Starbucks Motivation Strategy: Case Study

Starbucks Motivation Strategy Case StudyNowadays, the competition becomes more extreme because rapid globalization in the recent years, in particular for the service industry with the similar products. The most vital point for pedigree to success is not only the quality of products they supply, but the atmosphere of cooperating and the amount from bear of team become in retail sales. The employees who always touch with customers and c dispatchin nail realize what customers really need are first-line staffs. Therefore, it turns to be essential for companies to motivate, reinforce and train their employees to be the best(p) quality personnel.In the first stage, the historical background of Starbucks will be kick offd. Secondly, an issue more or less the methods of cause employees are going to discuss. Next, the strategies, which are used by Starbucks to deal their team doing execution intimately, will be pointer out. In the end, there is a conclusion about the effect of pol icies in pauperism and teamwork.Managers are endlessly searching for ways tocreate a motivational milieu where associates(employees) to work at their optimal levels toaccomplish telephoner objectives. Workplacemotivators acknowledge both monetary and non-monetaryincentives. Monetary incentives fundament be different art objecthaving a similar effect on associates. One example ofmonetary incentives is mutual funds provided by comp each pension plans or insurance policyprograms. Because it has been suggested thatassociates, depending on their age, halt differentneeds pertaining to incentives, traditional incentivepackages are being replaced with alternatives to attract younger associates.This physical composition will discuss how monetary and non-monetary incentives are influenced by career stages and the problems associated with monetaryand non-monetary incentives.How the entire total reward and human resources (HR) systems at Starbucks are linked to the business objec tives and reinforce the companys strong glossiness and set. Working in mutual support of the business, the culture, and look upons, this integrated HR system has helped shape a powerful success accounting that didnt rely on conventional estimateing and trends with respect to the treatment of its workforce.Part 2 Setting the SceneA Brief History of StarbucksStarbucks Coffee Company, as we know it today, began in 1987, when Howard Schultz, the current chairman and CEO, acquired the assets from the original founders, whom he had worked with from 1982 to 1985. In 1987, Starbucks had 11 stores. The original business plan, and promise to the investors, was to have 125 stores within flipper years.From 1987 to 1992, the company remained private, growing at the astonishing rate of 80% per year to more than 150 stores. In June 1992, the company went public, and it was one of the most successful sign public offerings of the year. Today, Starbucks is the leading retailer, roaster, and b rand of particular(prenominal)ty coffee in North America. It operates more than 1,800 retail locations in North America, the United Kingdom, and the Pacific Rim and has launch joint-venture partnerships with Breyers (to produce coffee ice cream) and PepsiCo (to produce Frappuccino, a bottled coffee drink). sales for fiscal year 1997 were $967 million, an increase of nearly 39% over the previous year, and the company employed more than 25,000 partners (the companys term for employees). The company goal is to have more than 2,000 locations in North America by the year 2000. The company mission is to throw Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles as we grow.Starbucks Culture and Values The Driver of HR and Reward SystemsStarbucks is a values- set company, with a firmly represented set of principles that are widely shared within the organization. It is also a company that puts its employees first and invests a tremendous amount in them. None of this is by accident. Source Wilson, Thomas, B., Rewards That Drive High Performance, Amazon, New York, 1999. www.wilsongroup.com 1It all stems from the values and beliefs of its CEO. Says Schultz, I wanted to establish the kind of company that gave mountain a form of equity (ownership) and comprehensive health insurance, and most importantly, give them self-esteem in the workplace. People feel that Starbucks is a place that gives them self-respect and values the contributions they make, regardless of their education or where they are in the company. The company believes that if it puts partners first, the result will be exceptional customer service, and by extension, if it has highly satisfied customers, the financial returns will follow.The history of StarbucksStarbucks began by three friends, Jerry Baldwin, Zev Siegl, and Gordon Bowker, who knew each other in the University of Seattle. In 1971, the first name of their store is Starbucks Coffe e, Tea, and Spice in Seattle, Washingtons Pike determine Market. They engaged in making profit from denounceing coffee beans roasted to individual customers and restaurants. Until 1982, they had increased the number of stores to four. During the same period, a sales representative of the can ware business in New York, Hammerplast, visited them. Howard Schultz wanted to know why a small company needs a large number of percolators from Hammerplast. Because of the traffic similarityship amid these two companies, he was acquainted with the three inventors. After he realized the atmosphere and environs of the company, he decided to be a part of Starbucks, then as a director of merchandise and retail sales.In the following year, he had a vocation to Milan, Italy. Though the time, he see an entirely different coffee culture from the United States. The culture of Italian caf had been one part of peoples daliy life. There were numerous coffee bars around the commonwealth and the pu blic usually liked to socialize in a coffee bar. Under those circumstances, Schultz had an idea of a