Starbucks' Human Resource Management Policies and the Growth Challenge

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Case Details:

Case Code : HROB068
Case Length : 12 Pages
Period : 1987 - 2005
Pub Date : 2005
Teaching Note : Available
Organization : Starbucks
Industry : Coffee Retailing
Countries : USA

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Human Resources Management at Starbucks

Starbucks realized early on that motivated and committed human resources were the key to the success of a retail business. Therefore the company took great care in selecting the right kind of people and made an effort to retain them. Consequently, the company's human resource policies reflected its commitment to its employees.

Starbucks relied on its baristas and other frontline staff to a great extent in creating the 'Starbucks Experience' which differentiated it from competitors. Therefore the company paid considerable attention to the kind of people it recruited. Starbucks' recruitment motto was "To have the right people hiring the right people."

Human Resource and Organization Behavior | Case Study in Management, Operations, Strategies, Human Resource and Organization Behavior, Case Studies

Starbucks hired people for qualities like adaptability, dependability and the ability to work in a team. The company often stated the qualities that it looked for in employees upfront in its job postings, which allowed prospective employees to self-select themselves to a certain extent.

Having selected the right kind of people, Starbucks invested in training them in the skills they would require to perform their jobs efficiently. Starbucks was one of the few retail companies to invest considerably in employee training and provide comprehensive training to all classes of employees, including part-timers...

The Human Resources' Challenge

Analysts said that Starbucks biggest challenge in the early 2000s would be to ensure that the company's image as a positive employer survived its rapid expansion program, and to find the right kind of people in the right numbers to support these expansion plans. Considering the rate at which the company was expanding, analysts wondered whether Starbucks would be able to retain its spirit even when it doubled or tripled its size. By the early 2000s, the company began to show signs that its generous policies and high human resource costs were reflecting on its financial strength.

Although the company did not reveal the amount it spent on employees, it said that it spent more on them than it did on advertising, which stood at $68.3 million in fiscal 2004.

That the company was finding its human resource costs burdensome was reflected in the fact that it effected an increase of 11 cents on its beverage prices in mid-2004. Analysts wondered whether the company's cost problems could be met by a price increase, as customers already paid a premium for Starbucks beverages. On the other hand, it would not be easy for the company to cut down on benefits, as it could result in a major morale problem within the company...


Exhibit I: Starbucks' Income Statement
Exhibit II: Starbucks' Mission Statement
Exhibit III: Benefits to Part-Time Workers and Full Time Workers


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