Starbucks Corporation’s Compensation Plan


Nowadays, every organization, regardless of its size, sphere, and goals, aims to attract talented workers and keep their current employees productive and satisfied. However, with the increasing competitiveness of the current workforce, more than fair pay is needed to keep employees happy and stay in the company. One of the reasons for this shift in perspective is the different values and young age of the employees. As the Baby Boomer generation starts to retire and leave their workplaces, Millennials continue to fulfill the workplaces and increase in numbers. Given that the younger generation differs perceptions, opinions, and values, they expect different benefits and compensations from their employers.

Another factor of the observed change is the general advancement in work conditions and the improvement in leadership. While past businesses strived for profits and competitive advantage, modern companies also prioritize social responsibility and ethics and dedicate a considerable amount of resources to teambuilding, employee bonuses, and corporate culture. This paper will analyze the Starbucks company’s benefits, present its strategy for workers’ compensation, and justify the implementation.

Organization’s Description

The Starbucks company was founded in Seattle, Washington, and initially operated within America as the representative of the second wave of coffee culture. As of today, Starbucks is considered the biggest chain of coffee and roastery shops worldwide. It became popular for its caffeinated beverages around the world, employing millions of people from varied backgrounds. The workforce within the business ranges from baristas needed for professional coffee preparation in every Starbucks location to managers overseeing the company’s operations, accountants, etc. Given the international influence and worldwide spread of the company, and inclusive employee benefit and compensation plan must be developed to ensure workers’ satisfaction and effectiveness.

Organizational Strategies and Purpose of the Compensation Plan

The new Starbucks compensation plan will aim at three aspects of improvement: increasing employee satisfaction, enhancing their loyalty, and attracting new workers. As per the first one, the research on organizational benefits by Breevaart and Zacher (2019) has shown that when employees receive enough compensation and appraisal for their day-to-day operations, the profitability of the business also increases. Furthermore, Laundon et al. (2019) highlight the importance of equality in employee compensation since if workers feel that the benefits they receive are not fair, the productiveness of the company suffers. Additionally, an equal bonus system perpetuates the positive development of an ethical organizational climate. As a result, ensuring fair benefit distribution will give Starbucks a competitive advantage.

As it concerns employee loyalty and attracting new talents, the redeveloped compensation strategy will enhance the likelihood of Starbucks employees entering and, most importantly, staying in a company. Breevaart and Zacher (2019) note that more than 75% of modern workers are Millennials, meaning that their benefits should differ from those that the previous generation needed (p. 71). Laundon et al. (2019) also highlighted that due to the outdated human resource management procedures, including appraisal and benefits, the majority of Millennial workers view their jobs as temporary. These findings also indicate that young employees expect to change their place of employment at least once every five years (Laundon et al., 2019). This results in a high turnover rate, especially among front-line workers who receive the least benefits, and low talent acquisition.

Components and Justification of the Compensation Plan

Given all the aforementioned points into consideration, a three-part organizational strategy aimed at suiting the workforce’s interest is developed. The three areas of improvement are presented as an addition to the existing compensation plan that includes healthcare and insurance benefits, financial compensation in the form of bonuses, fair base pay, etc. The supplementary benefits are primarily non-monetary and focus on increasing employee productivity and attracting incoming workers.

As per the first part of the organizational strategy, benefits and compensation aimed at improving employees’ work-life balance and leisure time are essential components. According to Morrell and Abston (2019), the current workforce, regardless of their age and values, has difficulties separating their workload from free time and seeks assistance on this matter from the employers.

Therefore, measures to help employees in separating work life from their time should be taken. Tools to promote work-life balance from the organization’s side can allow people to work remotely or take days off. Schedule flexibility has also been highlighted as one of the primary benefits that attract new workers (Morrell & Abston, 2019). Thus, the employee retention strategy will include flexibility in scheduling and opportunities to implement changes into the workweek according to employees’ needs.

Secondly, to complement an increasing interest in self-growth trends, opportunities for personal development should be provided. This approach of non-monetary rewards appeals to employees and serves as a point of interest for many potential talents as this measure emphasizes the need for workers not only as assets but also as individuals (Morrell & Abston, 2019). The highly personalized strategy will allow employees to attend professional training, receive time off for volunteer work, have opportunities for athletic training, etc. Student loan repayment benefit is another self-growth, non-monetary bonus that attracts many recent college graduates but is widely underused throughout the US; it can be implemented to increase workers’ retention (Morrell & Abston, 2019).

The strategy encourages employees to enrich their personal life with hobbies and meaningful leisure time, which perpetuates the first point made in the section. It also creates an image of a caring and supportive environment, which increases employee loyalty.

Thirdly, providing timely, regular, and quality feedback is vital in maintaining internal communication and enhancing employee productivity. While receiving appraisal and annual input from the upper management is standard across the organization, there is a growing interest in additional discussions (Morrell & Abston, 2019). According to Morrell and Abston (2019), modern employees request and expect more extensive and frequent feedback from their employers. As a result, more communication with managers significantly affects employee performance and builds trust and a sense of recognition.

Research by Laundon et al. (2019) found that workers value feedback more than monetary bonuses and appraisals. Furthermore, those who receive frequent evaluations feel more responsible for the improvements and achievements, which makes them more inclined to contribute to the company by, for example, introducing an innovation (Laundon et al., 2019). Consequently, regular communication and active listening strategies should be adopted by the management team to ensure timely and effective feedback processes as one of the benefits.


In conclusion, as it is apparent from the change in workforce expectations, the shift in benefits and compensations should be conducted in Starbucks. Three areas of improvement that have been marked as the most necessary by this analysis are feedback, personal development, and work-life balance benefits. Given that the current healthcare and financial bonuses will remain within the company and be supplemented by the non-monetary compensation mentioned above, employee retention, satisfaction, and productivity will increase.


Breevaart, K., & Zacher, H. (2019). Daily selection, optimization, and compensation strategy use and innovative performance: The role of job autonomy and time pressure. Journal of Personnel Psychology, 18(2), 71–83. Web.

Laundon, M., Cathcart, A., & McDonald, P. (2019). Just benefits? Employee benefits and organizational justice. Employee Relations, 41(4), 708-723. Web.

Morrell, D., & Abston, K. (2018). Millennial Motivation Issues Related to Compensation and Benefits: Suggestions for Improved Retention. Compensation & Benefits Review, 50(2), 107-113. Web.

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