Howard Schultz of Starbucks: An Analysis of Manager Effectiveness

Introduction

Starbucks was founded in 1971 in Seattle as a local coffee bean roaster and retailer. Today, it is the largest coffeehouse company in the world with nearly 18,000 stores in 60 countries (Starbucks, 2012). Starbucks offers a variety of products ranging from hot and cold drinks, coffee beans, salads, sandwiches, pastries, and mugs (Starbucks, 2012). The corporation also markets books, music and film through the Starbucks Entertainment Division and Hear Music brand (Starbucks, 2012). According to CEO, Howard Schultz, it is vital for Starbucks to reinvent and push itself, constantly challenging the status quo (Schultz & Gordon, 2011). Schultz strives to use his leadership to communicate Starbucks' mission statement to its growing customer base, "To inspire and nurture the human spirit - one person, one cup and one neighborhood at a time," (Starbucks, 2012).

Howard Schultz is founder of Starbucks Corporation and holds the positions of chairman, president and chief executive officer. In 1981, Schultz was instantly captivated by the company after having had his first cup of Sumatra. He joined Starbucks a year later. After his travels to Italy, Schultz was inspired to recreate the romantic, social atmosphere characteristic of Italian coffee bars in today's Starbucks coffee shops (Starbucks, 2012). His vision was to make Starbucks a third place between home and work; a place for conversation and a sense of community (Starbucks, 2012). Today, Schultz's ability to bring his vision into fruition is highly dependent upon his leadership style, effective management of diversity in the workplace, and motivation of Starbucks' human capital.

Schultz's Leadership Style

Personal leadership style is a set of specific ways selected by a leader to influence, organize, and control an organization (Jones & George, 2011). Schultz's leadership style most closely resembles servant leadership. A servant leader is less concerned about his or her personal interests and more interested about making a difference in the lives of others (Vinod & Sudhakar, 2011). Schultz genuinely cares for his employees and fellow management team members. For example, Starbucks offers health insurance to any employee that works at least 20 hours a week; it even extends to spouses in unmarried situations (Starbucks, 2012). Starbucks expends more money to provide healthcare for its employees than on coffee beans to make coffee (Starbucks, 2012). Such a step to ensure that employees' needs are met is a critical characteristic of servant leadership (Jones & George, 2011). Schultz not only aims to provide for his employees' basic needs, but also empowers them to contribute their potential to the organization.

Schultz exhibits several characteristics of transformational leadership, which strives to emphasize the importance of employees' jobs and performance for the organization as well as make them aware of their potential for growth (Jones & George, 2011). A significant aspect of transformational leadership is the stimulation of intellect, which helps employees generate innovative and creative ideas (Anderson & Ackerson-Anderson, 2001). For example, Starbucks' decision to develop a product line of instant coffee was risky because such a product had failed to attract a large audience in the past (Business London Forum, 2011). The key to innovation is not necessarily to create new goods, but to recreate old goods in better ways. Today, Starbucks' instant coffee line makes up an immense portion of the company's revenue, thanks to its innovative recreation of flavor and quality. Schultz's goal is to instill genuine curiosity and passion in his employees, not to simply direct them to complete tasks--such is characteristic of transformational leadership (London Business Forum, 2011). He believes that without openness to change in a changing society, "a corporation is dead" (London Business Forum, 2011). Schultz's goal is to develop a company atmosphere that encourages innovative thinking without the fear of failure or punishment. Similar to Schultz's vision for Starbucks, he works diligently to cultivate a sense of community in his diverse workforce.

Diversity as a Leader's Advantage

A diverse corporation is one with increased chances of problem resolution and hence, success (Cross, 2000). Schultz aims to develop a culture that respects and values diversity. At Starbucks, diversity is defined in the form of an equation: Diversity = Inclusion + Equity + Accessibility (Starbucks, 2012). Effective management of diversity can create competitive advantage for Starbucks (Jones & George, 2011). According to Kirton, "...diversity of problems require, for their resolution, a diversity of resources, including a diversity of problem solvers," (2003). A successful manager is one that can properly manage diversity in a company.

Schultz plays a figurehead role in effective management of diversity, which emphasizes that the effective management of diversity is important to an organization (Jones & George, 2011). Schultz stresses the importance of hiring employees that reflect the diversity of the communities Starbucks serves. Moreover, he aims to bind contracts with minority and women owned suppliers (Starbucks, 2012). Although Schultz is well on his way to managing diversity effectively, he can take a number of measures to catalyze this effort further.

It would be helpful for Schultz to increase diversity awareness in Starbucks through the development of a diversity awareness program. Such a program would aim to accomplish several goals: (1) provide accurate information about diversity, (2) reveal and overturn biases and stereotypes, (3) assess people's personal beliefs about diversity, and (4) cultivate an atmosphere that encourages freedom of expressing different points of views (Jones & George, 2011). A program such as this one would allow employees and management to understand differences between them and therefore, strengthen communication