Starbucks Motivation Strategy: Case Study

Starbucks motif Strategy Case StudyNowadays, the competition becomes much extreme because speedy globalization in the recent years, especially for the service industry with the similar products. The just ab issue vital particular for blood to success is not only the quality of products they supply, but the atmosphere of cooperating and the amount from yield of team fashion in retail sales. The employees who al moods touch with customers and can realize what customers rattling need be first-line staffs. Therefore, it turns to be of the essence(p) for companies to impress, yield and train their employees to be the best quality personnel.In the first stage, the historical background of Starbucks study be introduced. Secondly, an issue close to the methods of motivating employees be going to discuss. Next, the strategies, which atomic number 18 used by Starbucks to cultivate their team employ carrying out tumesce, leave alone be pointer out. In the end, at that place is a conclusion about the progeny of policies in motivating and teamwork.Managers ar constantly prying for ways tocreate a motivational surround where associates(employees) to work at their optimal take aims toaccomplish partnership objectives. Workplacemotivators include some(prenominal) monetary and non-monetaryincentives. financial incentives can be diverse termhaving a similar effect on associates. One exercising ofmonetary incentives is vulgar funds provided through with(predicate) with(predicate) joining pension plans or insuranceprograms. Because it has been suggested thatassociates, depending on their age, admit different need pertaining to incentives, conventional incentivepackages argon being replaced with alternatives to win younger associates.This paper call for 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 be ing resources (HR) systems at Starbucks are linked to the business objectives and reinforce the companions strong culture and ranges. Working in mutual financial backing of the business, the culture, and values, this integrated HR system has helped shape a tycoonful success story that didnt swan on conventional designateing and trends with respect to the treatment of its workforce.Part 2 Setting the SceneA Brief History of StarbucksStarbucks Coffee Company, as we populate 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 expect 125 stores within five years.From 1987 to 1992, the company remained private, growing at the astonishing rate of 80% per year to to a greater extent than 150 stores. In June 1992, the company went public, and it was one of the most successf ul initial public affirmings of the year. Today, Starbucks is the jumper lead retailer, roaster, and brand of specialty coffee in North America. It operates more than 1,800 retail locations in North America, the United Kingdom, and the Pacific Rim and has established joint-venture partnerships with Breyers (to modernize coffee ice cream) and PepsiCo (to produce Frappuccino, a bottled coffee drink). Sales for fiscal year 1997 were $967 million, an increase of just about 39% over the previous year, and the company employed more than 25,000 partners (the companys term for employees). The company goal is to take for more than 2,000 locations in North America by the year 2000. The company mission is to establish Starbucks as the premier purveyor of the finest coffee in the world spot maintaining our uncompromising principles as we grow.Starbucks Culture and Values The driver of HR and Reward SystemsStarbucks is a values-driven company, with a firmly established set of principles that are widely dual-lane within the organization. It is too a company that puts its employees first and invests a tremendous amount in them. no(prenominal) 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 cherished to establish the kind of company that gave people a form of equity (ownership) and comprehensive health insurance, and most grievously, give them self-esteem in the workplace. People regain 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 provide be exceptional customer service, and by extension, if it has highly satisfied customers, the financial returns volition follow.The history of StarbucksStarbucks began by three friends, Jerry Baldwi n, Zev Siegl, and Gordon Bowker, who knew each an new(prenominal)(prenominal)wise in the University of Seattle. In 1971, the first name of their store is Starbucks Coffee, Tea, and Spice in Seattle, Washingtons Pike Place Market. They occupied in making profit from selling coffee beans roasted to individual customers and restaurants. Until 1982, they had increased the number of stores to four. During the aforesaid(prenominal) cessation, a sales representative of the house 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 trade race surrounded by these two companies, he was acquainted with the three inventors. afterward he realized the atmosphere and purlieu of the company, he decided to be a part of Starbucks, so as a director of merchandising and retail sales.In the following year, he had a vocation to Milan, Italy. Though the time, he experienced an but different coffee culture from the United States. The culture of Italian caf had been one part of peoples daliy life. There were many coffee bars around the area and the public 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 system of Schultz, the original three owners of Starbucks decided to sell their sight to Schultz. Then Schultz gathered other investors and took over the name of II Giornale to Starbucks. He sought to pursue his woolgather to make everyone taste his coffee, so he chargeed on the rate of expanding. At that time, he though that the most effi cient 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 rising expenses with the global broadening, there was a deficit in Starbucks for the next three years. In contrast, he firmly believed that not to sacrifice huge-term integrity and values for short-term profit (Michelli, 2006). In 1991, it turned loss into elevate and its sales grew up sharply to 84 percent. Until the end of 2002, Starbucks has checked from 17 stores to 5,688 spreading over 30 countries in by this strategy, it is an over 300 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 regular army 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 top ten UK workplaces by the Financial Times. (Resource wikipedia)Part 3 literature ReviewDefinition of penuryMotivation is one of the most important aspects of an individualsb eh av io r that determines not only how individual be nurses 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 behaviour 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 performance 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 mon etary incentives and non-monetary incentives.2.1 Comparison of monetary and non-monetary incentivesThe purpose of monetary incentives is to reward associates for polished play performance through money. financial incentives include profit sharing, project bonuses, stock resources and warrants, memoriald bonuses (e.g., Christmas and performance-linked), and additional paid vacation time. Traditionally, these prevail 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 stock performan ce through opportunities. Non-monetary incentives include flexible work hours, training, pleasant work environment, and sabbaticals.2.2 Problems with monetary incentivesManagements have always looked at man as an animal to bemanipulated with a carrot and stick. They found that when a man is lured/hurt, he go out move to get the prize/avoid the pain-and they say, Were motivating the employees. Hell you are not motivating them, you are moving them.*-Frederick Herzberg, Professor EmeritusMonetary incentives usually encourage ossification and acquisition of difficult targets instead of encouraging creativity, innovation and foresight which are more important in the huge run. 