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Starbucks Consulting Project Paper

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Consulting Project for a local branch of Starbucks addressing employee moral in uncertain economic times.

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Starbucks Consulting Project Paper

  1. 1. “Diagnosing Organizational Effectiveness During Difficult Economic Times” Management 842 Seminar in Organization Design and Change Professor Mitchell Marks May 12, 2009 . TEAM 2: Seth Breedlove Valentinos Themistocleous Ian Kerwin Zishan Xu (Net) Manatsanan Anunatmatee Sivaporn Ratanavilaiwan
  2. 2. Table of Content Introduction ....................................................................................3 Presenting Opportunity .............................................................4 Measures .........................................................................................6 Result from Observations ..............................................................7 Result from First round interviews ..............................................8 Congruence Model .......................................................................... 9 Hypotheses ..................................................................................11 Expectancy Theory of Motivation ..............................................14 Surveys ..........................................................................................16 Findings Applied to the Congruence Model ...............................16 Work ........................................................................................................................16 People and the Informal organization .....................................................................19 Formal Organization ...............................................................................................21 Findings Applied to the Expectancy Theory ..............................23 Findings in terms of correlation...................................................26 1. Performance management ...................................................................................31 2. Communication ...................................................................................................34 3. Career Development.............................................................................................35 Conclusion ..................................................................................... 36 References: ................................................................................... 38 Appendix A: Agreement...............................................................41 ........................................................................................................ 43 Appendix B: Raw Data from First Round Interview Responses ......................................................................................................... 44 Appendix C: Raw Data from Second Round Interview Responses ......................................................................................49 Appendix E: Starbucks Surveys Question...................................51 Appendix F: Congruence Model .................................................54 Appendix G: Performance Management.....................................55 Appendix H: Result from Expectancy Theory............................56 Appendix I: Mean and Standard Deviation................................57 Appendix J: Summary of Survey Results (See attachment).......58
  3. 3. Introduction Since opening their first location in Seattle in 1971, Starbucks has amassed to over 16,000 locations worldwide. According to the Specialty Coffee Association of America, in 1983 the specialty coffee market to which Starbucks belongs, represented less than 4% of the $6.5 billion U.S. coffee market. In 1994, that market share reached 31%, and in 2001, specialty coffee represented 53% of the U.S. coffee market. Modeled after the renowned coffee houses of Italy, Starbucks provides much more than just a cup of coffee. Starbucks strives to provide an experience that includes a friendly gathering place, merchandise, music, recently announced high speed Internet access with AT& T, and of course of gourmet coffee. Starbucks mission statement summarizes their approach to "conquering" the specialty coffee segment- "Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow" (Starbucks, 2009) As the largest retail coffee company in the world, Starbucks is not only famous for social responsibility, but was also named number 7 of the 100 best companies to work in 2008 by CNN.com (2008). The company’s reputation as an employer is often accredited to its human resource strategies, corporate culture and employee benefits. To many employees, it is a place to build long-term careers or to enjoy job stability while pursuing other goals. It was through Starbucks' “Employees First” policy that the company built a strong psychological contract with its employees. Howard Schultz, Starbucks' CEO, has stated, “The customers always come second -- the employees matter more.” While this is not a traditional approach towards customer service, Starbucks has proved its effectiveness as demonstrated by its success and dominant market share within the industry. Schultz goes on to illustrate that employee happiness is projected onto the customer in the form of enthusiasm (H.R. Spectrum, 2003). Our client organization, located at 390 Stockton Street, San Francisco, is the second largest revenue producing Starbucks in Northern California. Jon Smiley, our client and contact, is the store manager of this location and has been with the company for over twelve years. The organizational structure of this location is comprised of 1 store manager, 2 assistant managers, 4 shift supervisors and more than
  4. 4. 15 additional employees, or partners as they are referred to internally. It takes a minimum of 3 employees to run the store at any given time during business hours, which for this location are from 5:00am to midnight. This store is unique in the sense that it is located in the company's top geographic pay scale, and has an additional assistant manager compared to most locations. The first and third regional revenue producing stores are located within blocks and this store has the flexibility to share employees with neighboring locations to fulfill staffing needs. Presenting Opportunity After initially contacting and meeting with our client, they expressed a true interest and commitment towards the scope of our project (See Appendix A: Agreement). However, our collaborative efforts to identify a problem or concern within this particular location were unsuccessful as the manager continued to express that although things could always be done better, he felt all areas of his organization were running smoothly. As a result of this, we decided to move forward with our diagnosis based on two assumptions that we were confident would remain constant for the duration of our research. The first assumption is that there is always room for improvement and efficiency, no matter how well an organization and its employees may seem to be operating. With this concept in mind, we derived our second assumption that lower business volumes, resulting from the current economic downturn, would provide this store with the time and human resources necessary to examine and improve the efficiency of their operations. By combining these two assumptions, we entered into our diagnosis of this organization with a plan to identify the concerns of Starbucks' employees and make recommendations regarding how to satisfy those concerns, thus resulting in an overall increased organizational effectiveness. Starbucks Corporation is one of the great growth stories on Wall Street. Starbucks has undergone a rapid expansion since it went public in 1992. It went from 125 stores in 1992 to approximately 15,000 stores in 44 countries by 2008 (Flynn, 2008). Since then, the U.S. and Global Economy has experienced a recession with declines that have not been seen in decades. Facing the current economic situation, Starbucks is going to have to make some changes about their operating structure. To combat this decline, Starbucks is planning to close 600 under performing stores in the
  5. 5. U.S. and another 100 globally throughout 2009. In addition, Starbucks has been downsizing and restructuring across the organization to compensate for the weakened economy, including the elimination of almost 1,000 non-retail jobs as part of its bid to re-energize the brand and boost its profit (Marcus, 2009). However, in the same year the company intends to open 140 other stores in the U.S. and 170 internationally in an attempt to reduce operating costs while maintaining their market share. While the decision to close these stores was mainly to avoid overlapping territories, the opening of additional stores is a result of the company’s strategy to expand and effectively compete on a global scale. In an open system model, people, work, formal organization and informal organization are generally considered to be of equal importance. Starbucks current strategy of both downsizing and expansion has cast uncertainty about the relevant influence these elements will have in the future. Downsizing and restructuring within an organization can have a profound effect on its environment, with specific regards to a firm’s psychological contract. For a psychological contract to exist there must be mutual expectations between the employee and employer. This contract includes the “beliefs, values, expectations and aspirations of employer and employee, including beliefs about implicit promises and obligations”. These do not need to be written, but rather can be implicit and based on good faith between the two parties (Wellin, 2009). Consequently, a psychological contract can be re-negotiated and change over time. This re-negotiation does not need to verbalized, but rather can be perceived, by either employer or employee. Given the change to Starbucks’ operating environment over the past 18 months, there is a possibility that the psychological contract between the organization and its employees has been augmented as well. Through the process of data collection and analysis of our client store, we aim to determine if such a change is indeed evident and to what effect. If this relationship has not changed or remained healthy, we seek to determine the reasons for this, so that Starbucks may capture this advantage at the organizational level. We also seek to determine what affects this has had on the store culture and in turn, what affect this has had on the store’s performance. Our diagnosis is development-oriented. We will assess the current functioning of Starbucks Coffee as an open system, analyzing their strengths and weaknesses, in
  6. 6. congruence with corporate strategy. Given current economic conditions, we plan to pay considerable attention to emerging trends and the direct effects they have on the operating environment of our client organization. We will perform a diagnostic analysis of both the individual and group performance capabilities and review the impact each has on the organization’s strategy. We will also use our findings to target specific functional areas that show an opportunity to maintain and improve effectiveness. Our findings will be summarized and delivered to our client, along with a recommended course of action necessary to operate with highest level of organizational effectiveness. Measures In order to perform an accurate diagnosis of our organization, we will use a variety of data collection methods to extract relevant information. By using the range of methods detailed below, we are facilitating data collection that represents a combination of foundation information, real life observations, and direct responses from members of the organization. More detailed descriptions of our data collection methods are described below; 1. Unobtrusive measures: Starbucks will provide store relevant information including compensation programs and performance evaluations. In addition, we will analyze customer satisfaction surveys conducted by the company that examine items such as overall satisfaction, friendliness, cleanliness and speed of service. 2. Observations: We will observe organizational behavior three separate times during various store shifts including rush hour, in order to collect data and better understand the company culture, employee relationships and customer satisfaction levels. We will be observing as regular Starbucks customers. These observations will take place before the first round of interviews and our formal introductions with the staff to not influence their behavior by the knowledge that they are being observed. 3. First round Interviews: In an attempt to gain more knowledge about the organization and uncover presenting problems and issues, the first round interview will be conducted with 6 employees (1 assistant store manager, 2 shift supervisors and 3 baristas) at roughly 25 minutes per interview during business hours. These will be
  7. 7. short interviews asking some background questions as well as some open-ended questions to further develop issue identification. Please refer to appendix 1. 4. Surveys: A store-wide confidential survey will be distributed to 22 employees during their respective shifts. These will be surveys to assess more comprehensive organizational characteristics including quantitative comparison and evaluation. Moreover, they also can vary in the extent to the focused issues based on findings we discover during the first round of interviews. This survey can be completed at the employee's discretion and returned to the consultant team within a specified period of time. 5. Second round Interviews: After analyzing the results from our initial interviews and survey, we will conduct a second round of interviews to get in-depth information regarding presented issues. The second interview will provide us an opportunity to validate the results of our analysis from the first interview, feedback the results of our survey, and seek more detailed information from the interviewee. After collecting data from the two interviews and one survey, we will analyze the data, by applying both quantitative and qualitative analysis techniques. First, for qualitative tools, we will use content analysis to summarize all data from interviews into meaningful categories in order to discover any issues or attitudes among the group. Second, for quantitative tools, we will calculate the means, standard deviations and relevant correlations to summarize the survey data in order to better gauge what issues the employees value most, and to examine any variance in their responses. Result from Observations We went into Starbucks during a Saturday morning shift and a Thursday evening shift, which had similar findings. Employees enjoy their positions and working with each other. The store was well kept and clean and they were responsive to employees and gave service with a smile. When the store was slow, they promptly focused on tasks to keep up the store appearance.
