Introduction and the Setting
Starbucks is a multinational company dealing with retail coffee houses. It has a rich history of internationalization and the development of a robust franchise model of business. This essay seeks to present theoretical and practical information relating to the topic of human resource management (HRM). It uses one of the company’s franchises as the subject of the research study. The essay presents the findings of two interviews done on the company. The interviews involved the head of staff in charge of country operations and a manager of one Starbucks retail coffee outlet. The results of the interview are going to form the basis of analysis and will answer the research question, which is to evaluate the responsibilities of human resource management (HRM) at the company. Starbucks has been selling coffee and other beverages at a premium price compared to what the competitors offer, yet the company has been able to maintain a positive financial outlook for many years of operation. Beyond that, it has been able to cultivate a rich employee culture that translates to a high-quality customer service culture at any Starbucks outlet. Thus, it is interesting to find out what exactly the human resource department at the company does to ensure that the company can keep its customer promise and keep many of its employees committed to the excellence of the organization. The understanding presented in this essay about the human resource is that employees are a vital asset to any organization, but the ability of the organization to derive absolute competitive advantage from employees depends on the strategic role that the human resource department plays to achieve the objective (Mondy & Mondy, 2013).
Literature Review
Although companies have had human resource departments for more than a century, the subject and practice of human resource management are still evolving. No company can say that it has perfected the process (Katou & Budhwar, 2010). However, all practitioners and researchers of HRM agree that the practice is about making the best use of people as part of a process of achieving an organization’s objectives. Despite the simplicity of this understanding of HRM, many organizations around the world have difficulties in achieving optimal results in their HRM objectives. The essay is going to highlight notable contributions by scholars on the subject as part of the literature review. The review will provide a theoretical and practical basis for understanding the way organizations handle employees and the exact ways that they should use to achieve the best results.
The measures of training and the outcomes that organizations achieve through training of employees differ. The differences emerge in HR outcomes, organizational performance outcomes, and financial or accounting outcomes. The differences can also be on stock market outcomes (Tharenou, Saks, & Moore, 2007). According to Katou and Budhwar (2010), business strategies, managerial style, and organizational culture have a salient effect on the possible achievements of HRM policies of any company. Although some HRM policies have no direct influence on the success of a firm, the policies are still important because they rely on employee skills, attitude, and behavior to promote desirable change in organizations.
Another notable research that is insightful for understanding human resource management is by Steinmetz, Schwens, Wehmer, and Kabst (2011), which explains that there is a need to standardize the process of research in the field of human resource. The scholars advocate for the development of a process that ensures all practitioners and researchers are using standardized data collection procedures and formats to allow generalization and application of research findings in more than one setting. The call by Steinmetz et al. (2011) is a confirmation of the complex nature of HRM research and the myriad of possible interpretations that exist in the current research reports. It points to the need to rely on primary information sources when conducting and exploring particular features of HRM in an organization. Relying on secondary literature alone can expose a researcher to errors caused by biased interpretations by some scholars, based on the motivations of their studies. Thus, the future calls for accurate uses of primary data, according to standardized formats of analysis. The study by Steinmetz et al. (2011) lends support to the intention of this essay to use typical HRM theory as part of analyzing and recommending solutions to the challenges identified in the organization chosen for inquiry.
This essay is also picking on findings by Minbaeva (2008), which attach the goal of HRM to the performance of a company. The study results show that HRM practices help in the formation of competencies when they are used in a company. These capabilities remain firm-specific; therefore, they play a significant role in creating organizational knowledge. A company can achieve a significant competitive advantage with the unique experience that remains restricted to a firm. Meanwhile, Gooderham and Nordhaug (2010) kept on insisting on the fact that HRM is a firm-specific attribute. Practitioners should not blindly copy the practices of another organization and expect to find similar success as their copied organization. However, it is possible to use a standard framework for handling HRM issues in several organizations. Such a structure would involve different contextual factors, as described by Gooderham and Nordhaug (2010). Such factors include culture, labor union membership, and a country’s business regulation, among others.
The growth in the significance of HRM is a product of the realization of the strategic HRM role in organizational effectiveness. If there are good HRM policies in an organization, then there will be excellent avenues for promoting knowledge exchange, which will end up improving the performance of the organization from a theoretical point of view. In practical terms, the outcome will depend on several mediating factors that various scholars highlighted above have explained. Many firms will have performance appraisals, compensation, selection practices, and training and development practices as core elements of their HRM practices. Nevertheless, the results will usually differ even among organizations that have all these practices. Unfortunately, many scholars fail to examine the HRM responsibilities of managers in project-oriented companies. It is important to consider managers as relevant stakeholders in the achievement of HRM objectives in any institution. An organization can increase its performance at each level of the organization when the responsibilities of management are clear and specific, as findings by Keegan, Huemman, and Turner (2010 explain in their study of HRM and the role of managers.
