Following a racist incident, the company closed all of its stores for a day of racial bias training for employees.
Now helps employees pay for emergency backup childcare and eldercare; announced a new paid sick and parental leave benefit; and expanded its health coverage to include cosmetic surgery for transgender employees.
For other employers dealing with such issues in the future, Starbucks' actions may serve as a benchmark, although that's not to say they should adopt the company's plan wholesale.
Starbucks made international headlines earlier this year when a store manager called the police on two black men waiting for a third man at a Philadelphia location. The incident led the company to close all of its stores for a day of racial bias training for employees.
The move was a big one: Experts estimate the company missed out on about $12 million in revenue by closing, and it didn't please everyone. Still, many hailed it as a great example of damage control and some market watchers say the incident — which came amid a few other problems for Starbucks this year — hasn't hurt the company's potential for growth.
"What Starbucks did was bold and on a scale that demonstrated a commitment to change and clearly represented the remorse they felt with what had happened," according to Maurice Schweitzer, a professor of management and operations, information and decisions at the Wharton School at the University of Pennsylvania.
Perhaps relatively unnoticed by the general public, however, was the message it sent to employees. "Whenever a company takes an action like this, there are two audiences: customer and employee," Schweitzer told HR Dive. "I think as consumers we often presume that everything they're doing is for us but a lot of what they do is for their internal audience."
The closures and training sent a clear message to the employee base, he said: "Here's what we care about; here are our values, here's what we're willing to do." Instead of blaming a bad apple, Starbucks demonstrated that this is a problem it wants to invest in solving — and something it wants employees' help in tackling.
For other employers dealing with such issues in the future, Starbucks' actions may serve as a benchmark, although that's not to say they should adopt the company's plan wholesale. "It's difficult to say that everybody should do what Starbucks does," Schweitzer said. Many don't have its resources or its problems — here, "a relatively low-skill workforce characterized by high turnover that interacts with customers in a very personal way."
Instead, it's more about signaling a willingness to take an issue seriously, and putting resources into finding a solution, Schweitzer continued. Short of eliminating the opportunity for bias — like that attempted with "blind" orchestra auditions — an employer's best option is to focus on culture, sending a message about the behavior it values, he said.
The Starbucks response illustrates that. The company was essentially tasked with making sure that the racism that exists in society doesn't get expressed in its consumer settings, Schweitzer said; "that's a hard problem." But it is taking clear actions to create an environment that signals its values. "It's not just the CEO saying 'we care about diversity and inclusion,'" he noted. "They're taking actions to support that claim."
'A reservoir of good will'
What's more, Starbucks had "a reservoir of good will" built up, experts said. It's known to the public for being somewhat socially conscious. And workforce watchers know that the company is often held out as the gold standard for an employer with a large non-exempt employee base. The company has long been known for its health insurance and related benefits.
It's constantly working to be a destination employer, and the past 12-month period was no exception. It paid employees who couldn't work during a hurricane, announced a new paid sick and parental leave benefit, expanded its health coverage to include cosmetic surgery for transgender employees, launched a pilot program that allows workers to be paid for time spent in volunteer activities and, just a few weeks ago, said it will now help employees pay for emergency backup childcare and eldercare.
Of course, Starbucks isn't in business for its employees. The company just spent a great deal of effort unsuccessfully defending a putative collective action from an employee who alleged the company's pay practices violated California law. And it recently announced corporate layoffs. But personnel moves didn't seem to affect its stock prices this year; when it comes to branding, Starbucks is hitting it out of the park. "No one wants to work for a place that people are protesting or gets bad PR," Schweitzer said. "People want to work at a place [where] their values are consistent with what the company is doing," and employers can signal values in a way that makes people more excited to be there. Starbucks seems to have that down.
It's Starbucks' well-designed continued quest for improvement — the constant working to be an employer of choice for hourly employees and the willingness to address a workforce problem head on and with remorse — that won Starbucks our HR Company of the Year award