Analysis Of Starbucks

By Author: Henry Ford
Total Articles: 189
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1) Low Employee Turnover in Starbucks
The value attached to employees in Starbucks is derived from the company’s desire to achieve satisfaction in their customers. Established on the company’s founder belief that customer satisfaction is directly proportional to employee’s satisfaction, the company has built an employee environment that not only offers them physical satisfaction but also offers them recognition that is rare in other places. An employee in Starbuck is more than an employee, he is a partner. The company’s vice president in administration highlighted the significance of this by asserting that this is not a mere company slogan but an actuality lived on the daily life of the company. The concept traces back to the founder, Howard Schultz, who Moon and Quelch attributes his DNA conviction of the importance of partners satisfaction in the company. With consistent investment in partner’s value creation, the company has over the past succeeded in achieving employee’s satisfactions to levels beyond that of their competitors. With a consistent partner satisfaction rate of between 80-90%, the company ...
... has over time succeeded in creating an environment favourable for employees to work in. For this, the company was ranked 47th as the best place to work in globally which is a significant evidence of how partners feel valued in the company. Some of the physical resources the company use to create the efficient partner environment have included offering stock options to employees and generous health policies to all levels of employees. In addition to that, the HR ensures that their labour sourcing is done directly from employees implying that the chances of promotions of low cadre employees are always high.
The effect of efficient treatment of partner’s over time translated to one of the lowest employee’s turnover. Theoretically, this is an attribute of satisfaction; that is, employees are less likely to desire leaving a place in which their desires, wants, professional development as well as remuneration are well catered for. To assess the effectiveness of HR strategies adopted in Starbucks, an important analysis would be to assess the roles of HR departments and evaluate how those roles are effectively handled. Traditionally, the human resource department is charged with managing a number of both conscious and unconscious aspects which include: management of a set of assumptions and ideologies held by a company’s workforce; crafting real-time decisions on employee’s affairs, management of line managers etc. The direct HR roles are generally shaped by the objectives designed by a company in their HR strategy. Fundamentally, overall planning of what roles every individual should play in the company forms a crucial part in HR roles. Specific roles as outlined by McNamara (2010) includes recruitment and selection, provision for training and personal development, performance appraisal, motivation as well as the facilitation of employee’s remuneration. In a nutshell, HRM exists to ensure that the organization achieves its set purposes through effective utilization of the organization’s workforce, facilitated by the provision of an environment that enables individuals to self-actualize and therefore perform at optimal capabilities. Whether HR strategies are effective or not would be based on how well the department play these roles. Looking at Starbucks, the HR is efficient in recruitment, promotion and catering for the social welfare of the workers. Besides that, they are actively involved in training for employee’s development so that most of their partners (baristas) ends up in managerial roles. When the company manages to sustain their employee’s, they in turn develop close relationships wit their customers, who turn up at their facilities not only for the goods and services but also for personalized service. In a sense therefore, healthy employee’s treatment in Starbucks translates to healthy customer relationship management which translates to long term relationships with the customers.
2) ServiceScape Model in Starbucks
The model was a construct of Booms & Bitner in 1981 whose emphasis was on the impact of a business physical environment to the customers. It refers to the environment where a firm develops and offers services to consumers. Key to note is that it is in this environment that both the service providers and the consumers interact and as such, that environment should have enhancing commodities that enhances the way the service provider does his work and how the consumer communicates with the service provider. The service scape therefore is equivalent to a service landscape consisting of exterior design, parking space, landscaping, entire surrounding environment etc. Interior facilities that are considered critical in service scape include physical facilities such as air ventilation and quality, temperature regulation, interior decorations, furniture design and arrangements etc. The tangibles that consumers interact with during a transaction that forms part of the service scape includes billing statements, staff uniforms, company’s brochures etc. The physical environment especially in the service industry is now considered a crucial aspect in the quest for understanding customers’ behaviour. In the view of Kim et al (2005), service providers ought to develop an environment which achieves two fundamental objectives;
i. Environment that appeals to customers arousal states and pleasure
ii. Environment that enhances operational efficiency.
The emphasis of the service model therefore is on how the physical environment is tailored to meet both consumers’ needs and facilitates a smooth flow for operational efficiency.
To capture the meaning of Service Scape in Starbucks, Senior Vice president, administration Christine Day asserts that the company’s atmosphere is a crucial component of building the ‘Starbucks brand’ but it goes beyond that; it creates an ambience that makes customers interested in staying longer in the company’s facilities. To achieve this, the Starbuck facilities are not only designed to allow customers to consume their products but its seating arrangements are designed and arranged to encourage customers to lounge. The layout is tailored to an inviting environment that encourages customers to linger in the company’s facilities. The logic behind Starbucks physical environment is built on what Day referred to as the ‘human spirit’; logic built on the fact that humans are social beings who love a sense of community achieved when they come together. Although Starbuck’s may not have a full control of its external environment, all its stores have unique interior designs, appropriate seat arrangements and where possible, the company invests in creating a surrounding environment that reflects its internal environment. For instance, one of its newest stores opened in Japan at Fukuoka was inspired by the company’s ‘shared planet inspiration’. This is a Starbucks concept of environmental stewardship through proper landscaping and creation of space for environmental conservation. The store in Japan is designed to accommodate trees and their continual preservation, as well as incorporation of efficient energy and water consumption modalities. It incorporates rainfall water collection for watering the landscape and low table tops designed from reclaimed wood that gives customers a natural environment feeling. By creating a stimulating physical environment, the company lures customers to linger in their business, which promotes relationship nurturing and boosts increased spending.
3) Measurement of Customer’s Satisfaction and Expectations
The evaluation of how well the company’s services are perceived by customers is of fundamental importance to the company. To ensure that it consistently measures its performance; Starbucks employs a number of metrics. First, they use monthly status reports. Secondly, they use self-reported checklists and thirdly; use of internally developed tool under its ‘mystery shopper program’. This program is the most prominent and involves a mystery shopper visiting the company’s stores thrice in a quarter. The shopper then rates the service using internally developed basic service criteria including service, cleanliness, product quality, and speed of service. The tool was designed in a question format and the mystery shopper would simply rate the store by either affirming or negating the tool question. Besides this tool, there is an additional exceptional tool aimed at capturing an exceptional aspect of service by the mystery shopper. Dubbed the’ legendary service score’, this tool is designed to record exceptional behaviours, for instance, a conversation, a customer experience or a memorable event that can inspire a customer to describe the business to a friend or return personally as a result of the service.
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