:
Case Code : HROB068
Case Length : 12 Pages
Period : 1987 - 2005
Pub Date : 2005
Teaching Note : Available
Organization : Starbucks
Industry : Coffee Retailing
Countries : USA
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Excerpts
Human Resources Management at Starbucks
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Starbucks realized early on that motivated and committed human resources were
the key to the success of a retail business. Therefore the company took great
care in selecting the right kind of people and made an effort to retain them.
Consequently, the company's human resource policies reflected its commitment to
its employees.
Starbucks relied on its baristas and other frontline staff to a great extent in
creating the 'Starbucks Experience' which differentiated it from competitors.
Therefore the company paid considerable attention to the kind of people it
recruited. Starbucks' recruitment motto was "To have the right people hiring the
right people."
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Starbucks hired people for qualities like adaptability, dependability and
the ability to work in a team. The company often stated the qualities that
it looked for in employees upfront in its job postings, which allowed
prospective employees to self-select themselves to a certain extent.
Having selected the right kind of people, Starbucks invested in training
them in the skills they would require to perform their jobs efficiently.
Starbucks was one of the few retail companies to invest considerably in
employee training and provide comprehensive training to all classes of
employees, including part-timers...
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The Human Resources' Challenge
Analysts said that Starbucks biggest challenge in the early 2000s
would be to ensure that the company's image as a positive employer
survived its rapid expansion program, and to find the right kind of
people in the right numbers to support these expansion plans.
Considering the rate at which the company was expanding, analysts
wondered whether Starbucks would be able to retain its spirit even
when it doubled or tripled its size. By the early 2000s, the company
began to show signs that its generous policies and high human
resource costs were reflecting on its financial strength. |
Although the company did not reveal the amount it spent on
employees, it said that it spent more on them than it did on advertising, which
stood at $68.3 million in fiscal 2004.
That the company was finding its human resource costs burdensome was reflected
in the fact that it effected an increase of 11 cents on its beverage prices in
mid-2004. Analysts wondered whether the company's cost problems could be met by
a price increase, as customers already paid a premium for Starbucks beverages.
On the other hand, it would not be easy for the company to cut down on benefits,
as it could result in a major morale problem within the company...
Exhibits
Exhibit I: Starbucks' Income Statement
Exhibit II: Starbucks' Mission Statement
Exhibit III: Benefits to Part-Time Workers and Full Time Workers
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