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It's Not Just Coffee: The Howard Schultz Story Age: 57 Born and Raised: Brooklyn, New York Education: Northern Michigan Family: Wife Sheri, Children Jordan and Addison

Introduction

This page was created by: Katie Rice, Benjamin Compton, Breanna Crafton, and Lorenzo Di Matteo.

We chose Howard Schultz of Starbucks as our leader because we felt he was an ideal representation of firstly, how someone can become extremely successful despite long odds, and secondly how once reaching success, Schultz remained grounded in his values in order to create an ethical which serves millions of customers every day. Under his leadership, Starbucks has been taken to household-name-status.

Personality

There is more to being successful in the coffee industry than the combination of the right ingredients. The person behind the product must also have personality traits that form in a way that will allow for a successful product. When looking at Howard Schultz and his decisions there are certain personality traits that stand out. One being that he is the Intuition type. Schultz always seems to be exploring new ideas and thinking more about what could be rather than what actually is. A prime example comes from all of the types of businesses he has had a hand in. Starting of course with coffee, Schultz became the director of retail operations at Starbucks by pleading with the original founders to allow him to create what he envisioned Starbucks could be. Schultz’s idea for what coffee could be in America continued to grow, and because of it he decided to leave Starbucks and create Il Giornale (Waxman, 2009). Still wanting more Schultz realized that he needed funding to continue his dream. From this comes a prime example on how Schultz is the Feeling type. Schultz persuaded investors to buy Starbucks from the original owners who were looking to sell. What he did not realize however was that one of the investors was going to make Schultz a manager and not a shareholder. In a rage of passion Schultz told the investor that it was his creation, and it could not be taken away from him (Schrieffer, n.d.). When discussing how Starbucks was created he exclaimed, "And you have to follow the path of doing the right thing by making decisions that are true to your mission and cause. You refer to your heart, conscience, and memory." (Meyers, 2005). Through these examples it is clear that Howard Schultz truly uses his heart in the decisions he makes. After the incident with the investor he even cried, proving that he is a man who is not afraid of emotion in the workplace. Along with his passion for the Starbucks is his passion for his employees. Part of this comes from the amount they are paid. Starbucks employees are paid more than the average food industry employee (Schrieffer, n.d.). In a 2009 meeting with shareholders Schultz emphasized that benefits for employees must remain constant. (Waxman, 2009) When being asked how a new espresso machine would improve profits Schultz discussed how it would help reduce stress to employees (Meyers, 2005). This care and devotion to treating employees fair comes from what happened to Schultz’s father. It cannot be any more obvious that with his full out passion for Starbucks and its’ employees Howard Schultz is the Feeling Type.

Values

The values of Howard Schultz, both instrumental and terminal, are readily apparent from his actions. Terminal values are the goals or ends a person wants to reach. Three of Schultz’s most important terminal values are achievement, equality, and happiness. Instrumental values, on the other hand, are the methods a person employs to attempt to reach their goals. Schultz’s instrumental values include responsibility, honesty, and helpfulness.

One of Schultz’s most important terminal values is achievement. Examples of Schultz’s desire for achievement can be seen throughout his life. As Schultz once said as he was trying to return Starbucks to success, his and the company’s focus is on “the fear of failure, the hunger to win” (Miller, 1). Schultz’s ambition began when he was still young. He felt his father never got the respect he deserved at his workplace and so Schultz dreamed of creating the kind of company that he wished his father had been able to work for (Bryant, 1). He said that his childhood memories gave him “tremendous motivation to want to exceed at a level that would create an environment for [his] own family that was different from the one [he] was in” (Bryant, 2). His goal has always been about much more than just succeeding financially. He wanted to build a solid and stable company which, while it is profitable, also treats all people it comes in contact with in a respectful way (Gordon & Schultz, introduction). He realizes it can be very difficult “striving to achieve profitability without sacrificing humanity…But [he has] always refused to abandon purpose” (Gordon & Schultz, introduction). After going to Italy and witnessing how coffee can truly bring people together, he had a clear vision of how he could enhance people’s lives through coffee. However, the then-owners of Starbucks did not support his ideas. So when he found himself able to buy Starbucks, he did so. This illustrates his perseverance and strong need to achieve. As Schultz created a plan to save Starbucks after it began to struggle, he writes of how he “was hungry to win, confident that we could…” (Gordon & Schultz, 68) and that “losing was not an option” (Gordon & Schultz, 87). Schultz was able to recapture Starbucks’ success, due partly to his commitment to achievement. To learn more about how Schultz saved Starbucks from failure, read his book //Onward.// Read a description of //Onward// at [].

