Five Star Development Firm’s Compensation Program


The compensation plan is an important component of modern organizational management that has the capacity to substantially influence the overall performance of the firm. It is vital to the motivation of employees and concerns the package of additional benefits they receive for working at the company, outside of the direct salary. This paper aims to describe the internal organizational strategy of Starbucks as an example and design an efficient and fitting compensation plan for this company.

Organization Description

Starbucks is an internationally known and globally operating brand of luxury coffee shops that offers its customers a premium experience and a wide range of signature flavored coffee drinks. Currently, it operates in 83 countries worldwide, with the management team preoccupied with discovering new emerging markets. Over the last two decades, the brand has successfully built up a devoted customer base that is attached to the unique flavors and premium marketing of the firm. One might say that at the moment Starbucks is more than a coffee shop chain, but, at least to a degree, a way of life. However, as a large-scale corporation that heavily relies on global management, the maintenance of identical quality standards worldwide and the competition with local coffee remains a consistent challenge for the brand. Thus, Starbucks’ management is devoting substantial efforts to the issues of motivating the company’s employees in the most effective way possible.

Organizational Strategies & Compensation Plan Purpose

Starbucks management team operates with three organizational strategies in mind: a corporate one, a business one, and a functional one. Originally, the firm chose the concentration approach for its corporate strategy, focusing its efforts and expertise on success within a single industry. However, as the coffee shop industry became increasingly saturated, the executives realized that excellency in a singular restricted area might not be sufficient anymore. As a result, the company might be in need of expanding its corporate strategy, namely incorporating diversification and investigation approaches (Markus, 2017). To successfully achieve this outcome without losing a portion of the precision and expertise the firm has become known for, Starbucks’ executives incorporated food items into the menus. Additionally, they launched a range of corporate merchandise, primarily available online (Chang, 2020). These new lines of business require additional efforts from Starbucks employees, as well as the introduction of new team members, making the question of motivational tactics as relevant as ever.

The business-level strategy of the firm may be placed in between the long-term overall objectives and the daily operations of the company, occasionally overlapping with either of these areas. It prioritizes the value customers might be getting out of the business while ensuring this value provision does not compromise other corporate aims. Starbucks’ business strategy relies on market segmentation, with the group of experienced coffee drinkers identified as the target market. The strategy relies on the acting assumption that this demographic would pay a premium price to receive a luxury coffee shop experience.

Functional level strategies concern everyday activities and precise benchmarks that, by definition, are extremely specific and situational. For Starbucks, the functional strategy relies primarily on innovation and high quality, which can be observed in products and the brand image itself. For its beverages, Starbucks purchases have specially grown Narino Supremo beans, despite the fact that they have to outbid other European competitors (Chang, 2020). Additionally, the quality commitment is furthered by the company’s decision to introduce minimal requirements in relation to working conditions.

With these organizational strategies in mind, it becomes apparent that the motivation of existing and new employees is one of the most consistent challenges in the company. The Premium coffee shop sector is dominated by Starbucks, yet the threat of emerging competitors is now stronger than ever. With the trend of responsible consumption and sustainable shopping, customers are likely to pay more attention to small and medium enterprises in the industry. To counter this trend, Starbucks has emphasized the quality of service delivered in the outlets by its highly trained staff members. As a result, the compensation package becomes one of the pillars that guarantee the attractiveness of the firm as an employer.

Compensation Plan Components

Starbucks employees can be easily recognized as one of the key components of the company’s market success and general efficiency. However, as service workers, they are unlikely to be entitled to an extremely competitive salary, compared to other alternative occupations. As a result, despite the brand successfully marketing its quality of service, the coffee shops are often staffed with younger workers who perceive their Starbucks contracts as temporary career options. Evidently, their motivation may therefore be relatively fragile and would benefit substantially from an adequate compensation plan.

The compensation plan for Starbucks might include time-gated yet generous insurance packages and education opportunities, that become available to employees after a certain period of working in the company. The availability of training courses and health-related benefits will increase the attractiveness of Starbucks as a long-term employment option. Additionally, the management team might consider team-building events, such as monthly corporate brunches or bi-yearly organized camping trips.


In conclusion, despite relying on the premium pricing and diversification strategies of a luxury coffee brand, Starbucks is highly dependent on its quality of service. Consecutively, the company should consider increasing the emphasis on motivating its employees and creating a mutually beneficial working relationship with them. The adequately designed and attractive compensation plan is a crucial step towards the achievement of this goal.


Chang, W. J. (2020). Experiential marketing, brand image and brand loyalty: a case study of Starbucks. British Food Journal, 123(1), pp. 209-223, Web.

Markus, M. (2017). Datification, Organizational Strategy, and IS Research: What’s the Score?. The Journal Of Strategic Information Systems, 26(3), 233-241. Web.

Musawir, A., Serra, C., Zwikael, O., & Ali, I. (2017). Project governance, benefits management, and project success: Towards a framework for supporting organizational strategy implementation. International Journal Of Project Management, 35(8), 1658-1672. Web.

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