new flavor of caf and a stylish environment to communicating with friends.After the trip, he prepared the business plan for his vision. However, the three initiators did not want to transfer their business into restaurant industry. Consequently, in 1985 he chose to establish a new coffee shop, named II Giornale, in Seattle. After the next two years, due to the successful strategy of Schultz, the original three owners of Starbucks decided to sell their corporation to Schultz. Then Schultz gathered other investors and took over the name of II Giornale to Starbucks. He sought to pursue his dream to make everyone taste his coffee, so he focused on the rate of expanding. At that time, he though that the most efficient way to grow the amount of branches is to set up new stores in other places. In I987, Starbucks had the first overseas store in Japan.In the subsequent years, owing to the ri sing expenses with the worldwide broadening, there was a deficit in Starbucks for the next three years. In contrast, he firmly believed that not to sacrifice long-term integrity and values for short-term profit (Michelli, 2006). In 1991, it turned expiration into move on and its sales grew up sharply to 84 percent. Until the end of 2002, Starbucks has developed from 17 stores to 5,688 spreading over 30 countries in by this strategy, it is an over ccc times growing in these ten years (shown as Exhibit 1) From Fortune magazine, Starbucks was ranked the 11th best company to work for in 2005 in the USA and then risen up in 2006 to 29th. As to 2007, it was ranked as the 16th best. In the same year, Starbucks was also voted as one of the sneak ten UK workplaces by the Financial Times. (Resource wikipedia)Part 3 Literature ReviewDefinition of MotivationMotivation is one of the most important aspects of an individualsb eh av io r that determines not only how individual behaves and thinks but also ways in which he / she interacts with others and influences them. Motivation is derived from the word motives. The word motive is derived from Latin word movere, which means to move or to energize. Thus motivation actives us and directs our behavior to a particular goal.According to Armstrong (2002 P.56) states thatPeople wont change their deportment unless it makes a difference tothem to do soManagers are individuals who achieve their goals through other people. They are constantly searching for ways to motivate their employees to make them work at their optimal level of operation to accomplish the company objective. Various incentives are provided by the managers to their employees for motivation. The incentives that are provided by the mangers to their employees can be broadly classified as monetary incentives and non-monetary incentives.2.1 Comparison of monetary and non-monetary incentivesThe goal of monetary incentives is to reward associates for excellent job pe rformance through money. Monetary incentives hold profit sharing, suggest bonuses, stock options and warrants, scheduled bonuses (e.g., Christmas and performance-linked), and additional paid vacation time. Traditionally, these have helped maintain a positive motivational environment for associates. Monetary incentives can be diverse while having a similar effect on associates. One example of monetary incentives is mutual funds provided through company pension plans or insurance programs. Because it has been suggested that associates, depending on their age have different needs pertaining to incentives, traditional incentive packages are being replaced with alternatives to attract younger associates. On the other hand, the purpose of non-monetary benefits is to reward excellent job performance through opportunities. Non-monetary incentives include flexible work hours, training, pleasant work environment, and sabbaticals.2.2 Problems with monetary incentivesManagements have always l ooked at man as an animal to bemanipulated with a carrot and stick. They found that when a man is lured/hurt, he will move to get the prize/avoid the pain-and they say, Were motivating the employees. sinning you are not motivating them, you are lamentable them.*-Frederick Herzberg, Professor EmeritusMonetary incentives usually encourage compliance and achievement of unwieldy targets instead of encourage creativity, innovation and foresight which are more important in the long flush. Thus employees are not able to express their true talent and in the long run lose their creativity. Employers also may use monetary incentives as an extrinsic rather than an intrinsic motivator. In other words, associates are driven to do things just for the monetary reward versus doing something because it is the right thing to do. This can disrupt or terminate good relationships betweenemployees because they are transformed from co-workers to competitors, which can quickly disrupt the workplace en vironment. Another problem with monetary incentive is that it is given to circumvent a life-sizeger problem for a short run. Sales employees are given high monetary incentives to compensate for poor management and poor products, employees are paid more for working in poor work environment. Monetary incentives can even drive the employees to falsely reporting their achievements. Huge monetary incentives given to middle mangers are seen as a hook to conceal them which may make them work counterproductively. Though the monetary incentives have a better effect than the monetary incentives in the short run, they fail miserably in the long run and in extreme situations downfall of the company (when employees start anticipating monetary incentives even for routine jobs and in absence of which they start working inefficiently or go on a strike as in the case of some government employees). Also most of the non-monetary incentives are intrinsic in nature. Intrinsic motivation is more effec tive as the impetus to work is from within. Employees are working because they feel satisfied or fulfilled by the occupation they undertake. Under these