Equality is another of Schultz’s terminal values. Despite his wealth and power, he demonstrates his humility and a belief that no person is better than another. As a child in a middle class family, Schultz’s previous insecurity about his economic situation helped him be sympathetic towards those who struggle financially and are denied respect for that reason. His past has affected his leadership style and interactions with employees. Schultz emphasizes that he has never thought of himself as better than anyone else and never demanded an action from others that he himself would not do. In fact, early in his time at Starbucks, his office was located in the plant where the coffee was roasted and every day he walked through the plant and personally thanked those he considered to be the “unsung heroes” of Starbucks. He did this to show that he was part of the team (Bryant, 2). Another demonstration of his belief in equality is a little unique. All job titles begin with lowercase letters at Starbucks and always have. Instead of CEO, Schultz is the ceo. The lack of capital letters suggests that Schultz and the other high-ranking employees at Starbucks want to be seen as regular people who are approachable and equal to other employees including part-time baristas. Finally, Schultz’s openness to others’ suggestions and ideas shows that he does not believe that only he can come up with good ideas. Schultz welcomes both new ideas and challenges to the current system. He actually looks for these kinds of qualities in potential employees during the hiring process (Bryant, 3). He once said, “I want big thinkers…I want people who are going to have important things to say and the courage to say them. I want people to challenge the status quo…” (Bryant, 3). Schultz also emphasizes effective teamwork and unity (Good CEOs, 4). Clearly Schultz does not try to dominate Starbucks or maintain tight-fisted control. He believes in other people and truly seems to treat them as his equals.

As a final terminal value, Schultz strives for true happiness. In his book //Onward//, he mentions how much it bother him that his father “never found fulfillment or meaning in his work” (Gordon & Schultz, 15). Schultz emphasizes the importance of passion. He even describes the coffee business as his “true passion” (Gordon & Schultz, introduction). He also speaks of the ups and downs of being an entrepreneur. He states that, to be one, a person must truly love his job. He must love it to such an extent that he can persevere through the great amount of sacrifice that is inevitable. Schultz admits that he cannot imagine himself doing anything else (Gordon & Schultz, 9). Schultz also believes in the power of passion. He knew that, in order to make Starbucks successful again, he needed to bring out in others his passion for Starbucks and coffee (Gordon & Schultz, 56). What makes Schultz so admirable is that he also wants others to find happiness through passion. He wants employees to love their jobs with “unbridled passion and enthusiasm” so that they can conquer any obstacles that present themselves (Bryant, 4). He also hopes that his customers develop a passionate feeling for Starbucks and its coffee through information from baristas. Schultz truly loves Starbucks, as seen by how he returned as ceo and saved the company after it struggled in 2008. He pursues his own happiness by doing what he is passionate about and hopes others can do the same.

One of Schultz’s instrumental vales is responsibility. He feels a responsibility to care for his workers and makes sure all of their needs are met. Howard speaks of how, when he first became a boss, he realized that people were truly reliant on him (Bryant, 1). Starbucks offers part-time workers complete health care benefits as well as stock options (Graves, 1). So too, when trying to decide whether to try and save Starbucks during its difficult times in 2008, Howard writes in his own book that he knew he had to try because he could not abandon the workers (Gordon & Schultz, 52). Howard also acknowledges his sense of responsibility regarding maintaining Starbucks’ relationship with its customers (Gordon & Schultz, 24).