  8. 8. Result from First round interviews In general, our first round interviews were both comprehensive and successful (See Appendix B: Raw Data from First Round Interview Responses). They were conducted in the lobby of the downtown San Francisco Starbucks store during business hours. Following some initial unobtrusive observations, we decided that after 9:00 at night was the most appropriate time to conduct our interviews based on business levels. The atmosphere of the store was inviting and friendly and our interviewees seemed naturally comfortable in this environment. Upon introducing ourselves to each employee, we briefly described the details of our project and proceeded to ask them 12 predetermined questions. Each interview lasted roughly 20 minutes on average. Our sample population included 1 assistant manager, 1 shift supervisor and 4 baristas, an accurate representation of the store's 23 employees, whom have worked this store for between 15 to 30 months. Based on each employee's willingness to participate, detailed responses and genuine interest in the scope of our project, we are confident that we have gathered enough data necessary to continue with our diagnostic analysis. To make a broad generalization, each employee’s response seemed to be positive regarding their experience working at Starbucks, with work environment, including co-workers, and flexibility repeatedly being cited as major attributes to job satisfaction. When asked what motivates employees to stay with the company, just about every interviewee had something to say about the competitive compensation package offered by their employer, and gratitude for employment given the current economic situation. Similarly, almost everyone made a positive comment about their co-worker relations, interaction and the overall culture within the store. They cite Starbucks as a fun place to work where people treat each other with dignity. While a third of our first round interview responses mentioned the desire to advance within the company, the remainder viewed their employment as a flexible source of income, while they pursued other things. Several interviewees were students whom are granted full-time benefits for a part-time commitment.
  9. 9. Consequently, every employee was asked to describe his/her dissatisfaction in working for the company, and responses were less consistent including product lines, hours of operation, and dress code. Some responses talked about difficult customers as motivation to prefer working in the back rather than interacting directly with customers. A lack of internal communication was a prevalent negative response, especially among the baristas interviewed. Criticisms regarding communication arose again when we asked the employees to comment on any communication relevant to the company’s plans to restructure, as well as their trust in the corporation as a whole. While most employees seemed to be unaware of the company’s plans, the assistant manager informed us of a web portal that gives employees access to company news before it is released to the public. However, this service is not made available to any barista within the company. In conclusion, we found that employees at this store enjoy their jobs and the people they work with, regardless of their position. The positive aspects of the job, employees and culture were clearly communicated to our team in these interviews. Everyone seems to enjoy the pay and his/her coworkers. The position entitled barista provides a flexible and economic opportunity for some, while positions with greater responsibility offer a path to career advancement as a primary motivator. One emerging negative trend that we have identified relates to communication, evident within this store, and pertaining to Starbucks as an organization. Based on our initial interviewing, there are some evidences that the quality or content of communication varies among positions. While some of the information being communicated may not be relevant to an entry-level position, some of it absolutely is and can have a direct effect on the performance and commitment of all parties involved. Congruence Model To analyze this particular location, we will be applying the concepts and theories of the congruence model (See Appendix F: Congruence Model). We have chosen this model because Starbucks fits within the underlying assumption that the organization is an open system. An open system is comprised of three major interactive components, which are inputs (environment, resources, and history), through puts (task, individual, informal organization, and outputs (organization, group, individual) (Falletta, 2005). The open system is dependent on the surrounding
  10. 10. environment for resources, information and feedback. The feedback helps to seek equilibrium, and to provide feedback on the transformation process (Nadler and Tushman, 1980). We will use the feedback function to measure the alignment of this process and identify potential strengths and weaknesses. Based on our diagnosis, we will make recommendations to our client detailing which design components maximize effectiveness and which ones are having an adverse affect. The congruence model is a valuable assessment tool because it helps to identify focus areas, such as task, individual, informal organization, and formal organizational arrangements to improve performance and integrate changes within an organization. This model proposes that the effective change management means considering all four transformation elements and striving to reach the greatest congruence between them (Falletta, 2005). In applying this definition to the model, which assumes that the organization’s strategy is effective, we can conclude that greater observed congruence correlates to a better performing organization. Given that a greater congruence or alignment regarding an organization’s elements of transformation shows effectiveness, we will need to examine what situations will result directly in a lack of congruence. A general limitation of organizational effectiveness is the lack of congruence between corporate strategy and the functions utilized in reaching their strategic goals. In a more detailed sense, a poor fit between two or more functional elements can have a negative impact on an organizations output (Eiser, A. & Eiser, B., 1996). When a lack of congruence occurs, energy that builds in the system can be released in the form of resistance. Resistance comes from a fear of the unknown, such as a change imposed from the outside, or a need for things to remain stable. By analyzing the congruence of our client's organization, we can identify the strengths and weaknesses that exist within the transformation process and recommend embracing or correcting them as needed. We believe this model can help Starbucks to enhance organizational effectiveness, even in a difficult economy, and to maintain its performance as the second largest store in terms of revenue in Northern California.