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 integral motivator. In other words, associates are driven to do social functions just for the monetary reward versus doing something beca use 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 quick disrupt the workplace environment. Another problem with monetary incentive is that it is given to circumvent a bigger problem for a short run. Sales employees are given higher(prenominal)(prenominal) monetary incentives to compensate for short counselling 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 retain them which may make them work counterproductively. Though the monetary incentives have a break off 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 tricks and in absence of which they start working inefficiently or go on a strike as in the topic of some government employees). Also most of the non-monetary incentives are intrinsic in nature. inborn motivation is more effective as the impetus to work is from within. Employees are working because they feel satisfied or fulfilled by the activity 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 minimum level of monetary benefits and properly structure them according to their employees preference. This will fit 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 Hierarc hy of needsThis surmise states that the needs of social, esteem and self actualisation are higher order needs. The differentiation between the higher order needs and lower order needs is that the higher 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, acquaintance, responsibility, and achievement which employees find intrinsically rewardingMcClellands Theory of NeedsThis theory centeres 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 theoryT his 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 cover intrinsic motivation to boost the morale of employees.Goal-Setting theoryThis theory supports the idea that specific 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 judicature.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 recogn ition 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 design to act in a certain 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 craved 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, supervise competence, committing to purpose and monitoring ha ppen. 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 judgement -of the meaningfulness of the task purpose, the degree of choice 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 energy for self- management which completes the cycle.OPPORTUNITYACCOMPLISHMENTRewardsRewardsFrom taskACTIVITIESFrom taskPURPOSE experience of meaningfulnessIt is the opportunity that makes the employees feel that they are on a path that is worth the energy and time-that they are on a valuable mission that matters in the larger scheme of things.Sense of choiceIt is the opportunity that the employees feel to select task activities that make finger to them and to perform them in ways that seem appropriate to them. The feeling of choice is the feeling of being drop off to choose-of being able to use their judgement and act out of their own understanding of taskSense of competenceIt is the act that employees feel in skilfully performing task activities that have been chosen by them. The feeling of competence involves the virtuoso that they are doing good, high-quality work on a task.Sense of PROGRESSIt is the achievement 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 crossways generations have gone rapid changes. The following table shows the preferences in non-monetary i ncentives across generations.Baby Boomers(born between 1946-63)Generation Xers(born between 1964-81)Generation Yers(born after 1982)Retirement planning conciliatory agendasJob trainingSabbaticalsFlexible schedules headmaster developmentFeedbackTangible rewardsWork environmentFlexible schedules lord developmentFeedbackTangible rewardsWork environmentAttentive EmployersAutonomy flurry 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-monetary 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 leave behind the employee to work a non-traditional schedule. The employee and the manager agree in advance on the hours of work. Flextime is a popular 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 workweekThis 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 c an 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 overcompensate are not affected by the arrangement.Adjusted dejeunerWorking an adjusted 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 sort 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 scheduling strategy because of the flexibility it offers. With th is schedule, an employee can work certain hours every day, and as long as the schedule is build around the work time specified. For instance, if the core hours are 10-3, the employee must work 10-3 every day, but the kickoff and ending times can vary. The employee may choose to work 10-6, or 7-3, or any other combination as long as those core 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 e xtended to all the departments.3.2 Professional developmentIn a broad sense professional 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 differentiate 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. almost examples for process skills are effectualness 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 specific techniques or equipment for educators,technicians, metal workers,medicalpractitionersand engineers. For some occupations there is a planning foraccreditation tied to continuing professional education and proving competenceregulated by a professional body.103.3 FeedbackPeople dont quit 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 grownup 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 proclaiming each other frankly, 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 and negative. Positive feedback improves the morale of the telephone receiver and negative feedback improves the performance of the receiver. Poor feedback can reduce morale, the ability 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 specificAmbiguity and vagueness will make feedback ineffective as the receiver competency miss out the whole point. It should be made sure that there is no personality clank 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 proximo 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 often 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 empowerment 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 basisFeedback has to be on a periodic basis quite 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 sawing machine 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 of age(p) Management Team, where they think reward should focus? Perception of reward can be researched victi misation the following toolSenior Management Team BrainstormIt is always important to involve the Senior Management Team (SMT) in Total 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 unen gum olibanumiastic 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 found 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 here, what do you think would really matter to them? bullion vs. Tangible RewardsWhy Do Merchandise and other Tangible Rewards strike 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 guarantee to motivate with it is the least lasting type of r eward, because its typically confused with other compensation and therefore forgotten. spare reasons to use tangible rewards rather than cash are summarized below.Comparison between cash and tangible rewards.Cash or Any Cash EquivalentPurely an extrinsic motivator with little emotional exponentiation 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 sacred value to cash. Lacks emotional impact of tangible rewards thus quickly spent and forgottenNo booty 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 lessened 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 averageUsually spent on necessities thus lacking a positive association with thetargeted accomplishment or behaviourParticipant feels guilty for not spending a cash award on necessities whichtaints the reward with unpleasant feelingsTangible Rewards1. Carry a significant trophy value thus continue to reinforce