Starbucks is considered to be one of the few companies in the retail sector to provide generous benefits to both full time workers as well as part timers, and this shows how they care about its employees. This had a tremendous impact that their employees remained motivated, and had a moderately low employee turnover. In the early 2000s, the Starbucks had faced a serious challenge of finding and retaining the right number and kind of employees to man its future growth. One of the Fortune’s list “Best Companies to Work For” last January 2005, was Starbucks Coffee Company (Starbucks).
They were placed second among large companies to be listed in a prestigious list of Fortune. This only shows that their HR Strategy is very competitive and have a best Starbucks human resource management and work culture. Starbucks knows the importance and value of its employees. This is their overall corporate strategy to hire the best there is, and be able to retain and motivate them in the long run. For a retail company, where there’s a lot of competition especially in coffee business is a world wide trend, and rivalries soars high, employees especially the front liners are critical to one’s industry.
Starbucks HR policies
It could make or break you. If this would be a problem for a retail business, employee turnover would be on top of their list. It is very difficult to retain best employees and keep them motivated not only in terms of financial aspect but other key factors that will contribute in order form them to be loyal to the company. Starbucks is known for their employee-friendly policies and supportive work culture. Some companies don’t offer benefits for their part timers, but Starbucks have changed this kind of policy toward its employees.
Thus, the kind of benefits extension it offered to its employees has attracted a lot of people to apply. As a result, this had made a major impact to the company’s low turn over of its employees and productivity and efficiency of employees are highly visible. This could make an impact to Starbucks Human Resource Strategy, the have identified and assess the key factors for employee retention. First, they have identified Value Creation; they have succeeded to implement a new value proposition to their customers, shareholder and employees.
Second vital factor is its Core Competence; it’s a mix of people, process and system of the company that will provide value to their customers. Furthermore, the kind of value they provide to their customers are very essential to the success of the company and in return will also benefit the employees. Third, Starbucks human capital architecture, it is not only about filling vacancies or numbers of employees rather the importance of the role and how will it be able to contribute to the success of the company. The total package of one’s individual will benefit the company as well.
Not only for the present needs of the company but as well as for their future expansion. Last key factor would be the strategic alignment, human capital and its process will enable them to provide better services to its customers, and the impact would be on financial success of the company. Starbucks Human Resource System has several aspects that will lead to a better process such as; leadership, structure, technology, workflow, staffing, training, and rewards. These strategies will enable Starbucks to achieve its core vision. (Center for Advanced Human Resource Studies)
By identifying key factors in HR strategies this will help Starbucks to expand their business world wide. 10 years from now would be critical to them but if they will continue what they have started to their employees, transition would not be that hard for them. Their main goal is to attract potential employees, continue to motivate them by giving benefits, rewards and trainings for them to remain loyal to the company. Starbucks ambitious expansion program with generous human resource policies sounds strategically in a sense, that they be able to keep the turnover low and provide a ready pool of experienced employees to support expansion.
However, three possible problems must be consider by the early 2000s; would the company be able to support its current staff with the same level of benefits that they can offer for their staff in the future, given the large increase in the number of employees; if they attempt to lower its human resource costs by cutting on benefits would the company be able to retain its employees; and would Starbucks be able to maintain its small company culture, an important element in its past growth.
As one of their expansion growth, they see China as one of the biggest market in Asia, and would become firm's largest market outside of North America, considering China’s population and their culture, their likeness for tea and coffee. In 1999 where the first Starbucks outlet on the Chinese mainland opened in Beijing, Starbucks has become one of the most popular brands among Chinese white-collar workers aged between 25 and 40, according to surveys.
Considerably, Starbucks in Beijing has maintained an annual sales growth of more than 30% in recent years. In Shanghai, the chain started to make a profit the second year after the first store opened in the city. Its net profit reached 32 million yuan ($4 million) in less than two years. (http://www. atimes. com/atimes/China_Business) Starbucks may have difficulties in expanding its business in China because of certain policies, they only receives royalty fees from the licensee that unable to regulate cash flow in the business.
They have to revise ownership from time to time and use better strategic opportunities to penetrate the market successfully. But the removal of restrictions on foreign investment in the retail industry at the end of 2004, due to China's World Trade Organization membership, also opens the door for Starbucks to be directly involved in the development of the China market. With 400 Starbucks stores in China and continues to expand, it can be clearly seen that Starbucks was able to penetrate the Chinese Market and will continue to increase its stores in the near future.
This is an indication that they have succeeded and will continue to achieve such growth. 35-year-old Starbucks still opens five new ones daily, with 11,500 stores around the world. In February the coffee retailer would maintain annual earnings growth of at least 20% over the next three to five years. Starbucks believe over the long term that the market opportunities for Starbucks worldwide mean at least 30,000 stores, with 15,000 in North America and 15,000 outside North America.