Tuesday, May 16, 2006

Starbucks: Success Is Best When Shared

"Success is best when it's shared." That's a personal quote from Howard Schultz, Chairman of Starbucks Coffee Company. Schultz is a graduate of Northern Michigan University and he spoke this week to the Detroit Economics Club on how to build a company that makes profits without sacrificing corporate responsibility.

I'm not very familiar with the company, but according to the Detroit Free Press, "Starbucks employees who work at least 20 hours a week receive full health care benefits and stock options of 14% of base pay." Health care is one of America's most critical issues according to Schultz. Here is some of what he had to say in Detroit this week:
[Schultz] criticized major American corporations that are not paying their part of the nation's health care costs and Congress for doing nothing about the problem. He noted that nearly 50 million Americans are uninsured.

"We have companies that are very profitable and have high stock prices but who either do not make health insurance available for their employees or, if they do, the premiums are too high for most people to afford them. Or companies keep the hours down so the employees can't qualify," Schultz said. [...]

Schultz, who grew up in a Brooklyn, N.Y. housing projects, said his father was injured at work and was left without a job or health care insurance and unable to support his family. The experience when Schultz was 7 years old shaped his sense of corporate responsibility.

"I wanted to build a company my father never got a chance to work for."
I'm impressed with Schultz who believes "Success has to be based on building an emotional connection with the consumer." I don't frequent coffeeshops that often, but issues like affordable health insurance for employees and corporate responsibility sway my decisions on where I shop. Schultz connected with me emotionally. The next time I'm faced with the decision about where to stop for coffee, I'm spending my $4 dollars on a cup of CafĂ© Estima Blend® - a versatile blend of Fair Trade Certified coffees - and I'll raise my cup in a toast to Starbucks.

[h/t Absolute Michigan for pointing me to the story.]

12 comments:

Midwestern Progressive said...

Wow.

"Starbucks employees who work at least 20 hours a week receive full health care benefits and stock options of 14% of base pay."

Those are nice benefits. My company had an intern last fall/winter that was very good, and when her internship ended, we tried to hire her full-time. She declined to work more hours at her part-time gig.

You guessed it.

She is a barista at Starbucks.

Kvatch said...

Though you can't live in Babylon by the Bay and really be anything but a Peets fan, I have heard from many people about Starbucks commitment to their employees, and it's laudable.

enigma4ever said...

Well, thanks for posting on this- I will now not feel a bit quilty about my green tea frappy addiction....now how do we get ALL companies and the dumass government to admit that we have a healthcare crisis in this country?...( I dunno- but I am willing to drink more green tea and think and write on it).

Lew Scannon said...

The local Meijer's has a Starbucks franchise inside, and it really bugs me to see the suburban professionals walking about doing their shopping with their hot latte extended in front of them, another status symbol like the cell phone in the other hand, but I can feel a lot better knowing that these people, unwittingly or not, are supporting a corporation with good business practices, even though they're shopping at Meijer's. At least they're not at WalMart.

Kathy said...

Midwestern, doesn't your company offer new hires health insurance? I'm just puzzled as to why the intern would stay at Starbucks instead of getting experience in her chosen field.

Kvatch, I never heard of Peets. It used to be an old meat packing company in this area, but I'm sure that's not what you're referring to. Is it a franchise coffeeshop?

Enigma, I've taken to drinking green tea too. Not because its trendy, but because I want all the anti-oxidants I can get in this toxic society we live in! ;-)

Lew, at least Meijers is a Michigan company. That's a plus.

farlane said...

The story made me feel better about my mocha frappuccino addiction too, enigma! I don't think it's any mystery that there's a health care crisis. The problem is that paying the cost by a corporation sacrifices competitive advantage (borne out so aptly by GM & Ford) and paying the cost by the government would sacrifice tax breaks and all the other shiny things the politicos want.

Thanks for the nod, Kathy. Peet's is a coffee franchise that (I believe) started in Chicago. Great coffee.

I went to Peets.com and realized that it was started in Berkeley by Alfred Peet. That's the problem with this darned internet. You're only a click away from having your assumptions corrected.

Peets does have great coffee though!

abi said...

I confess to being a Dunkin Donuts addict. Please don't tell me they use 8-year-olds working 14 hour days to make those scrumptious plain sticks.

Midwestern Progressive said...

Midwestern, doesn't your company offer new hires health insurance?

It does, indeed. It was her decision, though, to go with the job she was comfortable with, rather than one that was (relatively) new to her.

She was a terrific intern, though - I wish I had more who asked things like "what else can I do?" and "what do you need me to do?"

Kathy said...

Farlane, thanks for the info on Peets. I see from their website that the closest location to me is in Chicago. I guess I won't be visiting Peet's anytime soon.

Also, you're correct that paying the cost of health care by a corporation sacrifices competitive advantage (borne out so aptly by GM & Ford). However, in Starbucks case, they don't have the issue of outsourcing and foreign competition eroding their profits so they can use the money for health care. That being said, I still give them credit for using the profits on their employees benefits instead of plowing it all into upper management compensation like some companies do.

Abi, Dunkin Donuts is my favorite coffee too. My friend's daughter (who is in her mid 20's) used to work there and they paid decently - $9 an hour to start - but there were no benefits. I couldn't tell you if that is determined by company policy or the franchise owner. I do know that she lost her job after two years, along with two other women, because the owner decided to let his son manage the place and he decided to hire young teenage girls for $6 an hour. The place went to hell after that as they kept messing up the orders, getting smart alecky with the customers, etc. You only get what you pay for!

We haven't gone back in a long time. Once in a while if we pass one when we're out we stop in and buy their vacuum packed coffee to make at home.

Midwestern, you were fortunate to have eager intern. Who says the kids of today are a bunch of slackers? I know lots of energetic, capable kids.

Kvatch said...

Kvatch, I never heard of Peets. It used to be an old meat packing company in this area, but I'm sure that's not what you're referring to. Is it a franchise coffeeshop?

Peets Coffee & Tea, started in Berkeley back in...67...I think. Excellent coffee. Small by Starbucks standards. Outside of the Bay Area, they may have 10 to 15 stores total. They've be careful to limit their expansion.

What distinguishes Peets from Starbucks around here is that Peets still has real espresso machines and uses real Baristas. Starbacks has switched to those push-button machines.

Lew Scannon said...

Farmer Peets? We used to tell our little sister that was where we she came from! There was an empty five pound can of lard in the basement if Grandpa Wilbur's cabin that we told her she came in!

GraemeAnfinson said...

whats this? A company with a