  11. 11. Hypotheses Upon entering into this diagnostic analysis, the initial presenting opportunity for our client organization was how to enhance organizational effectiveness during the current economic downturn. Based on the model that we plan to apply to Starbucks, organizational effectiveness can be measured by the congruence or alignment that exists between the strategic components of the organization. As a result, we must analyze the current state of alignment, with the economic situation held constant, to expose weaknesses in the congruence between work, people, the formal and the informal organization and make recommendations that will improve alignment and result in a more effective operation. By posing questions that relate directly to our hypotheses, we can use the questionnaire as a test to identify potential issues that need to be addressed. As mentioned in our introduction, Starbucks has built its success first on employee’s attitude and second on customer relationship (Starbucks) (H.R. Spectrum, 2003). This employee first policy has created a strong and positive psychological contract between employer and employee. However, for this to remain strong, the mutual expectations must be clear, consistent and based on good faith between the employer and employee (Wellin, 2009). Our initial first interviews with the employees revealed that, while for the most part the psychological contract has remained positive, there has been indication of damage and weakening of the good faith of the corporation. This has led to some employees indicating that they do not perceive a future with the company. Most of this damage appears to have its root in the poor state of the economy. However, some remedies may lie in better communication, employee development, awareness of entire benefits package and the self-efficiency of employees to succeed in goals internal and external to the company. H1: There is a positive correlation between employee self-efficacy (the ability to exceed in a specific situation including their outside goals) and their expressed intent to remain at Starbucks. Employee turnover is a process, not an event. It occurs over time as the employee becomes less engaged with his/her employer, a process that can take days or even years (Branham, 2005). Career planning, growth and learning opportunities are the three top reasons for employee retention (Evans and Kaye,
  12. 12. 2003). It is the perceived lack of opportunities in a company, or the lack of support the company provides for external opportunities that create the most employee turnover (Withers, 2001). H2: There is a positive correlation between employee awareness of their Starbucks compensation package and benefits and their expressed intent to remain at Starbucks. An employer that can help an employee achieve his/her goals will have employees that are more motivated to stay with the employer if that employee perceives a reward for doing so (Kaliprasad, 2006). According to our initial interviews, not all employees were familiar with the entire benefits package such as tuition reimbursement. The development of personal goals and ability to use their employment at Starbucks to achieve those goals should develop other skills for present or future use. It is shown that individuals who continually acquired new skills demonstrated greater satisfaction and better work performance (Lantz, 2002). H3: The communication gap between management levels and baristas can adversely affect employee motivation and trust. For example, by not clearly communicating employee benefits to baristas, and the process to retrieve and manage them, can result in dissatisfaction and reduced commitment. Training employees and empowering them will motivate them to exceed customer expectations and contribute to organizational goals. Development programs will bring personal goals and aspirations of employees into alignment with the organization's goals. The issues presented in our hypothesis promote ineffectiveness. The ideal result of this diagnosis is to reveal these issues and correct them, resulting in increased organizational effectiveness. H4: There is inadequate communication between management levels and baristas regarding many aspects of the organization. Low level employees are kept in the dark about Starbucks' direction and immediate plans, which creates different levels of uncertainty and trust issues at work. Within an organization, people often feel shared emotions and are passionate and compelled to achieve that organization’s goals in the presence of stability. "They want job security and opportunities for personal expression in exchange for a fair day's work. They also prefer working at a place where they feel they are being treated fairly, communicated with, and contributing to the attainment of a clear and inspiring vision" (Marks, 2003).
  13. 13. H5: There is a positive correlation between the level and frequency of employee development and their goals, whether they are internal to Starbucks or external goals, and the employee’s expressed intent to remain at Starbucks. While the responsibility for the cause of an employee’s lack of awareness of the entire Starbuck’s benefits package or the lack of goals may not lie with management, it is the responsibility of management to initiate and follow through with employee development (Kark and Shamir, 2000). Management must take responsibility for implementation of such programs. Managers who work to build “a solid foundation of shared goals” experience increased employee loyalty and satisfaction (Koch, 2004). These goals, as long as they are not in conflict with the employee’s performance, can be external to Starbucks as well, such as an employee’s educational goals (Yuki, 2002). An employer that encourages and fosters an individual’s personal development helps to create a positive work culture (Kouzes and Posner, 2001). In addition, an employer that understands its employees’ goals will better understand what retains them with the company (Stock, 2001). For employees to achieve higher levels of performance, their personal goals must align with the organization's goals. For this to happen, job stability is essential. Ultimately, they are the ones facing the customers and representing Starbucks. Management needs to be transparent with employees and communicate at all levels. Change management is reinforced by constant communication. The company should not only focus on employee’s strengths during hiring, but also develop them through a continuous systematic process. Consequently, employee development will motivate employees to pursue careers in the organization, be enthusiastic and constantly strive to excel. A process is needed to develop all employees and to align their goals with the organization. Communication of employee benefits and responsibilities should be an on-going event. Employees should be also heard and their concerns should be timely addressed. As a result, there will be workers ready to take initiative and willing to go the distance to exceed expectations. Employee empowerment can significantly enhance Starbucks' effectiveness. H6: There is a positive correlation between the openness and amount of top- down communication regarding the company’s plans and employee’s expressed intent to remain at Starbucks. Employees that perceive that top-down communication and
  14. 14. information is being limited will experience stifled creativity and a lack of trust. The employees may sense a loss of control, an unwilling dependency and an ‘us against them’ attitude (Ackerman, Ball and Squire, 2002). A perceived instability and lack of freedom to choose their futures, on behalf of the employees, will lead to problems in employee retention for the organization in the future. An empowered workforce can help the organization enhance competitiveness and achieve goals. Mitchell Marks, in his book "Charging back up the hill: Workplace recovery after mergers, acquisitions, and downsizing", wrote “Already in the twenty- first century, we have seen that organizational efforts to achieve, maintain, or enhance competitiveness have been affected by the availability of a well-trained and highly motivated workforce.” To compete in this environment, Starbucks needs to manage the relationship with the workforce on a store-by-store basis. As employees, people seek not only financial compensation, but also psychological rewards because the people need to be loyal to the company. And, once the economy recovers they will stay and not go look for other places and jobs. After a downturn there is an upturn. Expectancy Theory of Motivation The hypotheses derived from findings of the first round interview introduces additional dimension to help understand the organization. Employee satisfaction and motivation play an important role in improving organization efficiency. The motivation model deals with motivation and management. An employee's performance is based on individual factors such as personality, skills, knowledge, experience and abilities. It proposes that employees in an organization will be motivated if they have certain expectations. When employees believe that putting in more effort will yield better job performance, better job performance will lead to organizational rewards, such as an increase in salary or benefits. The employees in question value these predicted organizational rewards. The motivation model emphasizes self-interest in the alignment of rewards with employee's wants and the connections among expected behaviors, rewards and organizational goals. From the employees’ perspective, internal communication appears weak at Starbucks. Lacking effective communication within all employee levels leads to several organizational problems. Lower-level employees who are not included in the
  15. 15. communication process may feel dissatisfied and reduce their commitment to the company. Additionally, it is difficult for employees to connect their personal goals to unclear organizational goals. Employees can also face unclear direction in terms of self-development and motivation. Productivity can be increased through improved employee communication, motivation and skills and abilities. Productivity can also be affected through increased worker satisfaction, which in turn results in productive employees joining and remaining within the organization. As a result, we have elected to apply the motivation model in addition to the congruence model to better analyze the organization's situation. Since we believe that if the employees' motivation is enhanced, Starbucks can achieve higher level of efficiency. Vroom's (1964) Expectancy theory consists of three components: Valence, Expectancy, and Instrumentality. First, the term valence refers to the feelings of satisfaction people derive from their preferred outcomes should performance be achieved. When people have preferences of attaining certain outcomes, the outcomes have positive valence. On the contrary, if negative valence exists, people have the desire to avoid the outcomes at all expense. The valence has no value if people are indifferent to attaining or not attaining the outcomes. Second, Expectancy is defined as “the probability or degree of certainty people estimate on how well a particular alternative action will indeed lead to a desired outcome" (Miner, 2005). The desired outcome depends not only on the choices that the person makes but also on the circumstances that are out of the person's control. Third, Instrumentality is regarded as means people have to successfully achieve their preferred outcomes. In order to successfully achieve the desired outcomes, people must have the experience, knowledge, physical ability and the right machinery tools as well as external support such as the appropriate job design, organization structure and work procedure. The expectancy theory formula is as follows: Motivation Force = Expectancy * Instrumentality * Valence. Because this theory is based on the product of the probabilities of these three components, there will be no motivation, if any of these has a value near or equal to zero. Vroom suggested that an employee's beliefs about Expectancy, Instrumentality, and Valence interact psychologically to create a motivational force such that the employee acts in ways that bring pleasure and avoid pain.