circumstances the management can be regarded as more of a support than control. So managers should concentrate more on non-monetary incentives after the negligible level of monetary benefits and properly structure them according to their employees preference. This will ensure high motivational level of the employees which will get reflected in their better performance at work.2.3 Theories which support intrinsic motivationVarious theories that support the concept that intrinsic motivation which is attained through non-monetary incentives is important and better than extrinsic motivation are as followsMaslows Hierarchy of needsThis theory states that the needs of social, esteem and self actualisation are higher parliamentary procedure needs. The differentiation between the higher order needs and lower order needs is that the highe r order needs are satisfied at the individual level whereas the lower order needs are satisfied externally.Herzbergs two-factor theoryIt supports the emphasis on factors associated with work like promotional opportunities, opportunities for personal growth, apprehension, responsibility, and achievement which employees find in and of itself rewardingMcClellands hypothesis of emergencysThis theory focuses on three needs achievement, power and affiliation. They are defined as followsNeed for achievement The drive to excel, to achieve in relation to a set of standards, to strive to succeed.Need for power The need to make others behave in a way that they would not have behaved otherwiseNeed for affiliation The desire for friendly and closely interpersonal relationships.Cognitive evaluation theoryThis theory states that allocating extrinsic rewards for behaviour that had been rewarding intrinsically leads to decrease in overall level of motivation. Thus it supports the view that it is better to continue intrinsic motivation to boost the morale of employees.Goal-Setting theoryThis theory supports the idea that ad hoc and difficult goals with feedbacklead to higher motivation and performance.Self-efficacy theory(Social cognitive theory)It is the individuals belief that a task assigned can be done. Higher the self efficacy higher is the confidence of the employee at the workplace.Reinforcement theoryThis theory states that the behaviour is a function of its consequences. If employees feel that their efforts are duly rewarded then they will work in a more effective manner for the organisation.Equity theoryThis theory states that individuals compare their job inputs and outcomes with those of others and then respond to eliminate any inequities. If their colleagues are given recognition employees will work towards achieving those rewards. This motivates them to perform them to work better which beneficial to the organisation.Expectancy theoryThe strength of a tenden cy to act in a definite way depends on the strength of an expectation that the act will be followed by a outcome and on the attractiveness of that outcome to the individual. Thus when expectations from a employee increases the employee responds with better performance.From the above theories (however different they may be) it is clear that intrinsic motivation is desired by the employees.2.4 Intrinsic Motivation by non-monetary incentivesVarious non-monetary incentives motivate employees intrinsically which is more efficient than the extrinsic motivation. The intrinsic motivation that these incentives offer is the result of intrinsic rewards of self management.Self managementIn employees perspective self-management is choosing activities, monitoring competence, committing to purpose and monitoring progress. The intrinsic motivation that energises the work comes directly from the four management events namely activities, purpose, opportunities and rewards. From these four events the employees make a understanding -of the meaningfulness of the task purpose, the degree of alternative available in selecting activities, the competence with which the activities are performed, and the amount of progress being made to the task purpose. The judgements from self-management lead to intrinsic rewards which in turn provide the slide fastener for self- management which completes the cycle.OPPORTUNITYACCOMPLISHMENTRewardsRewardsFrom taskACTIVITIESFrom taskPURPOSESense of meaningfulnessIt is the opportunity that makes the employees feel that they are on a path that is worth the susceptibility and time-that they are on a valuable mission that functions in the larger scheme of things.Sense of choiceIt is the opportunity that the employees feel to select task activities that make sense to them and to perform them in ways that seem appropriate to them. The tonicity of choice is the feeling of being free to choose-of being able to use their judgement and act out of their ow n understanding of taskSense of competenceIt is the accomplishment that employees feel in skilfully performing task activities that have been elect by them. The feeling of competence involves the sense that they are doing good, high-quality work on a task.Sense of PROGRESSIt is the accomplishment felt in achieving the task purpose. The feeling of progress involves the sense that the task is moving forward, and their activities are really accomplishing something.It is the accomplishment felt in achieving the task purpose. The feeling of progress involves the sense that the task is moving forward, and their activities are really accomplishing something.2.5 Non-monetary incentivesThe non-monetary incentives desired by employees across genesiss have gone rapid changes. The following table shows the preferences in non-monetary incentives across generations.Baby Boomers(born between 1946-63) propagation Xers(born between 1964-81)Generation Yers(born after 1982)Retirement planning concili atory schedulesJob trainingSabbaticalsFlexible schedulesProfessional developmentFeedback concrete rewardsWork environmentFlexible schedulesProfessional developmentFeedbackTangible rewardsWork environmentAttentive