Another of Howard’s instrumental values is honesty. Howard is very honest with his employees, even regarding his feelings, fears, and weaknesses. He believes it is a good thing to show some vulnerability when it is appropriate. He considers it to be a strength when used the right way because it helps employees see him as human and makes them feel closer to him (Bryant 4, 5). He is not afraid to admit when another company presents a threat to Starbucks (Gordon & Schultz, 62,63). Schultz continues to believe in honesty even when it is painful. When a personal, private memo was leaked to the media, causing much embarrassment, he admitted he indeed wrote it and did not attempt any sort of cover-up (Gordon & Schultz, 27). Schultz also offers honest critiques that people may see as hurtful because he views not being truthful as a betrayal of trust (Gordon & Schultz, 32).

A third and final instrumental value of Schultz’s is helpfulness, as seen by his many acts of charity. During a five year period, Starbucks participated in contributing more than 47 million dollars to various causes around the world such as literacy programs, better education in China, and disaster relief after such as 9/11, Hurricane Katrina, and the 2004 tsunami that devastated much of Asia. Starbucks also formed a relationship with Global Green USA which attempts to raise awareness about the environment and Ethos Water which works to give children from all around the world clean drinking water (Gordon & Schultz, 19). So too, Schultz helps the farmers from whom Starbucks gets it coffee beans by working with Fairtrade advocates which supports small farmers by establishing a guaranteed minimum price and helping to connect these farmers to global markets (Gordon & Schultz, 19, 20). Schultz also personally gets involved to help others such as dedicating his time and energy to doing service work in New Orleans after Hurricane Katrina (Gordon & Schultz, 200).

<span style="font-family: 'Times New Roman',Times,serif; font-size: 120%;">Howard Schultz’s values have absolutely affected his attitudes, especially those towards people, his company, and his leadership role. His attitude toward people, shaped by feelings of responsibility for them and a desire to be helpful, is that people deserve respect and deserve to be believed in. He has an extremely positive attitude towards Starbucks based on his desire for happiness and achievement. Finally, he takes his leadership role seriously and does not view himself as better than anyone else, due to his belief in equality. Values are extremely important in shaping one's attitudes, and Schultz’s attitudes are, without a doubt, a very large part of what has helped Starbucks succeed. To find out how Starbucks is performing in the stock market right now, visit [|Yahoo Finance (SBUX)]



<span style="color: #008000; font-family: Arial,Helvetica,sans-serif; font-size: 150%;">Motivation

<span style="font-family: 'Times New Roman','serif'; font-size: 16px;">Howard Schultz’s motivation is based on his belief that the success of Starbucks relied on customers having a positive experience. In order to satisfy customers, it was essential for the employees to share the passion about not just Starbucks products, but also coffee in general. Because many of the current employees were part time college students, the challenge became how to motivate and reward employees so that they could contribute to making Starbucks a better company. <span style="font-family: 'Times New Roman','serif'; font-size: 16px;">The first place Schultz started to motivate his employees was to fulfill the internal need for trust and respect of their management. As a result, Schultz revisited a former request which was denied to extend healthcare coverage to part time employees. This was something that Schultz could relate to on a personal level because of his father’s health situation so this motivated him to fight for his employees. In 1988, Schultz went to the board with the proposal to extend healthcare to employees that work at least 20 hours a week ("Starbucks Corporation", 1999). Schultz combated the boards concern that the added costs would worsen the company’s bottom line by pointing out that the new benefit would likely reduce turnover and ultimately reduce training and hiring costs. In the end, Howard Schultz walked away with his proposal approved. This was a major win for both employees and the company, as providing health care coverage fulfilled the physiological and safety and security needs of Maslow’s need hierarchy, and also McGregor’s theory X.