A firm may be able to gain increased control over line managers when it is embracing modern HRM practices. This is the expectation of a global retail-based organization like Starbucks. There should be a level of doubt about the transferability of excelling practices from one location to another around the globe when one undertakes critical approaches to management analysis, as done by McKenna et al. (2010). While the organization can be the same, people are different and geographical locations come with other characteristics that affect people’s ability to react to particular HRM practices. Therefore, it is better to consider work design and the right ways of managing people to achieve the necessary control in an organization. This goes against the current practices that rely more on the ability to transfer skills and practices across the globe to apply to the same company or different companies in the same industry. The concern with transferability only brings out barriers to transfer. Moreover, the study of these barriers serves as a distraction to the primary intention of evaluating HRM effectiveness.
Based on the understanding of this literature review, the preliminary verdict for this essay is that the field of HRM is still evolving. It is hard to come up with a definite framework that will capture all the elements of the current perspectives on the subject. HR practices that align with the business strategy lead to improved organizational performance. Therefore, studying one in isolation can bring up problems when analyzing results. There is no universal, best practice for dealing with human resources in an organization. Any practitioner claiming to have achieved this objective is misleading. However, some companies seem to have a formula for combining HRM and strategic management, such that they can achieve sustainable, positive results in their area of business (Mondy & Mondy, 2013). This goes on to support the idea that it is not the actual practices that matter most. Instead, the manner of doing a particular thing is the most important factor in achieving HRM objectives.
Based on the literature presented in this section, it is apparent that companies succeed mostly because of the way they treat their employees. While they may be following the best practices in HRM, their success only comes as a measure of the actual conduct of the HRM practices in the companies (Minbaeva, 2008). Therefore, it is improper to see HRM only as an administrative practice; instead, it has to become a central practice or feature of an organization. HRM has to influence all other activities that involve the members of an organization. Organizations should be able to achieve positive objectives with such an approach to HRM because they will be able to realize the direct and indirect benefits of HRM practice. Going back to the literature on HRM to gain an understanding of HRM practices in an organizational context is important because it allows one to know the pitfalls to avoid in analyzing and minimizing the effect of generalization that can present a failed promise of HRM practice to practitioners (Katou & Budhwar, 2010). Going forward, it will be important to focus on contextual factors because of their salient role in determining the actual success rates of any HRM practice or policy. One may be making or applying assumptions that do not fit the particular organization studied if one does not review the context.
The Findings
The initial question presented to the two interviews selected at Starbucks and presented in the introduction of this essay was what seemed to be the most important feature that led to the success of Starbucks. Based on the offered answers in the interview, Starbucks is relying on a strategy to defeat its rivals in performance. Many people have come to associate any Starbucks retail outlet in the world with a high quality of customer service. They are likely to hold a particular product in high esteem whenever they see the Starbucks logo on merchandise or a package because they already associate the logo with high-quality services.
All managers in the company follow a policy laid out by Howard Schultz. The policy requires the managers to treat people like family in any engagement, policy, and practice within the company. Also, managers have to be loyal to the people under them and give their all in finding solutions and making sustainable contributions to the success of Starbucks. At the same time, every Starbucks franchisee has to obey and follow the guidelines on employee management set by the parent company. Therefore, there is a guarantee of workers getting flexible working hours in all Starbucks outlets to ensure that there is an appropriate work to life balance. According to the manager of Starbucks interviewed, the leading factor for the success of the company has been innovating. While the manager did not break down the elements of innovation at the company to explain the exact ways that they contribute to the success of the firm, the description offered for innovation as a reason for the success revolved around the following features. First, Starbucks regularly increases its beverage offerings. It may retire some menu items because they are performing poorly and give room for new brands. However, innovation does not just come from the introduction of new items, but it also comes from the engagement with employees on reading customer demands and finding out other trends in particular markets. Staffs receive recognition when they make notable contributions that can assist the company to maintain its innovative edge over its rivals.