  16. 16. Surveys The next phase in the diagnosis of this organization is to create a short survey that we will use to further explore our hypotheses (See Appendix E: Starbucks Survey Question). Using the congruence model as a guide, we developed hypotheses that test the alignment of the congruence components. The questions in this survey pertain to the congruence model and help to reject or validate each hypothesis, as well as to measure the degree of fit related to model component relationships. The questions on this survey will be tailored to expose some of the areas, based on our hypotheses, that we believe are causing this organization to come out of alignment and affect employee motivation. This survey will allow us to gain feedback from every member of the organization in a completely confidential forum. The format of this survey will consist of 37 questions and will ask the respondents to rate from 'strongly agree' or 'strongly disagree', on a scale from one to six, with each statement we have presented them with. Included in this survey is also a short section of demographic questions primarily designed to create a summary profile of the typical respondent. This survey was distributed to all 22 employees, of which 15 were returned to us. Findings Applied to the Congruence Model Work In consideration of the results of our first round of employee interviews, the concept of work seemed to be lacking very little based on employee responses. This particular throughput of the transformation process seemed to be operating efficiently with no consistent complaints or concerns voiced by the sample of employees interviewed. These initial findings were not a surprise to our group as Starbucks is a largely successful company operating close to 14,000 stores worldwide. Given the size and nominal success of the company, it is fair to assume that they have devoted a great deal of consideration regarding job design and the employees who perform such tasks. (See Appendix I: for Mean and Standard deviation) However, while employees may praise job design, the congruence model leads us to not only to analyze the individual components of the transformation process, but also to measure their alignment with regards to the organization’s overall strategy. An
  17. 17. individual’s work values can have a significant impact on their interpretation of their surrounding environment (Adkins, Ravlin & Meglino, 1996). With this idea in mind, we chose to move forward with the assumption that all employees are happy with their role in the transformation process. In holding this assumption constant, that task structure is properly aligned with Starbucks strategy, we were able to form a set of hypotheses and test them by implementing a store-wide survey. Of the six hypotheses that we aimed to test with our employee survey, two were directly related to the work function of the transformation process (See Appendix I: Summary of Survey Results). We created a theory that an employee’s ability to succeed and their intent to remain at Starbucks would be positively correlated. This is important to companies who offer limited types of work because they need to consider the future of their employees, including moving past the limits of their current position and growing in their work. Employee retention is often supported by the opportunity to succeed through self-improvement (McConnell, 2003). The second related hypothesis presents the idea that an empowered workforce can help an organization to achieve its goals and to operate effectively. Empowering employees can improve attitudes surrounding motivation, job satisfaction and loyalty as well as impact performance values such as employee productivity and effectiveness (Greasley, Bryman, Dainty & Price, 2008). Again, rather than directly examining job design at Starbucks, the purpose of our survey was to analyze its alignment with the other elements of the Congruence Model; people, formal organization and informal organization. In order to perform this analysis, we attempted to better define the relationship between Starbucks and its employees in terms of what each party contributes to the other. The specific concepts targeted by our survey include motivation, loyalty, expectations and resources. Initially our primary unit of measurement for this survey was the degree to which each employee agreed of disagreed with the statement that we presented to them. However, based on the range of standard deviations we have decided to include the correlation between questions as an additional measurement to analyze responses.
  18. 18. In terms of motivation, 93% of those surveyed agreed that they were satisfied with the compensation package offered by Starbucks although there was some discrepancy surrounding the number of respondents who were thoroughly explained these benefits at the time of their hire. Of those who regarded themselves as informed, there was a strong correlation to those who felt encouraged to make important decisions and expressed and interest in making those decisions. Consequently, among those who felt uniformed regarding the company’s benefits, there was a direct correlation to part-time employees or those who would leave Starbucks for a comparable position with another employer. This is a small percentage of the staff interviewed; however, as more than 65% indicated that they would not even consider leaving Starbucks if offered a similar job elsewhere. Additionally, all but two responses agreed that they would encourage their friends to work for this company. Of those who demonstrated this type of loyalty there was a positive correlation towards personal growth and career advancement. Adversely, of those who wouldn’t recommend Starbucks as an employer or demonstrated disloyalty, most cited a lack of training, opportunity and personal goals. Regarding company expectations, there is a divide where just over half of the employees surveyed express a motivation or incentive to meet or exceed these expectations. Those who seek to exceed expectations also hold expectations of their employer in terms of growth and empowerment opportunities. On the other hand, employees who have little or no reason to exceed expectations repeatedly blame the lack of potential for career advancement, rather than being poorly compensated. Lastly, in order to meet expectations described by a job, it is necessary for the employer to provide the proper resources. Of the employees who participated in this survey, every one of them agreed that Starbucks provides the necessary training perform the functions of their job properly. With this unanimous response, there was a positive correlation to those who agreed that their employer was aware of their goals. More specifically two-thirds of the partners questioned felt that Starbucks provides the resources needed to advance their careers. Of those who agreed, several felt that they had the power to choose their future with the company and also agreed that their personal growth was being supported.
  19. 19. By analyzing the responses to these questions and correlating them to other questions on the survey, we can see some distinctive patterns regarding the alignment of Starbucks transformation process. There is a direct link between the motivation to meet or exceed expectations and the perceived resources that are made available to accomplish this. Additionally, the degree of loyalty demonstrated by employees can be viewed as an indicator of the level of motivation that is present. People and the Informal organization The concept of people consists of knowledge, skills, needs, expectations and relationship of the employees in the organization. It is important to identify the salient characteristics of the people responsible for the ranges of tasks involved in their core work. Starbucks highly values its employees. The company’s reputation for being an employer of choice has been recognized countless times. The congruence model leads us to develop a store-wide survey to get further information that helps us better understand people at Starbucks. The survey findings did not surprise us since Starbucks employees' opinions related to the concept of people shows a multitude of positive feedback. In calculating the mean and standard deviation, we found that 95% of employee feedback surrounding their environment was positive, offering support to the initial opinion posed by the store manager. A total of 93% of employees agreed that they get the respect from other coworkers. We can conclude that respect between partners is strongly perceived. The high correlation shared with the following statements; “My supervisor keeps subordinates informed about store operations” and “If I consistently perform well at my job, I will be rewarded” indicates that there is a relationship between what employees contribute to their organization and what they receive in return. This also allows us to conclude that people are treated fairly and generally grateful for their employment at Starbucks. The survey result also shows that employees feel satisfied working at Starbucks. Part of that can be attributed to the job security (87% satisfied) and company’s benefit package (93% satisfied). However, it is not just the benefits that attract employees. They indicate that personal growth and development are also important to them. For example, there are a lot of part- time employees who work
  20. 20. there while pursuing other things, such as education. While more than half of their employees recognize that Starbucks supports their personal growth, 73% reported that the company allows them to work on their outside goals. Starbucks culture supports employee's growth and development which result in higher levels of their performance. All employees also agree that Starbucks provides necessary training to perform their jobs properly. This makes employees feel that Starbucks pays attention to their goals and helps them develop their knowledge and skills. 87% of employees also appreciate the opportunity to take part in company decision-making. Even though employees feel that they are treated of equal importance, 54% of them felt they were not allowed to participate in the process of revising company policies. Second round interviewing indicated that only store manager and assistant manager can make important decisions. Employees at this store are not a big part of this decision making process. Even though they can make suggestion to improve store performance and effectiveness, the final decision would be in the responsibility of store manager or management level. Employees also mentioned that the store manager is a key person involved with the level of employee participation. The more the store manager shows consideration to their employees' suggestions, the higher level of employee involvement. When reviewing the summary of employee responses, there is consistent evidence of employee loyalty at Starbucks. Close to 80% of our sample agreed that the success of Starbucks is important to them, and view their job as more than just a means to an income. Additionally, 66% of current employees would not even consider leaving the organization if they were offered a comparable position with another company. More than just being loyal, there is a sense of pride and ownership in the company shown by the 86% of employees who agreed that they would recommend Starbucks as a great place to work to their friends. Moreover, 47% of employees also question the career path Starbucks provides. Baristas who perform their job well will get promoted to move to a higher- level position. The career path seems to stop at the position of store manager which is the highest level at the store. There is a little chance that an employee at Starbucks store could be promoted to work in the corporate operation. While only 67% of employees feel they are provided with the tools necessary to advance their careers, a
  21. 21. total of 74% admit that Starbucks gives partners the freedom to choice regarding career options. There is a direct correlation between those who recognize this choice and those who feel the resources necessary for advancement have been made available to them. This doubt about their career path correlates with the motivation to exceed company's expectation. It indicates that employees do not have a clear picture of their career path at Starbucks, which results in the decrease in their motivation to go over company's expectation. In conclusion, applying findings from the survey and interview to the congruence model, we found that people at Starbucks seems to be in general positively aligned with organizational structure. Their knowledge and skills are comprehensive and are developed continuously. Their needs and preferences are served by the company appropriately, in terms of personal and financial rewards. To strengthen its performance and effectiveness, Starbucks should plan to increase employee involvement and provide a clearer career path to its employees. Formal Organization We examined the alignment of the congruence components relation to the formal organization. The fit of the congruence model components with the formal organization component is determined. The alignment of the following strategic components is tested; Individual-formal organization, work-formal Organization and formal organization-informal organization. The results point to a slight misalignment of Individual-Formal Organization component. There is a positive correlation between employee awareness of their Starbucks compensation package and benefits with the clarity of the career path Starbucks provides to the employees. It can be inferred that employees who see clear rewards and benefits are motivated to further pursue their careers at Starbucks. However, 28% responded that they are not fully aware of their benefits package. The survey results show that 93% of partners want to be continuously updated about the company's current situation. Employees who have a clear career path, are aware of their benefits and are communicated with by management more often are motivated to take initiative to address issues as they arise and/or suggest new ideas for improvement to Management.