EmployersAutonomyTable 2 Preferences in non-monetary incentives across generationsThus it is obvious that the demands of the current generation of employees are ever increasing and in current scenario where there is low loyalty to the companies, high attrition rate these demands have to be met reasonably well to attract prospective employees who can perform really well and to retain the employees.3. PRACTICES IN ORGANISATIONSVarious non-monetary incentives in Table 1 are affected by career stage and proximity to retirement. The older the associate, the more the focus is placed on retirement or supplementing retirement income with part-time or temporary jobs. The younger the associate, the more the focus is placed on job satisfaction and the work environment.Types of non-mon etary incentivesVarious types of non-monetary incentives are as followsFlextimeProfessional developmentFeedbackTangible rewardsWork environmentAttentive employersAutonomyRedesigning of jobsRetirement planning and others.3.1 FlextimeFlextime refers to several arrangements that allow the employee to work a non-traditional schedule. The employee and the manager agree in advance on the hours of work. Flextime is a democratic option for good reasonit lends balance to busy lives. Fortunately, flextime also benefits the manager too. Allowing employees to work schedules that best suit their lives results in more productive workers. The most common flextime arrangements includeCompressed hebdomadThis arrangement allows the employees to work a full, 40-hour schedule in 4 days by extending the hours they work each day. The compressed week can also be scheduled over 2 workweeks, during which they work 9 longer days and have the tenth off. In any case, the compressed workweek maintains the same overall number of hours, just divided up differently. The workload, benefits, and pay are not affected by the arrangement.Adjusted lunchWorking an modify lunch schedule doesnt actually allow any additional days off. Instead, he employees can take a longer lunch each day, making up the hours at the beginning or end of the day. For example, he manager may allow the employee to take your lunch from 11-1 so that the latter can run errands, go to a doctors appointment, or work out, but in exchange the employee works that additional hour at the beginning or end of your day. This consort of arrangement may be an unofficial privilege of every worker, especially if its used only occasionally.Core hoursNext to the compressed workweek, this is the most popular computer programing strategy because of the flexibility it offers. With this schedule, an employee can work certain hours every day, and as long as the schedule is built around the work time specified. For instance, if the heart hou rs are 10-3, the employee must work 10-3 every day, but the starting and ending times can vary. The employee may choose to work 10-6, or 7-3, or any other combination as long as those sum total hours are covered. If the employee maintains the same total number of hours, your workload, benefits, and pay remain the same.FlexiblehoursCommoncoreLunchCommoncoreFlexiblehours6 A.M 9 A.M12 noon1 P.M3 P.M6 P.MFigure 2 Example of a Flextime scheduleThe only problem with flextime is that it cant be extended to employees involved in production as the work time also depends on the machines which have to be run continuously for a certain period of time. Problems may arise if flextime is offered to employees of other departments and not to those of production department. So it is better not to introduce flextime in organisations where it cant be extended to all the departments.3.2 Professional developmentIn a broad sense pro development may include formal types of vocational education, typically post-secondaryor polytechnic training leading to qualification or acredentia l required to get or retain employment. Informal or individualized programs of professional development may also include the concept of personalcoaching. Professional development on the job may develop or enhance process skills, sometimes referred to as leadership skills, as well as task skills. Some examples for process skills are effectiveness skills, team functioning skills, and systems thinking skills. Some examples of task skills are computer software applications, customer service skills and safety training. Examples of skills relevant to a currentoccupation are leadership training for managers and training for ad hoc techniques or equipment for educators,technicians, metal workers,medicalpractitionersand engineers. For some occupations there is a provision foraccreditation tied to continuing professional education and proving competenceregulated by a professional body.103.3 FeedbackPeople dont qui t organisations, they quit bosses. This can be extended to colleagues too. Improper communication, negative relationship, backbiting etc can lead to inefficiency and counter productivity. To overcome this, organisations are adopting feedback culture. It is the culture wherein all the employees are taught the skills of effectively receiving and giving feedback which is the degree to which carrying out the work activities required by the job results in the employee obtaining direct and clear information about the effectiveness in their job performance. This includes telling each other candidly, honestly and effectively what they think about their behaviour, job performance, ideas etc. Employees prefer being told what others think about them directly instead of in the round about way and they like being given feedback to self evaluate their performance. They also would like to frankly tell their bosses the various problems and issues faced by them. Feedback is of two types positive an d negative. Positive feedback improves the morale of the receiver and negative feedback improves the performance of the receiver. Poor feedback can reduce morale, the great power to do the job, confidence of employees and can even lead to conflicts between