The report is about employee engagement in Starbucks Coffee company
In the pursuit of their goals, organizations typically rely on a variety of resources, ranging from physical inputs to financial capital. The human resource is another significant resource that organizations deploy. In fact, it is perhaps the most vital resource granted the evolving nature of business whereby other resources are becoming increasingly ubiquitous, thereby losing their value and capacity to provide a competitive advantage. Organizations competing in the same industry today have nearly homogeneous access to resources such as production factors, financial inputs, and technology. Within this context, the human resource then becomes highly relevant, granted that it is highly dynamic in nature, versatile and adaptive. The net effect for organizations is a need to engage in astute management practices of their human resource component so that they are able to enjoy the associated competitive advantage. Such astute management practices comprise a variety of approaches and techniques, one of which is employee engagement. Employee engagement is important aspect of human resource management, which improves employees’ commitment to the organization and enhances their productivity ultimately improving organizational outcomes. In this essay, employee engagement is reviewed through a case study of the Starbucks Coffee Company. The aim is to determine the manner in which the company engages its employees, and the adequacy of these strategies. Based on the outcomes of the evaluation, recommendations are then provided regarding how the company can further improve employee engagement.
Starbucks is a world-renown roaster, marketer, and retailer of specialty coffee that boasts of being the premier such company globally. The company was formed in 1985 and has operations in 75 countries (Starbucks, 2016). The company’s main business is roasting and selling high-quality coffees alongside a variety of handcrafted beverages as well as other fresh food items. Asides from the Starbucks brands, Starbucks also operates a number of other brands including Tazo, Teavana, La Boulange, and Evolution Fresh among others. The company operates through two different channels, its own stores, and licensed stores. Starbucks indicates that its chief competition stems from other specialty coffee stores as well as quick-service restaurants. The company has 254,000 employees worldwide, with over 65% of this number being located in the US.
Starbucks business strategy can be understood in the context of its operational segments as well as its channel development segments. In terms of operations, the company reports four segments, which are the Americas, China/Asia Pacific (CAP), Europe, Middle East, and Africa (EMEA), and Channel development (Starbucks, 2016). In the first three segments, operations are carried out through two principal types of stores, which are company-owned stores and licensed stores. The Channel development Segment comprises various types of branded products that are marketed in the form of brands such as Tazo teas, and other branded products. These products are sold in in grocery stores, convenience stores, and warehouse clubs. The company-operated stores are the company’s most valuable source of revenue, accounting for 79% of the company’s total net revenues in 2016 (Starbucks, 2016). The company’s strategy is hinged on being the market leader when it comes to the retail and branding of coffee in its target markets. Moreover, Starbucks strategy for expansion is the selective addition of stores, in support of its overall strategy to position itself as “one of the most recognized and respected brands in the world” (Starbucks, 2016, p. 3).
As earlier noted, Starbucks has an employee base of 254,000 worldwide. The company refers to its employees as its partners. A good majority of these employees are based in the US (170,000), with about 95% of these individuals located in its stores. The company indicates that only an insignificant number of its employees are unionized, arguing that this is because it has a good relationship with its employees. Starbucks manages its human resources at the highest level, having a global human resource manager who is in its preferred terms referred to as the executive vice president, Partner Resources (Starbucks, 2009). This role reports directly to the Chairman, President, and CEO of the company. The global Partner Resources manager is responsible for the company’s overall Partner Resources strategy, and has full authority over all generalist as well as specialist functions. This department has more than 500 individuals under different groups such as Learning and Development, Total Pay and Organizational Development. The aim of the department is to develop programs targeted at assisting employees become their personal best (Corporate Careers, 2017).
Employee engagement is a relatively new concept in the human resources management literature, and as such, lacks a clear-cut definition (Saks, 2006). Saks further indicates that most definitions that have so far been proffered are problematic since they vastly resemble definitions of established concepts like organizational commitment. Despite the lack of clarity on what exactly is meant by employee engagement, it can be envisioned as the level to which employees are absorbed into the daily routines of their job. According to Bakker and Demerouti, work engagement refers to “a positive, fulfilling, work-related state of mind that is characterized by vigour, dedication, and absorption” (2008, p. 209). This definition brings to light three key aspects, which are vigour, dedication, and absorption. On their part, Macy and Shneider (2008) indicate that employee engagement can refer to three different issues, including psychological state of engagement, behavioural engagement and trait engagement. The implication of this framework is that employee engagement can be evaluated in three ways, by evaluating employee’s psychological state, their behaviour, and their traits.