  22. 22. Employees get a sense of job security when they know whether they are doing their job well. At Starbucks, 87% of those surveyed reported a good sense of job security. However, 37% answered that they didn't know whether they were doing their job well. Job security also positively correlates with partner awareness of career direction options to choose from. Interestingly, 67% answered negatively to the awareness of career direction options to choose from in Starbucks. This misalignment of the formal organization with the individual can have negative impact on employee motivation and trust. To support this, even further only 61% of those surveyed responded positive to being aware of their compensation package. This question positively correlates with the partners' perception of company provision of a career path for them. Only 54% of the partners surveyed agree that the company provides them with a clear career path. Partners who believe there is good communication of benefits and career paths would also like to participate in company decision-making. Good communication clearly contributes to motivated and loyal employees. To remedy this misalignment, systematic communication should be enhanced and employee development programs need to be improved. 60% of those responded agreed that their personal goals were not aligned with Starbucks goals. But only 26% agree that they don't have the option to choose their future at Starbucks. Goal alignment and freedom to choose future careers correlate with how often partners feel that their job is stressful. 34% agreed that their job is stressful with another 27% on the verge. Development programs will bring the personal goals and aspirations of employees into alignment with the organization's goals. This alignment will make employees aware of the opportunities they can pursue within the company. Their jobs will be meaningful working towards clear goals and consequently less stressful. The 67% of employees who feel that Starbucks provides them with the tools to advance their careers also believe that Starbucks supports their personal growth. That motivates them to want to work full time because their goals are aligned with Starbucks. "My employer knows what my goals are" positively correlates with "working at Starbucks helps me work on my outside goals". This result is achieved with development and communication. Employees are motivated to exceed company expectations when they feel that Starbucks supports their personal growth. Moreover, they are motivated to excel when
  23. 23. they feel that they have several options to choose from regarding their careers at Starbucks. Employee development provides a sense of fairness because employees get a better organizational perspective. Communication and development enhance trust between employer and employee. The employee feels part of a "family" and that their employer knows what their goals are. The survey results show that 100% of the employees believe that adequate training is provided at Starbucks to motivate employees to achieve desired outcomes. When partners feel that Starbucks management knows their goals, they are motivated to contribute to Starbucks' attainment of overall goals and not just work for the benefits and paycheck. Employee personal growth correlates with Starbucks employee development. When employees believe that Starbucks provides them with the necessary training to achieve desired outcomes, they are motivated to develop careers in the company. Findings Applied to the Expectancy Theory Of the 37 questions on our survey, 14 were related to the expectancy theory. The objective of this paper was to examine the motivational factors of Starbucks’ employees and the relationship between their motivations and their intention to perform better. We had analyzed the data into each component of the expectancy theory as followed. First, expectancy is effort-performance relationship. It is the belief that increased effort will lead to increased performance. This is affected by having the right resources available, having the right skills to do the job and having the necessary support to get the job done. We have calculated the mean, standard deviation, and response correlation to interpret the level of expectancy at Starbucks Table 1 in Appendix H The collected data shows that all employees at Starbucks believed that they receive necessary training to help them achieve desired outcomes and perform job properly. In addition, 93 % of them believed that their supervisor helps them to develop their necessary skills to improve their performance. The data from the correlation also showed that for these people, once they believed that their supervisor supported them, they are likely to be motivated to exceed company’s expectation. In addition, we also conducted a second round interview to assess whether work harder will result in better performance (See Appendix C: Raw Data from
  24. 24. Second round Interview). We found that all of the interviewees agreed that if they put more effort, not only could they outperform their partners, but they could also help their branch to increase revenue, attract more customers and increase customer loyalty. In conclusion, by weighing the data collected from each source, we concluded that the expectancy score of Starbucks is very high. Second, Instrumentality is performance-reward relationship. It is the belief that if you perform well that a valued outcome will be received. We would like to uncover to what extent does the individual expect that the outcomes are associated with good performance differ from those outcomes associated with poor performance. This is affected by clear understanding of the relationship between performance and outcome, trust in the people that decide who gets what outcome, and transparency of the process that decides who gets what outcome. At Starbucks, employee performance is measured every six months; the data from the survey in Table 2 in Appendix H showed that all employees agreed that they were treated fairly. It is a positive sign that shows trust between Starbucks and its employees, they know they will be rewarded fairly by their supervisor. Being treated or rewarded fairly is just one of the components of instrumentality. On the other hand, some of the survey responses signaled some negativity toward instrumentality. The employees answered differently when we asked if they consistently perform well at their jobs, would they be rewarded. Since the coefficient between mean and standard deviation of the question was a bit high (50%), we decided to perform the second round interview to examine this variance. To our surprise, the result of the second round interview showed that all interviewees agreed that if they do a good job, there is some good outcome for them, which was inconsistent with the survey result. Then, we figured out that the variance came from different the attitude toward expected rewards or outcomes they would receive; each employee valued these rewards or outcomes differently. For example, the students who work in Starbucks part-time might not be interested to get more working hours. However, for some full-time employees, being scheduled for more hours can be a measure of compensation or a representation of their worth to the organization. Or, during this economic downturn, having a job is considered big reward for some employee. In employees’ point of views, the expected rewards can be an increase in
  25. 25. working hours, an increase in pay rate, an increase in their own reputation, flexibility in working hours, recognition from their supervisor, or a promotion. From all sources of the data collected, we drew the conclusion that the instrumentality score of Starbucks is quite high. The 6-month evaluation feedback system in Starbucks is designed to reflect employee performance. The employees reported noticing that if they work harder, they will receive a better reward. One of the interviewees told us that he felt proud that he receives higher pay rate than other partners, reflecting on his motivation to continue doing a good job. So, we can conclude that employees at Starbucks strongly believe that there are some good outcomes waiting for them if they consistently perform good work and are treated fairly. Last, valence is the importance that the individual places upon the expected outcome. The data from the survey in Table 3 in Appendix H showed that 74% of the employees agreed that working at Starbucks helps them pursuing on their outside goals, and 93% of them were satisfied with compensation package offered by Starbucks. In general, we can conclude that most employees at Starbucks were satisfied with the overall benefits and compensations they got from working at Starbucks. However, all employees are eligible for these rewards as long as they are Starbucks’ employees, regardless of how much effort they demonstrate. In order for partners to exert more effort in achieving better performance is dependent on how they value the expected outcome they will get, and how they prefer the outcomes associated with good performance. If the employees at Starbucks believe that putting more effort will lead to outcomes that are attractive to them, then they will find that contributing more effort is attractive. However, as we mentioned earlier regarding the variance as it pertains to instrumentality, the collected data showed us that the degree of matching individual needs and the respective rewards is not that high. As a result, we conclude that the level of valence at Starbucks is medium. In conclusion, according to Vroom’s expectancy theory, the product of valence, expectancy, and instrumentality is motivation. It can be thought of as the strength of the drive towards a goal. After combining all three components together,
  26. 26. the motivation force for Starbucks is considered almost high. We can conclude that there is a motivation force within Starbucks. Its culture is one of the most important components that can motivate the employees to achieve higher performance. As one employee reported to us that he did not want to be a partner that no one would like to work with. Although both intrinsic and extrinsic motivation within Starbucks is quite high, it still has a room for improvement. The more Starbucks can motivate its employee, the more Starbucks can improve its effectiveness. Findings in terms of correlation Correlation Scale • r = 0.74 - “My employer knows what my goals are.” • r = 0.71 - “Starbucks provides partners with a clear career path.” • r = 0.62 - “I am motivated to exceed company’s expectations.” • r = Negative 0.51 - “I only want part-time employment at Starbucks." Employee self-efficacy: H1: There is a positive correlation between employee self-efficacy (the ability to exceed in a specific situation including their outside goals) and their motivation to remain at Starbucks. Independent Variable Question “My supervisor gives me the incentive to exceed expectations.” • r = 0.72 - “M supervisor encourages partners to participate in important decisions.” • r = 0.76 - “I do not have an opportunity to take part in making decisions.” • r = 0.59 - “Working at Starbucks helps me work on my outside goals.” Compensation Package Awareness: H2: There is a positive correlation between employee awareness of their Starbucks compensation package and benefits and their motivation to remain at Starbucks. Independent Variable Question “The individual who hired me thoroughly explained my benefits package at the time of hire.”