Another theme in the questions presented to the interviewees was the main challenges that would affect the company in the coming half-decade period. There was an acknowledgment of difficulties with human resource management as part of the answer given. For example, many competitors are emerging, in addition to the current ones, and they are all looking at the possibilities of poaching Starbucks’ staff. The cost of training new workers to embrace high-quality customer service in the industry is high. One quick way to achieve highly trained employee numbers is to snatch rival company employees using several incentives to compel many employees to shift their employer. Starbucks will continuously have to refine its HRM strategy so that it increases the sense of employee commitment to the company and avoid high employee turnover. Also, the company has to attract new employees who are among the best available in particular markets where it operates. In this regard, it faces a challenge of remaining visible through its employment practices and encouraging the current employees to maintain a positive representation of the company to the public.
The increased acts of consumer activism regarding ethical business practices will likely affect the pricing and sourcing of premium coffee and other ingredients used at Starbucks. However, the most impact of this emerging trend is that it is increasing the awareness of the company’s practices to many stakeholders, who directly or indirectly affect its employee attitudes and commitments to the organization. Going forward, Starbucks will be facing a challenge of coming up with better defenses against public accusations of unethical practices and ensuring that its employees become part of the solution, instead of leaving the organization.
Another finding from the interviews is that the organization understands that employees play an important role in success. That is why it is using incentives to ensure that the employees are motivated at all times. At a global level, the company seeks to have a long-term relationship with its partners to maintain stability in supplies and allow long-term planning and capacity management. The strategy also affects the outlook of human resource management, as the company considers its employees as partners in the success of the company. Therefore, one way to achieve a long-term partnership status is always to have long-term perspectives on every interaction. The company has to react to short-term changes in its operating environment. It also has to consider the implications of the decisions made by the management to the long-term prospects of retaining talented employees or identifying them and attracting them to the company.
Therefore, the biggest contributing factor to success and a long-term solution to dealing with emerging employee management challenges affecting the company have been annual training programs for employees and management at different levels. Employees are also getting an upper hand at recommending solutions and highlighting problems with the current policies of any department of the company. This has been instrumental in making the employees proactive. It has also allowed the management to find out appropriate, motivating factors for different kinds of employees.
Critique and Recommendations
Although the management at Starbucks seems to pay appropriate attention to the welfare of employees as part of the strategy to prevent high employee turnover, it still appears to neglect the concept of multigenerational workforces. Starbucks appeals to a wide range of age groups. It can be considered a family retail outlet for coffee and other beverage enthusiasts. It has to have employees of different age groups, yet its management only recognizes employees as one continuous age group. There is an apparent lack of employee segmentations that can allow the company’s particular strategies on motivation and attraction of new staff work. At the same time, there is enough evidence to show that there are subtle influences that its motivating programs and training have on attracting a particular age group of employees, even though the company may not realize the intention of its practices (Kinicki & Kreitner, 2011).
The company has a well-functioning human resource department, although it may not be apparent at a retail store level. The presence of training programs, compensation features, and work-life balance programs and policies are all indications of the existence of a particular strategy for dealing with employees. This is a good thing for the company, as it leads to overall accountability of management actions towards the employees. Managers at the retail level can answer to those at the senior level based on their realization of company objectives on handling employees. This accountability ensures that policies are followed. If the company does not follow its policy, it will be struggling to find and retain capable employees because of a lack of measurement of results. Measurements of any business parameter are essential in informing decisions and driving organizations forward towards the realization of organizational objectives (Gooderham & Nordhaug, 2010).
The values that Starbucks upholds lead to the success of the company’s HRM department. Applying one strategy throughout the company can be difficult when companies have a global workforce. Different countries have different factors that mediate human resource strategies. Therefore, having a philosophy to follow is more important than knowing the particular steps to use. It is possible to break down situations or challenges, according to their local context if there is a philosophy, followed by applying the philosophy (Steinmetz et al. 2011). For example, for Starbucks, the management personnel at all levels know that it is important to treat every employee as a family. Managers will have to employ local solutions that are motivational or disciplinary in case there are disagreements. The essential matter in the interaction of management and employees is the communication of family values at Starbucks, irrespective of the action taken.
The function of HRM entails job analysis, selection of employees, training and development, performance appraisal, scholarships, registrations of employees, management of employee issues, and motivation of employees. Also, particular companies will have other roles in the HRM department, such as leave applications, salary verification, and health or hazard insurance handling.
