Pour Your Heart Into It (39 page)

As an entrepreneur myself, I have great respect for anyone who goes out and creates a business, whether it’s a coffeehouse or some other enterprise. A growing category like specialty coffee has proven large enough for many of us to succeed. Pleasing customers and thinking ahead of the curve are much more relevant to a company’s success than who opens a store across the street.

From the beginning, we’ve executed our expansion plans according to our own real estate strategy—locating in sites we consider desirable—and not as a response to the competition. We carefully analyze the demographics of a given area, our human and financial resources, the level of coffee knowledge, and each market’s ability to accommodate a cluster of stores.

Almost everywhere we open a store, we add value to the community. Our stores become an instant gathering spot, a Third Place that draws people together. That’s what community should be all about, yet a few activists persist in arguing that we’re damaging the character of their communities. I think it’s more about misunderstanding than reality. Nevertheless, it’s troubling.

What I’ve learned in the process of responding to these critics is that Starbucks has to increase its sensitivity to local issues and loyalties. In communities that are troubled about our entry, we have met with local leaders to understand local concerns. We also need to speak up more forcefully about our values and the contributions we have made. Starbucks managers have the power to allocate donations to local causes like ballet and opera companies, AIDS organizations, food banks, schools, and PTAs. In every city, all eight-day-old coffee beans are donated to food banks. Store managers also provide coffee for fund-raisers. One store in Seattle gives half its profits to the Zion Preparatory Academy, an African-American-run school for inner-city children. In fiscal 1996, we gave away more than $1.5 million in cash and kind, equaling about 4 percent of our net earnings. Since we don’t exploit these actions for public relations, a lot of our customers don’t even know about them.

Community giving is a policy to which we’ve been committed since we began in business. We do it because it’s right and because it makes Starbucks partners proud to work here. At Starbucks, we’re human, so we don’t always hit the bull’s-eye. But we strive to live our values. Our hope is that the public will judge us by our intentions and our actions, not by hearsay.

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Ultimately, the answer to this conundrum lies in the hands of our baristas. Once a store opens, it’s the person behind the counter, making the espresso drinks and selling the coffee, who is the face of Starbucks. The customer won’t care about ubiquity if the store manager is her neighbor or the barista is her son’s friend or she gets to know the staff as cordial and welcoming.

But how can we make new baristas feel a sense of identity with Starbucks? We’re hiring more than 500 people a month. It’s a dilemma all retailers face if they expand to city after city. As Starbucks grows, how can each barista feel the same passion for the coffee, the same drive, the same heartfelt commitment to the company that our early baristas did?

If you ask people who were with Starbucks in its earlier years what motivated them, it was an intimacy and a sense of common purpose. In 1987, we had fewer than 100 employees, and the offices and roasting plant were in the same building. When a store manager needed something, he or she could call the plant and have it within a few hours. I had an open-door policy, and those who had a gripe felt free to come to my office and tell me about it. We celebrated the births of our children, mourned the deaths of our parents, and laughed at pie-throwing contests each Halloween. (I never caught one in the face, but Orin and Howard Behar did.) Dave Seymour, who has worked in distribution in the plant since 1982, became our unofficial photographer, and he has boxes of albums and home videos of those gatherings.

I used to think that marketing was the most important department at Starbucks. Today, I’d say, unequivocally, it’s human resources. Our success depends entirely on the people we hire, retain, and promote. However outstanding our performance in marketing, design, real estate, manufacturing, store operations, new products, or R & D, it is ultimately interpreted and given life and meaning by the people of the company. How well each function is carried out depends entirely on how they feel about one another and how much they care about Starbucks.

But how can 25,000 people feel intimate with a corporation? I ponder this question all the time.

Giving stock options to all our employees was probably the best step we took toward keeping the company personal and caring. As a partner and part-owner, even the most remote barista senses a connection to the company.

We’ve always tried to keep hourly wages higher than the industry average and to offer benefits second to none. In addition, we have crafted a wide array of programs to ensure that we continue to recognize our partners as individuals. In addition to responding to our partners’ Mission Review comments, we communicate directly through quarterly Open Forums.

Every fall we bring field management from all over the United States and Canada to Seattle for a leadership conference. We show them around the support center and talk with them in large- and small-group settings. We honor managers of the quarter in each region and invite them to an annual dinner in Seattle where we celebrate the achievements of our Managers of the Year.

Every store has E-mail, called Dateline Starbucks, and we try to keep retail partners up-to-date with voice-mail messages. I send out recorded messages to all partners whenever the company has important news. But disembodied voices can’t do what real people can.

In mid-1994, when our total workforce reached 2,800, we recruited a senior human resources executive, Sharon Elliott, to help us deal with the “people issues” of growing big and staying personal. From her years at Macy’s, Squibb, and Allied Signal, she understood the hazards faced by large companies. But she had never encountered a culture as fast-moving and caring as the one she found at Starbucks. “This isn’t a mystique. This is the way Starbucks is,” she said shortly after joining. “I feel like I’m home.”

We handed Sharon two major assignments: to recruit a senior management team that would take us through the year 2000 and to maintain the caring, small-company atmosphere that had for so long nurtured our values.

Within a year, the first task was complete. We had seven new senior managers, all with experience at companies far larger than Starbucks:

Michael Casey, our chief financial officer, had worked at Grace and Family Restaurants.