  27. 27. • r = 0.59 - “I would encourage my friends to work for this company." • r = 0.56 - “Starbucks provides employees the tools to advance their career.” • r = 0.64 - “My supervisor encourages partners to participate in important decisions." • r = 0.71 - “I would like to participate in the company’s decision making." Employee Goals: H5: There is a positive correlation between the level and frequency of employee development and their goals, whether they are internal to Starbucks or external goals, and their intent to remain at Starbucks. Independent Variable Question “The success of Starbucks is NOT really important to me.” • r = Negative 0.55 - “Starbucks supports my personal growth." • r = Negative 0.67 - “Starbucks provides employees the tools to advance their career." • r = Negative 0.62 - “I am treated fairly.” • r = 0.62 - “If I were offered a comparable position, I would consider leaving Starbucks.” • r = 0.70 - “Starbucks does NOT provide the necessary training to help me achieve desired outcomes." Independent Variable Question “My supervisor helps subordinates develop their skills.” • r = 0.74 - “My employer knows what my goals are.” • r = 0.71 - “Starbucks provides partners with a clear career path.” • r = 0.62 - “I am motivated to exceed company’s expectations.” • r = Negative 0.51 - “I only want part-time employment at Starbucks." Communication:
  28. 28. H3: The communication gap between management levels and baristas can adversely affect employee motivation and trust. For example, by not clearly communicating employee benefits to baristas, and the process to retrieve and manage them, can result in dissatisfaction and reduced commitment. H4: There is inadequate communication between management levels and baristas regarding many aspects of the organization. H6: There is a positive correlation between the openness and amount of top-down communication regarding the company’s plans and employee’s expressed intent to remain at Starbucks. Independent Variable Question “There is good communication between partners at all levels.” • r = 0.80 - “My supervisor gives me incentive to exceed expectations.” • r = 0.74 - “Starbucks supports my personal growth." • r = 0.70 - “I feel I have several options to choose from regarding the direction of my career at Starbucks." • r = Negative 0.63 - “I do not have the freedom to choose my future at Starbucks." • r = 0.59 - “Working at Starbucks helps me work on my outside goals.” • r = Negative 0.62 - “The success of Starbucks is NOT really important to me.” Independent Variable Question “I would feel better if I were continuously updated about the company’s current situation." r = Negative 0.53 – “I am treated fairly” Independent Variable Question “My supervisor keeps subordinates informed about store operations."
  29. 29. r = Negative 0.74 “The success of Starbucks is NOT really important to me." Based on our findings we have chosen the following course of actions regarding our originally stated hypotheses. We have chosen to reject two hypotheses, specifically those that relate to self-efficacy and communication regarding the company’s plans to restructure and a positive correlation towards an employee’s intent to remain working at Starbucks. The reason we have chosen to reject these hypotheses is not that there wasn’t enough evidence to support them, employees definitely have the ability to succeed and would prefer to hear about the restructuring plans, but there was no link between these instances and employees leaving their employer. Of the six hypotheses that we created following our first round of interviews, our group has chosen to accept for of them as problems existing within the organization. Two of these were related directly to the quality of communication between various positions or management levels. Our hypotheses stated that employees prefer higher levels of communication and that they often reinforce a trust surrounding the people of the organization. After analyzing our survey responses it was clear to us that employees were concerned about the reasoning behind a lack of communication between certain groups, and they consistently agreed that they would like to see more communication in the workplace. By eliminating these concerns the organization could benefit from more engaged employees who truly feel that they are part of the big picture.
  30. 30. Another hypothesis that our survey was designed to test was the correlation between employee awareness of their benefits and their expressed intent to remain with the company. We have chosen to accept this hypothesis based on the fact that those who mentioned they were well aware of the benefits available to them also cited their desired to advance in the company and their overall satisfaction with these benefits. The final hypothesis we chose to accept is that there is a positive correlation between employee development, their goals and their intent to remain at Starbucks. Our support for this acceptance came from responses that indicated employees who feel their skills are recognized and developed also see a future with the company. However those who do not feel they are encouraged to grow personally and with the company, also seem to work part-time or do not recognize their employment as a long term opportunity. By increasing employee awareness of their benefits and presenting them with opportunities to reach their goals through growth and development the organization will benefit from increased retention of employees, willing to continually improve themselves and as a result overall organizational effectiveness. Recommendations After conducting a careful diagnosis at this Starbucks store, focusing on the presenting issues of quality or content of communication among positions, Starbucks should focus on its human resources issues as an area of improving productivity. In applying human resource management interventions, Starbucks would operate more efficiently, improving its performance and effectiveness. These interventions focus on employees by developing, integrating and supporting people in the organization, believing that organizational effectiveness results from improved practices for integrating employees into organization (Cummings and Worley, 2008).
  31. 31. 1. Performance management Performance management interventions are designed to improve and strengthen human resources in the organization (See Appendix G: Performance Management). Performance management is an integrated process of defining, assessing, and reinforcing employees work behaviors and outcomes (A. Mohrman, S. Mohrman and Worley, 1990). It includes practices and methods for goal setting, performance appraisal and reward systems. Goal setting specifies the kinds of performances that are desired, performance appraisal assesses those outcomes and reward systems provide the reinforcement to ensure that desired outcomes are repeated (Cummings and Worley, 2008). These practices jointly influence the performance of individuals and work groups. 1.1 Goal Setting Goal setting is a powerful way of motivating people. This change program involves setting clear and challenging goals. From the survey, some employees at Starbucks mentioned that their personal goals are not aligned with Starbucks' goals. This practice will help improve organization effectiveness by establishing a better fit between personal and organizational objectives. Goal setting describes the interaction between managers and employees in jointly defining member work behaviors and outcomes (Cummings and Worley, 2008). They periodically meet to plan work, review accomplishment and solve problems in achieving goals. When applied to jobs, goal setting can focus on individual goals and reinforce individual contributions and work outcomes. Goal setting can affect performance in several ways. Starbucks could influence what its employees think and do by focusing their behavior in the direction of the goals. Realistically developed, stated, and implemented goals can be the guiding principle for increased effectiveness and continued growth. The store manager and subordinates at Starbucks should jointly establish and clarify employee goals. First, a goal setting meeting should be conducted annually to develop challenging but realistic goals. This formal meeting increases employee perceived challenge and enhances the amount of effort to achieve goals. Having employees participate in goal setting process can increase motivation and performance. Participation can also convince employees that the goals are achievable
  32. 32. and can increase their commitment to achieving them. The goals could be established depending on organization objectives and strategies, such as "improving customer satisfaction" or "minimizing customer waiting time". Second, the manager needs to clarify a system of goal measurement among employees to reduce ambiguity about manager's expectation and focus their energy on appropriate behaviors. It is important to define the goal operationally to be sure that the measure can be influenced by employee behaviors. For example, a productivity goal could be defined by waiting time per customer or the number of wrong order per employee. 1.2 Performance appraisal Performance appraisal is a systematic process of jointly assessing work-related achievements, strengths and weaknesses. It can also facilitate career counseling, provide information about the strength and diversity of human resources in the company and link employee performance with rewards (Cummings and Worley, 2008). Performance appraisal represents an important link between goal setting and reward systems. By collecting and disseminating performance data, the company provides performance feedback to individuals. Since some employees said they seldom know whether they are doing their job well or not, feedback will allow them a chance to know how they are seen by others, to consider their skills and style, and improve work outcomes. A good review system could help to improve communications, while aiding people to increase their own effectiveness and to clarify their own jobs and responsibilities. It will not only increase the performance of the staff, but also help them to work together, with common goals and fewer obstacles. All employees at Starbucks store are currently evaluated by their store manager every six months. This formal, semi-annually evaluation results in an increase in pay or promotion depending on employee performance. Although Starbucks might not be able to increase the number of formal appraisals, they can increase the frequency of informal feedback. The store manager can help the organization achieve better performance by increasing the frequency of feedback and reinforcement to employees. We suggest that the store manager introduces monthly "five-minute meeting" feedback program. This informal, ongoing basis program will be used to define employees' performance, strengths and weaknesses. From the survey