According to the responses from the interviews, Starbucks is performing well in building a top management team because it has a management and leadership program. Having experienced employees is also another way of nurturing new management talent in a company. Starbucks seems to have embraced this strategy because it focuses on not allowing its rivals to poach its productive employees. Beyond management, Starbucks has also succeeded because of employee training. Training should make employees efficient and product not only at doing their duties but also in resolving problems with customers and coming up with innovative ideas for HRM and overall company competitiveness. Cultivating a sense of family at the organization can help Starbucks minimize the gap between its main employees and the employee of its franchises, which can be critical for meeting its challenges of keeping employee commitment to the organization at sustained high levels.
Another area that defines good HRM practices is the compensation and maintenance of appropriate employee welfare (Kinicki & Kreitner, 2011). Many people will consider additional compensation and employee welfare before considering whether the salary offered for the job is sufficient. Thus, a critical success factor for HRM is to come up with an appropriate balance between the company’s need for keeping human resource costs low and sustaining the highest employee production through appropriate welfare programs. A flexible work schedule is a huge bonus point for Starbucks, especially in its developed-country operations, where people tend to hold more than one job. Furthermore, Starbucks is succeeding because of planning and organization. The company’s management is aware of the upcoming challenges in maintaining a highly productive workforce. Moreover, it is organizing its technical resources, information, and finances in a way that will ensure it is capable of handling the challenges posed by its business environment.
Recommendations
Starbucks is doing well at its leading functions as part of HRM, and it needs to increase the leadership presence of retail managers who are in direct contact with employees. The service industry requires the management to pay attention to every detail relating to employee and customer interactions. Cutting out employees in the overall management reasoning of the company can detach the employees and provide avenues for them to jeopardize customer relations whenever they have negative issues with the company (Kinicki & Kreitner, 2011). Starbucks relies on its employees to sustain its reputation; thus, it needs to use leadership more than management to inspire the employees so that they do what the company wants out of the alignment of their personal goals with the objective of the company.
Moreover, the company should keep on using universal HRM practices when planning, recruiting and grading employee performance. However, with a change in its operating environment, it must also review its practices to ensure that they are relevant to the changing demographic characteristics of its workforce. Being aware of the globalization effects on the workforce at various country operations will allow Starbucks to come up with a sustainable measure of motivation, compensation, and discipline of the employees (Mondy & Mondy, 2013). The company should not try to treat employees in different countries differently because it may create feelings of favoritism in the organization. At the same time, it must continue to recognize the cultural attributes of different employees. Also, it has to come up with the appropriate policies for handling workers from different generations. For example, workers falling within the Generation Y age group will likely have different motivating factors than those who belong to the baby boomers generation. These workers will be expected to work together at a Starbucks outlet or in the overall operations of the company. The company should include these factors in its management. It should also conduct employee training to ensure that managers can adapt to employee demands.
References
Gooderham, P., & Nordhaug, O. (2010). One European model of HRM? Cranet empirical contributions. Human Resource Management Review, 21, 27-36.
Katou, A., & Budhwar, P. (2010). Casual relationship between HRM policies and organizatioal performance: Evidence from the Greek manufacturing sector. European Management Journal, 28, 25-39.
Keegan, A., Huemann, M., & Turner, J. (2011). Beyond the line: Exploring the HRM responsibilities of line managers, project managers and the HRM department in four project-oriented companies in the Netherlands, Austria, the UK and the USA. The International Journal of Human Resource Management, 1, 1-20.
Kinicki, A., & Kreitner, R. (2011). Organizational behavior: Key concepts, skills & best practices (5th ed.). New York, NY: McGraw-Hill/Irwin.
McKenna, S., Richardson, J., Singha, P., & Xu, J. J. (2010). Negotiating, accepting and resisting HRM: A Chinese case study. The International Journal of Human Resource Management, 21(6), 851-872.
Minbaeva, D. (2008). HRM practices affecting extrinsic and instrinsic motivation of knowledge receivers and the effect of intra-MNC knowledge transfer. International Business Review, 17, 703-713.
Mondy, R. W., & Mondy, B. J. (2013). Human resource management (13th ed.). Upper Saddle River, NJ: Pearson/Prentice Hall.
Steinmetz, H., Schwens, C., Wehmer, M., & Kabst, R. (2011). Conceptual and methodological issues in comparative HRM research: The cranet project as an example. Human Resource Management Review, 21, 16-26.
Tharenou, P., Saks, A., & Moore, C. (2007). A review and critique of research on training and organizational level outcomes. Human Resource Management Review, 17, 251-273.