Engagement is evidently a broad topic. The metadata on Starbucks indicates that the company has excelled in employee engagement, whereby according to Sakellariadis (2015), Starbucks is the champion of employee engagement in the retail industry. Importantly, Sakellariadis evaluates such engagement based on employee narratives, which is an excellent approach towards understanding employee perspectives as well as evaluating the employee-embedded features implicit to engagement that have been outlined above. One of the features that evidences employee engagement in an organization is an organizations rate of employee retention. According to Gruman and Saks (2011), employee engagement has positive outcomes on retention. Starbucks has reported positively on employee retention, with Nee (2015) indicating that in Starbucks Malaysia, staff in the company averaged a length of seven to eight years.
Evidently, Starbucks has astute engagement practices, which have enabled the organization to achieve a high threshold of employee retention. Despite this, there is stillroom for improvement, and in this regard, Starbucks can adopt several practices to improve engagement. One of the initiatives that the company can adopt is to adopt a needs segmentation approach towards the management of its human resource. This approach would involve the early identification of the engagement needs of different employees, and clustering employees together based on their engagement needs. The company can then pursue optimal engagement strategies for each of these clusters.
The rationale behind this initiative is the hierarchy of engagement developed by Penna (2007). This approach divides employee engagement needs into five distinct categories in a manner akin to Maslow’s hierarchy of needs. The framework identifies employees engagement needs as occurring at different levels and incrementally, with higher-level engagement needs only becoming significant when lower level engagement needs have been satisfied (Penna, 2007). This initiative has been chosen, as it would allow the company to have a better understanding of its employees’ needs, while optimizing on the satisfaction of these needs. The initiative is likely to have positive outcomes for the company leading to even higher levels of engagement at all levels. The company would gain a better understanding of its employees and become more efficient in its human resource management. Finally, the approach would make Starbucks more resilient to competition by offering the most compelling engagement outcomes at all levels. This is in accordance to Penna (2007), who note that as employees’ needs are met in an ascending manner, competitors find it more difficult to tempt away talent.
is the leading roaster, marketer, and retailer of specialty coffee. Founded in
1985, the company has operations in 75 countries globally, divided into four
reportable segments. Starbucks employs 254,000 employees worldwide. The
company’s strategy is hinged on maintaining a strong brand image. Starbucks has
excelled at employee engagement; a factor supported by its rating is one of the
best companies in terms of this facet. This report recommends that Starbucks
adopt a segmentation strategy, whereby it would segment its employees based on
their level of engagement needs. This approach would result in numerous
positive benefits, such as an enhanced understanding of its employees’ needs,
greater employee engagement, and greater resilience to competitive incentives.
Bakker, A.B. and Demerouti, E., 2008. Towards a model of work engagement. Career development international, 13(3), pp.209-223.
Corporate Careers. 2007. [Online] Available at: https://www.starbucks.com/careers/corporate-careers/human-resources [Accessed 30 April 2017].
Gruman, J.A. & Saks, A.M., 2011. Performance management and employee engagement. Human Resource Management Review, 21(2), pp.123-36.
Macey, W.H. and Schneider, B., 2008. The meaning of employee engagement. Industrial and organizational Psychology, 1(1), pp.3-30.
Nee, E.A., 2015. Employee engagement key in Starbucks. [Online] Available at: http://www.thesundaily.my/node/315921 [Accessed 30 April 2017].
Penna, 2007. Meaning At Work. PENNA.
Sakellariadis, S., 2015. Making Sure the Cup Stays Full at Starbucks: Leveraging Narratives from Glassdoor.com to Improve Recruitment and Retention. [Online] Available at: http://www.huffingtonpost.com/sophie-sakellariadis/making-sure-the-cup-stays_b_7935760.html [Accessed 30 April 2017].
Saks, A.M., 2006. Antecedents and consequences of employee engagement. Journal of managerial psychology, 21(7), pp.600-619.
Starbucks Corporation, 2016. Fiscal 2016 Annual Report. Annual Report. Seattle: Starbucks Corporation.
Starbucks, 2009. Starbucks Appoints Head of Global Human Resources. [Online] Available at: https://news.starbucks.com/news/starbucks-appoints-head-of-global-human-resources [Accessed 30 April 2017].