  33. 33. result, only 34 % reported that they know whether they are doing a good job. So, by having a chance to talk to their manager personally, employees can share ideas, feelings and opinions about their jobs, and they can ask where they stand in the company. This program also enhances employee involvement. Since some employees mentioned that they would like to take part in decision making, they could take this opportunity to make comment or suggestion on improving performance and effectiveness. The manager will receive input from those who actually perform the task. The success of two-way communication from this program will enhance the participation, commitment and productivity of Starbucks members. An immediate praise for a job well done is motivating. If the employees get feedback on how well they have done their jobs, they will do better. The store manager should acknowledge employees’ performance by personally congratulating them, offering an incentive or celebrating the success. An immediate praise for a job well done is motivating. A positive reinforcement will stimulate a person to do better (Anonymous, 2009). On the other hand, if they do not perform well, they will know in which area they have to improve. The sooner they know, the better the end result will be. They will continuously improve their performance until they are formally assessed by the company in semi-annually assessment. Feedback from manager helps employees understand their performance and the way to adapt their work behaviors to align with manager's expectation and company goals. Lack of reinforcement can result in a decrease in motivation (Anonymous, 2009). Without reinforcement, they are uncertain of their progress toward the company's objective and even their own goals. 1.3 Reward systems Reward systems involve the design of organizational rewards to improve employee satisfaction and performance (Scott, Farh and Podsakoff, 1988). It elicits and reinforces desired behaviors and work outcomes through compensation and other forms of recognition. The reward systems approach includes innovative approaches to pay, promotions and fringe benefits. According to Vroom’s Expectancy theory, this theory emphasizes the need for organizations to relate rewards directly to performance and to ensure that the rewards
  34. 34. provided are those rewards deserved and wanted by the recipients. However, there are many reasons that can negatively affect employee motivation. One of the reasons is rewards do not match expectations (Anonymous, 2009). An employer must not assume that all employees want the same things. Giving something that a person does not highly value will do little in terms of motivation. From our findings, the expectancy theory also showed that there are some contradictions between expected and actual rewards in which the overall motivation force at Starbucks was decreased. Since humans have different needs, each employee has her own expectations and expects appropriate rewards (Anonymous, 2009). From collected data, we found that some employee at Starbucks may expect a salary increase, some may expect having flexible working hours, another would want a promotion while someone else would love to feel important and be praised with recognition. As a result, first we suggest Starbucks to achieve the ideal outcomes that the employees desire by matching reward expectations to actual rewards. However, this does not mean that Starbucks has to meet all the employees’ needs. Starbucks just has to understand their individual needs and use this knowledge to keep them motivated. All motivation is self- motivation, and each individual is motivated by their specific needs. Second, we suggest that Starbucks clarify the rewards systems that were covered during the hiring process. Starbucks has already done a great job to communicating its compensation package to its employees; however, the survey result shows that 21% of the employees still are not well aware of the benefit package. As a result, Starbucks can improve both the store performance and the employee' motivation by clearly informing its compensations and benefits during the hiring process 2. Communication Starbucks was hurt by the economy going sour and decided to close 600 of their under-performing stores in the US over 2008 through the first part of 2009. These closings eliminated an estimated 12,000 jobs. Although the company said they will place employees in other stores that are remaining open if possible, surviving employees still worry about the next wave of layoffs. Downsizing has an unavoidable and unpredictable effect on the employees who remain with an organization. As stress rises, positive energy declines. The inescapable results are lowered morale, reduced
  35. 35. productivity and energy, and diminished effectiveness. A workplace recovery plan will help the survivors move through the pain of change and accelerate their return to productivity and positive morale. Although this store is not directly affected by the downsizing program, negative rumors are still present and have an effect on employee performance and satisfaction. Employees have almost no clue about the company's next decision plan. To restore employee confidence and energy, the store manager should engage people by communicating as much as possible. During and following a downsizing, communication should be improved both in frequency and in thoroughness (Marks, 2003). This is not easy when leaders are stretched thin by the demands of running an organization in tough times. Staying in touch with employees demonstrates that the manager is genuinely aware of the stress employees are experiencing and concerned about them. The leader should also strengthen internal communication within the organization by providing information received from the corporate level to his staff whenever possible. The store manager should include in their monthly meeting any updates regarding company news, overall strategy plan and important information effecting to employees and their benefits. Keeping people in the know through frequent and thorough communication enhances organizational effectiveness and employee satisfaction. 3. Career Development As we mentioned in People part, the career path seems to stop at the position of store manager, the highest level at the store. The doubt about the employee’s future career path can correlated with their motivation. It can result in the decrease of their motivation to exceed company's expectations. Starbucks can increase nationwide performance by providing an opportunity to promote some outstanding employees from within the company. Starbucks should create this incentive for the employees. If they perform well, they should have a chance to be promoted to work in the corporate operation. Their future will not get stuck at store manager level. When an organization emphasizes promotion from within, its employees have an increased incentive to strive for advancement. As they witness their promotions occurring within the company, employees become increasingly aware of their own opportunities (Caruth, Donald L., Handlogten, 1997). Consequently, a promotion-from-within
  36. 36. policy enhances motivation and leads to a relatively high level of morale. A company that frequently goes outside to hire the people it needs pays a price: a persistent erosion of the loyalty of the people already on its payroll (Lewis, B. 1999). However, this recommendation is out of the store’s manager control. Giving a chance to promote from within seems to be top management’s decision. To make it happen, the store manager should report to top management at corporate level to realize the benefit of this fact in order to strengthen its performance and effectiveness, and to increase employee involvement by providing them a clearer career path. Conclusion In conclusion, our experience diagnosing this organization has been a learning experience. An opportunity that began as challenge to identify how Starbucks could increase organizational effectiveness has with ended with a slightly different set of recommendation for our client. We entered into our contract with an assumption that everything was operating smoothly and our goal was to capture the things that were promoting this effectiveness so that they could be even further approved upon. However, in the course of our diagnosis, some issues and concerns were expressed by employees that indicated that things were not as positive as they could be. Specifically, we received repeated criticism regarding communication and motivation with the store environment. This is not to say that things were not satisfactory as far as company policy, but these were the areas that seemed to concern employees the most. As a result, our group has made a set of recommendations to our client that we feel, based on our academic research, will help to meet the expectations of their employees. Finally, if these issues are resolved and expectations are met, the positive result will be evident in terms of performance and morale. If our recommendations are implemented, we feel that we will have succeeded in increasing organizational effectiveness for our client, which was our original goal, however it is necessary to first correct some issues within the organization before we could proceed to this improved state.