the management and the employees. Hence great care has to be taken while giving and receiving feedback. So when both the managers and the employees acquire these skills of giving and receiving feedback the feedback culture works out well for the company. The following factors are to be considered while giving feedbackMake feedback specific ambiguity and vagueness will make feedback ineffective as the receiver might miss out the whole point. It should be made sure that there is no genius clash between the giver and receiver. Both of them should be comfortable with the way the feedback is being given and neither of them should feel attacked or offended. To do away with these problems the feedback has to be specific.Concentrate on behaviour and resultsFeedback should concentrate on behaviour, results and future prospective and not on personality and attitudes so that the receiver gets the desired message in the desired manner.Take responsibilityThe manager/employee should take the initiative of giving feedback rather than putting the blame on others saying that it is not their job. Most much it is due to lack of skills and unwillingness to give feedback. Employees should also be encouraged to take responsibility as there is lot of emphasis on teamwork and authorization in present days organisations which are becoming flat.Balanced feedbackFeedback has to be balanced and accurate. Overstating or understating results will lead to ineffectiveness of feedback.Feedback on periodic solid groundFeedback has to be on a periodic basis preferably on weekly basis. Delay in giving feedback will render it ineffective.Similarly while receiving feedback the receiver has to listen attentively to all what is said, analyse the feedback and take remedial action.Though difficult to establish, feedback culture promotes teamwork, job satisfaction, employee empowerment, improvement in job performance and so is preferred by most of the employees.3.4 Tangible rewardsIt is important to understand how different groups of employees perceive the total reward package offered by the organisation, particularly if the marketing adage Perception is Reality were to be recalled. If the employee doesnt understand the total reward package, how can employee value it? And how can it motivate he employee to perform?Therefore, there is a need to gain an understanding of how managers and employees perceive reward, and, in the case of the Senior Management Team, where they think reward should focus? Perception of reward can be researched using the following toolSenior Management Team BrainstormIt is always important to involve the Senior Management Team (SMT) in join Reward policy development. It is best to involve them from the outset to ensure that they understand and contribute to what you are doing. The key reason for conducting management interviews or focus groups is to gain buy-in from those who will be accountable for implementing the strategy. Interviews can help identify the information that managers will find useful, and begin to develop an action plan. This should focus on the big picture and on priorities, not on detail. Top teams (or other senior groups) are likely to be unenthusiastic about detailed level definitions. The specific organisation and style of the debate will depend on the make-up of the team and the nature of the facilitators relationship with it. The focus will be on discovering either what really matters to people who work here? or based on the kind of people you want to work here, what do you think would really matter to them? The focus in each case will be on discovering either what really matters to people who work here? or based on the kind of people you want to work h ere, what do you think would really matter to them?Cash vs. Tangible RewardsWhy Do Merchandise and other Tangible Rewards Motivate Better Than Cash?Perks programs feature custom-designed rewards catalogues with highly desirable and attainable merchandise as rewards. Our reward items are memorable and reinforce the relationship between the reward earner and the reward provider. They keep on giving each time a merchandise reward is viewed or noticed recipients relive the special recognition and appreciate the organization that honoured them.Cash rewards on the other hand, often have fleeting impact and more often than not, leave the recipients mind as soon as they are spent. Cash unfortunately for those companies that attempt to motivate with it is the least lasting type of reward, because its typically confused with other compensation and thusly forgotten. Additional reasons to use overt rewards rather than cash are summarized below.Comparison between cash and tangible rewards.Ca sh or Any Cash equalPurely an extrinsic motivator with little emotional involvement does notprovide lasting satisfaction and long-term performance stimulationCreates expectations, leads to entitlement and consequently looses its motivating valueA dollar is a dollar participant attaches no greater emotional or inspirational value to cash. Lacks emotional impact of tangible rewards thus quickly spent and forgottenNo trophy value to be a constant reminder and continue to motivate. It isdifficult to show off thus limits the lasting impact of the rewardDifficult to target a particular behaviour because of the lacking associationwith a particular achievementRecipients often cant recall what they purchased with cash reward whichfurther diminished its impactMinimal association with Sponsor Company due to minimal trophy valueof reward which minimizes the potential of goodwill toward the companyNot cost-effective requires three times the incentive investment comparedto non-cash, on averageUs ually spent on necessities thus lacking a positive association with thetargeted accomplishment or behaviourParticipant feels guilty for not spending a cash acquaint on necessities whichtaints the reward with unpleasant feelingsTangible Rewards1. Carry a significant trophy value thus continue to reinforce