Starbucks Corporation’s Organizational Behaviour

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Table of Contents

Motivation
The Way Incentives Work
Change Management
Communicating Change to the Employees
References

Motivation

Low morale and absenteeism are serious problems of Starbucks that cut across the industry. Starbucks could not deal properly with the aspect of motivation. On a distinctive day between 2 and 4% of employees at Starbucks fail to show up for work, which does not sound like a high rate of absence, but more time is lost for the reason of low morale and absenteeism than through strikes and lockouts. The yearly costs of low morale and absenteeism in the United States are estimated to be $29 billion and a change of 4.99% in the national absence rate changes the gross national product by $10 billion. (London, 2003) A great number of studies are done to identify the determinants of low morale and absenteeism. Many variables are found to be considerably related to indices of absence, the results appear to be unstable across situations and time.

The Way Incentives Work

Every incentive program is based on a formula for enhancing motivation that engages four fundamental variables: effort, performance, outcomes, and satisfaction. The logic behind these programs goes something like this: employees at Starbucks will put in the accurate quantity of effort to meet performance hopes if these part-time employees at Starbucks obtain the types of outcomes that include pay raises and promotions which will provide part-time employees satisfaction. In simpler words, Starbucks should provide its employees what they want, and employees will work hard to get it.

Effort => Performance => Outcomes=> Satisfaction

Conversely, the problem with most incentive programs like Starbucks is that they center exclusively on the submission of outcomes and overlook the three beliefs that are the key to making the motivation solution work:

Can one do it?
Will outcomes are tied to one’s performance?
Will outcomes are satisfying to one?

The first conviction compacts with the relationship between employee effort and performance. The second compacts with the relationship between performance and outcomes. And the third compacts with the relationship between outcomes and satisfaction. These three beliefs form the basis of the belief system of motivation and performance.

Accepting that these beliefs are decisive preconditions for motivation helps to explain why incentive programs generally yield such lackluster results like in the case of Starbucks Since employees do not always hold these beliefs to be true, attempts to improve motivation by using incentives cannot make the grade, even when the incentives are highly desirable ones.

Types of Motivation Problems
One cannot do it
Motivation problem:	Lack of confidence
Associated feelings:	Self-doubt
	Anxiety
	Frustration
Outcomes are not tied to one’s performance
Motivation problem:	Lack of trust
Associated feelings:	Skepticism
	Disbelief
	Mistrust
Outcomes will not be satisfying to one
Motivation problem:	Lack of satisfaction
Associated feelings:	Anger
	Rebelliousness
	Low Morale and Absenteeism

At Starbucks, a major transformation attempt only makes difficult the situation. If any of the three beliefs are shaky, to begin with, organizational change at Starbucks can weaken them even further. The result is often serious motivation and performance problems, at a time when organizations can least afford them, and a resultant surge in the negative emotions associated with change.

When an employee believes ‘one cannot do it, for example, one may develop a lack of self-confidence and begin to experience many of the unpleasant feelings that go along with it: self-doubt, anxiety, and frustration. About a year into the change effort, one manager portrayed the inner turmoil one went through by comparing the restructuring to building a ship at the same time one is trying to sail it. (Mele, 2003)

Worker beliefs that ‘outcomes are not tied to one’s performance’ can also escort to noteworthy motivation problems, especially lack of trust. This is normally accompanied by feelings of skepticism or disbelief; precisely the emotions that another manager felt when one was told early on change effort that power would be allocated differently.

Employee beliefs that ‘outcomes will not be satisfying to one’ often escort to a third major problem, chronic dissatisfaction, and feelings of anger, rebelliousness, low morale, and absenteeism. (Miner, 2002)

Like as the negative emotions allied with change can often go undetected, the motivation and performance problems that cause them frequently remain hidden and unresolved. Due to this, managers who lead change are sometimes frustrated in their efforts. They fail to realize that it is not enough to appeal to the intellect of their workers. So managers must also win employees’ hearts in order to implement change successfully.

Change Management

Managing Resistance to Change

One of the greatest obstacles to organizational change is resistance. Resistance usually comes from within Starbucks. Resistance could come from either the employees or top management itself. Resistance seldom comes from the customer since they usually are the beneficiary of modern-day organizational changes. Today’s business environment provided competitive prices and benefits to most consumers. Employees usually have developed attachments to their Starbucks, workgroup, and way of working. The ability to adapt to changing work conditions is significant for individual and organizational survival. The change will be present and learning to manage and lead change includes not only understanding human factors but also skill to manage and lead change effectively.

Developing a Vision for Change

Vision and leadership drive successful change. As the change agent, first, you must create a vision of the future that is capable of focusing the group’s energy. The vision should distinguish what is with what can be and it must be complete enough to direct awareness at how to bridge the hole to the future. Change must become a main organizational worth using customer feedback, internally developed organizational improvements, and other external feedback. Change initiatives should also be associated with efforts to improve overall performance and profitability. Support from senior management at the earliest stages of the change process is necessary for change to be successful. Furthermore, managing change successfully needs an understanding of the unknown at play, and adequate time must be allowed for implementation.