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  39. 39. Anonymous (2009). In order for an organization to succeed, it has to give emphasis to its employee motivation. Retrieved on May 6, 2009 from http://www.about-personal- growth.com/employee-motivatation.html Raida Abu Bakar, Abdul Latif Salleh, Lee Chee Ling. (2008). 'How We Do Things Around Here': Implications of Corporate Culture On Job Performance. The Business Review, Cambridge, 9(2), 339-344. Retrieved March 11, 2009, from ABI/INFORM Global database. (Document ID: 1617905151). International Resource Management (2002) Organizational Downsizing during Economic Recession: Work Values of Surviving and Non-surviving Managers. Retrieved March 11, 2009 from http://www.ctw- congress.de/ifsam/download/track_15/pap00380.pdf Michael Welled, Managing the Psychological Contract. Retrieved March 11, 2009, from http://www.ashgate.com/pdf/SamplePages/Managing_the_Psychological_Contract_C h2.pdf Laurie Flynn, Starbucks Blames Week Economy for Decline, Herald Tribune, Retrieved March 11, 2009 http://www.iht.com/articles/2008/05/01/business/01starbucksweb.php Chain Leader, Revenue Down for Starbucks in First Quarter Retrieved March 11, 2009 http://www.chainleader.com/article/CA6633206.html?industryid=47554 H.R. Spectrum, Cornell University, (2003) Retrieved March 11, 2009 http://www.ilr.cornell.edu/cahrs/research/pubs/hrspectrum/upload/HRSpec03-10.pdf
  40. 40. Appendix A: Agreement Consultant team Agreement This agreement dated 03 March 2009, is made between the students of San Francisco State University (Valentinos Themistocleous, Zishan Xu, Sivaporn Ratanavilaiwan, Seth Breedlove, Ian Kerwin and Manatsanan Anuwatmatee), whose address is 835 Market St, San Francisco, CA, referred to as “Consultant team”, AND Jon Smiley representing Starbucks whose address is 390 Stockton Street, San Francisco CA 94108. 1. Consultation Services: Starbucks at the above address allows the consultant team named above to provide consulting services in accordance with the general expectations set forth in this agreement: This agreement is non- binding, revocable and may be renegotiated at anytime by either party. 2. This agreement will begin 3 March 2009 and will end 12 May 2009. 3. Time Devoted by Consultant team: It is anticipated the consultant team will spend approximately 10 weeks in fulfilling its obligations under this contract. The particular amount of time required by the client may vary from day to day or week to week. The consultant team will conduct two rounds of interview sessions in early March and mid April, and administer one questionnaire in late March. In the time immediately prior to and following these interviews the consultant team will perform some random observations of the business environment of Starbucks to its duties in accordance with this agreement. 4. Accessibility: The Starbuck’s manager agrees to provide the accessibility needed by the consultant team with the objective of obtaining valid data. This access includes providing advance notification to employees, space and time needed by the consultant team to conduct one on one interviews, on-site
  41. 41. observations, and providing relevant documents such as work schedule, job description, evaluation criteria, company reward programs, discipline rules, when needed for diagnosis. In addition, the company allows the consultant team to deploy a company-wide written survey to be voluntarily completed by all willing employees. All interviews will be conducted in the lobby of the store during business hours. The specific amount of time we need from the company's employees will be as follow: · 1st Round Interviews: 10 partners (one assistant store manager, two shift supervisors and seven baristas) at roughly 25 minutes per employee, during business hours. · Store Wide Survey: Surveys will be distributed by the consultant team to all partners during their respective shifts. This survey can be completed at the employee's discretion and returned to the consultant team within one week's time. · 2nd Round Interviews: 10 partners (one assistant store manager, two shift supervisors and seven baristas) at roughly 25 minutes per employee, during business hours. · The consultant team and store manager will arrange time to communicate informally to discuss research progress and feedback on a weekly basis or as needed. · The store manager agrees to acknowledge phone or email communication requests within 48 hours. The consultant team agrees likewise. 5. Confidential Information: The consultant team agrees that any information received while providing its services which concerns the personal, financial or other affairs of the company will be treated in full confidence and will be shared only with Professor Mitchell Marks, and the students of Management 0842 on the presentation day, May 12th. Please note that individual responses are completely confidential—at no time will we ever reveal any individual’s responses. The only feedback will be aggregated at the group level.
  42. 42. 6. Voluntary Participation & Notification: Participation in this project is completely voluntary. No partner can be forced to participate. Partners will receive at 24 hours notification before any interviews and surveys are conducted 7. Deliverables: Starbucks will receive a report from the consultant team at the time the service has ended, on or before May 12th. The report will indicate the diagnosis of presented problems or opportunity with an appropriate model applied, and alternative solutions that can be implemented to improve or continue the effective management of the client’s business. It is strongly suggested that the company provide feedback to employees. The feedback can be a short summary report and not necessarily the full presentation. It is helpful to determine the method of feedback as soon as possible, and to have an answer prepared for when employees pose the question asking whether or not they will be presented with our findings. 8. Signatures: Both the Starbucks manager and the consultant team agree to the above contract. The Company Date: Name (_____________________) Signature ( ) The Consultant team Date: Name (______________________) Signature ( )
  43. 43. Appendix B: Raw Data from First Round Interview Responses 1) How long have you worked here? • 18 Months. • 17 Months. • 2 years at this store, 3 total with the company. • 1 year currently and 1 year previously. • 1 year and 2 months. • 2 and half years .it is a good company. 2) What do you like best about working here? • The environment, location. Being downtown is very exciting. • My Co-workers, we have fun and I like dealing with the customers, we have nice regulars. • I also get to meet interesting people; if you are pleasant to your customers they return the courtesy, making it not boring. • Simplicity, motivating work that keeps you busy, great company communication, get to work with people I may not otherwise befriend, multi task job, high energy. • It is flexible with my second job; I work part-time and get full time benefits. • Just having fun and interacting with a lot interesting customers. • They are very good at working around your schedule and be flexible with school hours. And work is really fun. He has clear view of expectation while at work. 3) What is your motivation to stay with the company? • Flexibility during school, fun, being in the city/downtown. • The shape of the current job market and that I enjoy the people I work with. • Easy to advance, good pay. • I enjoy the store and the pay is good. • Benefits and pay. • Job has flexible hours and the pay is better than any other coffee shop.
  44. 44. 4) What to you like the least about working here? • The lack of hours; having to work at other stores for a full work week. • The repetition of the job and dealing with certain customer attitudes. • Nothing. • Minor conflicts with co-workers. • Opening really early and closing really late. • Sometimes, working really early or super late, there are a lot grouchy customers. 5) If you could, what is one thing you would change about the organization? • Communication between management tiers, everybody needs to be on the same page regarding expectations. • The dress code. • Decisions regarding product lines should be made at the store level. • Improve the Quality of products (merchandize). But the drink quality is good. • Change the hours, because sometimes it’s not busy and there are people idle. Nothing structural or cultural needs changing. 6) What do you think about when you are preparing for a shift? • The staff on my shift, what I'll have to do to accomplish every responsibility during the shift. • The time commitment that I'm entering into. • My role as a manager takes over as soon as I walk in the door • I like to open the store, sometimes I think about whether I want to work with the customers (front) or production (back). • Customer flows and what task needs to be done. • The type of customer I will be dealing with. I will choose bar over register. Sometimes would like less interaction with customers. 7) How would you describe the relationships among the employees at this store? • Generally we all have a good working relationship; every manager has at least one person that they don't see eye to eye with.
  45. 45. • I like everyone but some don't take the job as serious, we are friends but only at work. • We are 98% on the same page. • Everyone is happy and I like the manager. We occasionally socialize outside of work. • Very close. We hang out with each other. • Really close. Same age partners. A few go to San Francisco State. Some of them have two jobs. Easy to get shifts covered. 8) Has there been any communication regarding the company's plans to restructure? • They made some initial cuts after the holiday season last year, and now there has just been a shortage in hours, but everyone seems grateful for their job. • Communication overall is good. There is an internal portal that gives employees (except baristas) access to company news ahead of the press. Employees with different position level rarely go hang out together. • No, but the communication is good at our meetings. • No. They don’t communicate with the employees. • Yes. There was training for transformation last year. During the meetings partners were well informed about new policies. 9) Do you trust the corporate side of this organization? • Yes, I have faith in them. Every company is dealing with the economy. • Yes but they kind of keep employees in the dark. They don't communicate with them. • Yes. 10) How do you see your future with Starbucks? • Two or more years, while I complete school. • No Real Future. I might go back to school. • I have talked with management about becoming a store manager within six months. Starbucks fits the other aspects of my life (school). • I will continue to work here.
  46. 46. • Just a part time job. I own a production company. I have my own stuff to pursuit. • I am Student at SF state. Working on Business Marketing degree. Would like to advance to work in the marketing department at Starbucks. Good corporation to work for. 11) How have your perceptions of the company changed since you started as an employee? • Sales volume has been cut in half, less busy. • I was hired on the spot and thought the pace was fast and overwhelming, but now it is just normal. • I didn't initially realize how strong the work ethic was and how customer focused the employees were expected to be. • At first I wasn't comfortable as a non-native English speaker, but now I am confident. • People think it is Power House Company but I don’t think so because they don’t have the corporate office culture. They keep downsizing, and getting smaller… I think the company will downsize because of the economic downturn and lots of other new coffee shops opening. • It has changed a lot. Used to think Starbucks was corporate. But they are easy going and like to treat everyone with respect. Better view now than initially held. 12) Is there anything you would like to add that we have not covered in this interview? • Each store that I've floated to has a different feel. It is important to have enough work to keep all of our staff. • If you are promoted to upper level management you have to change stores, my benefits were not clearly communicated to me. • No. • Things in general are OK. • No.
  47. 47. • Starbucks makes really good coffee and and treats employees fairly. They are really good at business ethics.