Employee Motivation and Teamwork at Starbucks

This paper presents practical information about how Starbucks motivates its employees. In the first part of this paper will be introduced the historical background of Starbucks. Secondly, are going to be discussed some issues about the methods of motivating employees. Next there the strategies which are used by Starbucks to improve their teamwork performance will be pointed out. In the end, there is a conclusion about the effect of these policies in motivation and teamwork.

Because of rapid globalization over recent years, the competition around the world becomes more intense, especially for the industries of common used goods. The most important point that a business needs to fulfill in order to succeed is not the quality of the products they supply, but the atmosphere of cooperation and teamwork in retail sales. The employees that come in contact with customers and can realize what customers really need are first-line staffs. Therefore, it turns to be essential for companies to motivate, reward and train their employees to be the best quality personnel.

Starbucks Corporation, the most famous chain of retail coffee shops in the world, mainly benefits from selling special coffee beans and various types of coffee or tea drinks. It owns about 4000 branches in the whole world and in April 2007 they have opened their first store in Romania, in Bucharest. The reasons of why Starbucks is worldwide popular are not only the quality of coffee, but also its customer service and cozy environment Starbucks establishes a comfortable surrounding for people to socialize and drink a good coffee, which attracts consumers of all ages into the stores. Beside this, Starbucks is also noted for the employees’ satisfaction.

1. The history of Starbucks

Starbucks was founded by three friends Jerry Baldwin, Zev Siegl, and Gordon Bowker who met each other at the University of Seattle. In 1971 they open their first store in Seattle, in Washington’s Pike Place Market, named “Starbucks Coffee, Tea, and Spice”. They started making profit by selling roasted coffee beans to both individual customers and restaurants. In 1982 the number of their stores increased to four. Entrepreneur Howard Schultz joined the company in 1983, and, after a trip to Milan, Italy, advised that the company should sell coffee and espresso drinks as well as beans. The owners rejected this idea, believing that getting into the beverage business would distract the company from its primary focus. To them, coffee was something to be prepared in the home. Certain that there was much money to be made selling drinks to on-the-go Americans; Schultz started the Giornale coffee bar chain in 1985. In 1987, the Starbucks chain was sold to Schultz’s Giornale, which rebranded the Giornale outlets as Starbucks and quickly began to expand. Starbucks grew rapidly under Schultz's leadership and opened its first locations outside Seattle at Waterfront Station in Vancouver, British Columbia, and Chicago, Illinois, that same year. The first Starbucks location outside of North America opened in Tokyo in 1996. Starbucks entered the U.K. market in 1998 with the acquisition of the then 60-outlet, UK-based Seattle Coffee Company, re-branding all its stores as Starbucks. By November 2005, London had more outlets than Manhattan, a sign of Starbucks becoming an international brand.

In 1999, Starbucks experimented with eateries in the San Francisco Bay area through a restaurant chain called Circadia. These restaurants were soon converted to Starbucks cafes. In April 2003, Starbucks completed the purchase of Seattle's Best Coffee and Torrefazione Italia from AFC Enterprises, bringing the total number of Starbucks-operated locations worldwide to more than 6,400. Fortune magazine ranked Starbucks as the 11th best company to work for in 2005 in the USA. As to 2007, it was ranked as the 16th best. In the same year, Starbucks was also voted as one of the top ten UK workplaces by the Financial Times.

2. The motivation process at Starbucks

"The relationship we have with our people and the culture of our company is our most sustainable competitive advantage."

-Howard Schultz, chairman and chief global strategist of Starbucks, in 2002

"My biggest fear isn't the competition, although I respect it. It's having a robust pipeline of people to open and manage the stores who will also be able to take their next steps with the company."

-Jim Donald, president, Starbucks North America in 2005

In general, the retail industry is notorious for its indifferent attitude towards employees. Despite the fact that employees, especially those on the frontline, are critical to the success of retail businesses, most companies do not have a strong relationship with their employees, and consequently suffer from a high rate of employee turnover

In this scenario, Starbucks stood out for its employee-friendly policies and supportive work culture. Kohn (1993) showed a survey that if a reward frame only offers physical rewards, employees’ amount of work might decline, especially in the creativity industries. Other factors are essential as well, such as working environment or relationship between employees and managers. Nicholson (1998) reported that “workers had strong social needs which they tried to satisfy through membership of informal social groups at work place”. Nowadays non-financial incentives used to motivate employees are preferred by most companies.