Communicating Change to the Employees

Employees also view the organizational change process differently. They often view change as troublesome. A successful change program requires that employees appreciate why the need for change is necessary. Employees must be persuaded to support the change program. Employees’ commitments must be associated with the company’s change outcomes. During the change process, employees often wonder about how the change will be advantageous or disadvantageous to them. People require more information during the change process. They want to know how changes will affect them and how to prepare. By providing specific information to everyone at the same time, rumors can be minimized.

As the business has continued to globalize or migration of many companies to other economies, one of the most challenging aspects has focused on how Starbucks manages its human resources to sustain a competitive advantage. Scholars from several disciplines are addressing these issues-coming from the perspective of strategy, cross-cultural management, international business, organizational theory, sociology, and personnel management. It appears that the traditional boundaries between academic disciplines and functional areas are becoming more highly integrated and that the globalization of business is having a significant impact on human resource management and organizational performance. The world of work and organization has become increasingly demanding and turbulent.

There are eight major challenges currently facing Starbucks. These are: globalization, migration of many companies to other economies, increasing revenue and decreasing costs, building organizational capability, change and transformation, implementing technology, attracting and developing human capital, and ensuring fundamental and long-lasting change. Thus, levels of competition among organizations have increased.

In the present period of the migration of many companies to other economies, Starbucks can replicate the technology, manufacturing processes, products, and strategy. On the other hand, personnel management practices and organization are difficult to reproduce, in this manner representing an exceptional competitive advantage. To be successful in the future, Starbucks will have to build organizational capability. Personnel management professionals and personnel management practices will be required to create value by increasing organizational competitiveness.

How does Starbucks create a strategy that adds value to investors, customers, and employees? Organizational capability is the key and both personnel management professionals and line managers need to work together to achieve this. Burke and Cooper (2004) articulate the reasons why a people-based strategy pays dividends. High-performance management practices that are selective hiring, extensive training, sharing of information, etc. lead to performance results like innovation, productivity while being hard to copy; in the long run, profitability is maintained.

Personnel management practices influence employee skills through the acquisition and development of human capital. Effective recruitment and selection practices can provide the company with highly qualified applicants. Training and development opportunities contribute to increasing human capital. Personnel management practices can also influence levels of motivation through the use of performance appraisals, pay-for-performance incentives, and internal promotions systems based on merit. Personnel management practices can also influence the design of work so that highly motivated and skilled employees can use what they know in performing their jobs.

The past decade has produced research evidence supporting the critical role personnel management plays in the success of Starbucks. This evidence has been generated in a variety of different types of Starbucks including manufacturing, professional services, and health care.

References

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Brewster, C. and Hegewisch, A. (1994) Policy and Proactive in European Human Resource Management: The Price Waterhouse Cranfield Survey. London: Rutledge.

Brown, M.P., Sturman, M.C., and Simmering, M.J. (2003) Compensation policy and organizational performance: The efficiency, operational and financial implications of pays levels and pay structure. Academy of Management Journal, 46, 752-762.

Burke, R.J. and Cooper, C.L. (2004) Leading in Turbulent Times. Oxford: Blackwell Publishers Inc.

Butkus T. Raymond, Thad B. Green, (1999), Motivation, Beliefs and Organisational Transformation. Quorum Books. Westport, CT.

Cameron Judy, Pierce W. David, (2002), Pay and Motivation: Resolving the Controversy. Bergin & Garvey. Westport, CT.

Caruth L. Donald, Handlogten D. Gail, (2001), Managing Compensation (And Understanding It Too): A Handbook for the Perplexed, Quorum Books.

Cooper, C.L. and Burke, R.J. (2002) The New World of Work. Oxford: Blackwell Publishers Inc.

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Hanlan Marc, (2004), High Performance Teams: How to Make Them Work, Praeger.

London Manuel, (2003), Job Feedback: Giving, Seeking, and Using Feedback for Performance Improvement, Lawrence Erlbaum Associates.

Mele R. Alfred, (2003), Motivation and Agency, Oxford University Press.

Miner B. John, (2002), Organizational Behaviour: Foundations, Theories, and Analyses, Oxford University Press.

Roe, R.A. and van den Berg, P.T. (2003) Selection in Europe: Context, developments and research agenda. European Journal of Work and Organizational Psychology, 12, 257-287.

Rynes, S.L., Trank, C.Q., Lauson, A.M., and Ilies, R. (2003) Behavioral course work in business education: Growing evidence of a legitimacy crisis. Academy of Management Learning and Education, 2, 269-283.

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Yancey, G., Wagner, S., Baxa, J., Alkouri, K., and Haugen, E. (2003) Is the dissemination of knowledge about industrial-organizational psychology too insulated? Psychological Reports, 92, 723-730.

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