Vincent Eades, specialty sales and marketing, came from Hallmark.

Ted Garcia, head of distribution and manufacturing, had worked at Grand Met.

Shelley Lanza had been general counsel at Honda of America.

Scott Bedbury had headed advertising at Nike.

Wanda Herndon, communications and public affairs, brought experience from Du Pont and Dow Chemical.

Some people in the company felt threatened by the heavy dose of new talent, all arriving at the same time. But I was exhilarated by it, for it showed that Starbucks had grown to the point where executives would leave large, successful companies and move to Seattle to join our team.

In recruiting senior managers, we looked for people who shared our values and brought the skills and experience we needed. But we also deliberately aimed for diversity in our executive team. As a high-powered African-American herself, Sharon was especially conscientious about making sure we met this goal. Before she arrived in 1994, our senior management team consisted of eight white men and two white women. By 1996, it consisted of nine white men, three white women, two African-American women, and one African-American man—a group far more representative of the face of America in the 1990s.

But as a human-resources professional, Sharon had a far broader view of diversity than one considering only race and gender. She encouraged a broadening of the workforce in terms of age, handicaps, personality, and learning style. We had already decided to give benefits to same-sex domestic partners, not as a political stance but as a recognition of the needs of the wide variety of individuals who already worked at Starbucks. We also began to locate stores in a wider variety of neighborhoods, recognizing that people of different racial, ethnic, and age groups also want convenient access to high-quality coffee. And we began to offer diversity training for all partners, stressing tolerance as not only the right thing to do but also as a key to winning and going global.

In 1996, Sharon proposed adding a line about diversity to our Mission Statement, the first change made to it since its adoption in 1990. To us, it felt as momentous as changing the Constitution, but it was unanimously approved.

Sharon also encouraged greater directness and accountability in our relations with one another. After she arrived, she encountered too often what she calls “the Dark Side of the Force”: an unspoken belief that being direct and open with co-workers is the equivalent of treating them with insufficient respect and dignity. Supervisors were reluctant to tell people honestly when they were underper-forming, to the point that employees occasionally weren’t even aware their supervisors were dissatisfied and were shocked when they were subsequently fired. It was the downside of niceness, and I was as guilty as anyone. Sharon relentlessly reminds us that it’s more professional to be forthright with people about their shortcomings so they know how they can improve.

Another of Sharon’s strategic moves was to hire Wanda Herndon, who plays a key role in our efforts to explain our values to an increasingly skeptical world. Wanda develops the strategies to shape our public image and communicate not only with our partners but also with communities, customers, and the media. She also plans shareholder meetings to make investors feel they are valued members of the Starbucks community. Wanda tends to disarm critics: As a smartly dressed African-American woman with close-cropped hair and an infectious laugh, she is far from most people’s preconceived image of a stiff corporate executive. She raises eyebrows with her direct and frank style.

To ensure two-way communication with our store partners, we have undertaken frequent surveys and cultural audits. The results of one coordinated by ARC Consulting in October 1996 gave us a sobering wake-up call. ARC conducted fifteen focus groups in seven cities and surveyed 900 partners by telephone. Their overall findings confirmed my belief that we have managed to maintain an extraordinary culture that truly values people:

88 percent were satisfied with their jobs,

85 percent thought Starbucks showed concern for its employees,

89 percent were proud to work at Starbucks, and

100 percent thought “working for a company that you respect” was an important factor in job satisfaction.

The professionals at ARC, who survey many companies, told us that these marks were extraordinarily high.

The poll also revealed that a high percentage of our baristas were in their late teens or early twenties, and many saw working at Starbucks as an acceptable “way station” on the road to a meaningful career. Baristas took pride in the coffee skills they had learned and judged a Starbucks job as much higher in status than working at a fast-food outlet. That was the good news.

The worrisome findings were that their level of satisfaction seemed to be slipping. When store managers felt overworked or baristas worried about short-staffing, they tended to blame these problems on the company’s rapid growth. They expressed concern that Starbucks would become just another huge, impersonal chain, losing its respect for the individual. Although still in the minority, other partners feared that Starbucks was beginning to care more about growth and profits than about its employees.

Fortunately, we have been able to provide an environment that makes people want to work for us. Even more than their stock options, baristas told us they cared about the emotional benefits they got from their jobs: the camaraderie among co-workers, interaction with customers, pride in a new skill and knowledge, respect from managers, and the fundamental satisfaction that came from working for a company that treated them well.

Clearly, we needed to find better ways to ensure that the quality of the Starbucks experience continued, both for partners and for customers.

When I heard these results, I knew that the company stood at a crossroads. The tension that accompanied our rapid expansion was a symptom of an underlying ailment that could have long-term consequences. If we were to put the brakes to our growth, even for just a year, we would disappoint shareholders, who expect continuous rapid earnings growth. It would also erode the momentum and pride our people take in working for a vibrant, successful company. The solution, it seemed to me, is to be continually diligent in our efforts to provide a great work environment for our partners and to offer them a range of opportunities to develop their skills. And we need to communicate our mission better, to help Starbucks people understand that our goal is not growth for growth’s sake (or worse, for Wall Street’s sake) but rather to bring our great coffee to the widest possible audience. We needed to reinvigorate their emotional connection to the company.

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