<span style="font-family: 'Times New Roman','serif'; font-size: 16px;">One of the biggest motivators involves Bean Stock, the stock option plan which made employees partners as well. Making employees partners creates a bond and establishes a culture in which people feel like they are really a part of a family. Furthermore, this Bean Stock program opens even more doors for motivation. (Schultz & Smith, 2004). As a partner through Bean Stock, employees (or partners) can also fulfill higher order needs because they are owners in the company. This is something that comes with esteem and self actualization because they have the opportunity to be more than just an employee. Another benefit offered as a partner is what is known as the Caring Unites Fund, or the CUP fund, which helps its partners who might find themselves going through tough times (Schultz & Smith, 2004. During 2003, the CUP Fund “provided financial relief to 306 partners, totaling $247,000” (Schultz & Smith, 2004).

<span style="font-family: 'Times New Roman','serif'; font-size: 16px;">Speaking of needs, McClelland’s need theory also comes into play under the leadership of Howard Schultz. The need for achievement is fulfilled through “30 plus recognition programs…used to highlight the achievement of their partners, whether its for ‘“Jobs Well Done’” or to acknowledge the profound impact <span style="font-family: 'Times New Roman',Times,serif;"> <span style="font-family: 'Times New Roman',Times,serif; font-size: 120%;">certain partners have on the company [because] workplace recognition goes a long way to let partners know that they are deeply appreciated and valued” (Schultz & Smith, 2004). Also, in order to really teach new employees how to be passionate experts, they are paired with “learning coaches that who guide them through the process of becoming ‘“Certified Baristas’” (Schultz & Smith, 2004). Throughout their personal Starbucks experience as employees, they also have the opportunity to attend a variety of other training options, including diversity learning, computer classes, situational leadership, etc (Schultz & Smith, 2004). In an environment with these opportunities, employees can always become further developed and continuously grow as an employee, alluding to the final basic category of Alderfer's ERG theory of motivation.

<span style="font-family: 'Times New Roman','serif'; font-size: 16px;">Furthermore, Howard Schultz personally ensures that the need for affiliation is not neglected by playing an active role in his employees’ lives. Schultz demonstrated his compassion after learning that one of his gay employees had AIDS. In the words of Schultz himself, “I had known [Jim] was gay but I had no idea that he was sick. His disease had entered a new phase, and he wouldn’t be able to work any longer. We sat together and cried, for I could not find meaningful words to console him. I couldn’t compose myself. I hugged him” ( "Starbucks Corporation", 1999). This situation thoroughly demonstrates Schultz completing the need for intimate, close relationships with his employees. He even went on to visit Jim while he was in hospice. Also, aside from the formal programs, celebration of anniversaries, birthdays, and other personal or professional milestones is another thing that Starbucks does with the newfound culture that Schultz has inspired (Schultz & Smith, 2004).

media type="youtube" key="6M0TgEUbRBc" height="315" width="420" align="left" <span style="color: #008000; font-family: Arial,Helvetica,sans-serif; font-size: 170%;">Howard Schultz Formula to Success: <span style="color: #008000; font-family: Arial,Helvetica,sans-serif; font-size: 170%;">Positive Starbucks Experience= Passionate Employees + Job Satisfaction <span style="font-family: 'Times New Roman',Times,serif; font-size: 120%;">As demonstrated by this short video, when employees have high job satisfaction, they are able to perform above and beyond other companies when it comes to customer service, the ultimate factor contributing to Starbucks' sucess.

**//<span style="font-family: 'Times New Roman','serif'; font-size: 18px;">“…I promise you I will not let you down. I promise you I will not leave anyone behind. . . In five years, I want you to look back at this day and say "I was there when it started. I helped build this company into something great." //**

**//<span style="font-family: 'Times New Roman','serif'; font-size: 18px;">-Howard Schultz //** **<span style="font-family: 'Times New Roman','serif';">("Starbucks Corporation", 1999) **



<span style="color: #008000; font-family: 'Times New Roman',Times,serif;">**Starbucks is an innovative company that wants to hear your ideas. To voice your thoughts, please visit**
 * <span style="color: #008000; font-family: 'Times New Roman',Times,serif;">[] **

Video Part 1 media type="youtube" key="TgWR-CoWeLU" height="315" width="560"

Video Part 2 media type="youtube" key="h-kYKz9arnI" height="315" width="560"

<span style="font-family: 'Times New Roman',Times,serif; font-size: 120%;">References