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Gary C. Kelly
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Born and Raised: Brooklyn, New York
Education: Northern Michigan
Family: Wife Sheri, Children Jordan and Addison
In 1971, the first Starbucks store was opened in Seattle's Pike Place Market. It was a small coffee store that only sold coffee beans and ground coffee. In 1982, Howard Schultz joined Starbucks as director of retail operations and marketing. It was not until a business trip to Italy, where he was impressed by all the small espresso bars in Milan and Verona. The aroma and warm feel of savoring a simple cup of coffee not only connected but created community among them drew a vision in Howard's eyes. He saw the potential and believed he could create the same world-class coffee and romance of Italian espresso bars back to the states. Unfortunately, his employers disagreed with his vision so he left Starbucks in 1985 and opened his own coffee company, Il Giornale, named after a Milan newspaper. Sixteen months later he was given the opportunity to purchase all six Starbucks stores and roasting plants from his former employers, he did just that with the support of a few investors, he merged the two companies and chose to keep the name Starbucks Coffee Company. By 1987, he had 17 stores, 100 employees (whom he calls "partners"), and a dream to create a national brand.
Our group chose the CEO of Starbucks, Howard Schultz, for our research project this semester. We chose Howard Schultz for his eclectic and impressive business background along with his continual drive to expand into new businesses and into different industries. With this, we knew he would undoubtedly offer us fantastic insight on the dynamics necessary to be the CEO of a global company such as Starbucks.
According to Forbes.com, our CEO, Howard Schultz has a net worth of 1.5 billion dollars. Success on this scale is not fathomable without a distinguishing personality. Through researching Howard Schultz, a couple of personality traits stuck out to us and are worthy to discuss because we believe they have played a great role in his professional career.
To begin, Howard Schultz has very strong positive affect. He is constantly trying to bring the best out of his employees, company and himself. For example, Schultz as an innovator never settles and always is searching for ways to grow his company. Starbucks’ most recent-end results were some of the company’s greatest losses. Schultz responded to the quarter shortcomings by acknowledging the areas of the business that succeeded expectations, accentuated the businesses overall performance in the past 11 quarters and adamantly pushed and encouraged that now growth is most important.
Next, throughout Schultz’s professional career it has been clear that among the “Big 5 Traits” Openness to Experience is a very evident personality trait for the Starbuck's CEO. He has ranged his interests and expressed his curiosity by owning the Seattle Super Sonics until they were relocated to Oklahoma City (myprimetime.com). On top of Starbucks, in 2011 he bought a business that specializes in premium juices called Evolution Fresh. Schultz bought the business for 30 million dollars. (forbes.com). Clearly with this steep investment, Howard Schultz has high self-esteem (trusting himself) and will continue to look for more business opportunities. Another "Big 5 Trait" is Howard being very conscientious. As the Starbucks experience was deteriorating, Howard had to do something besides talk about his frustrations with executives. He took it upon himself to speak to store, district, and regional managers directly, as well as with baristas at various Starbucks chains in order to figure out what he perceived was wrong with Starbucks. His actions alone shows how passionate, hardworking, and determined he was to find out what needed to be fixed.
Some of Howard Schultz’s most prominent values and attitudes include caring for others and having a strong sense of community. When Schultz was growing up in New York, his father worked a series of blue-collar jobs. Upon getting injured on the job and subsequently retiring, his father had nothing to show for it because he did not have the privilege of receiving worker’s compensation or health insurance. When Schultz was creating Starbucks, he did not forget the effect that his dad’s lack of benefits had on his family. Schultz offers his workers comprehensive health coverage, including coverage for unmarried spouses, for any worker that logs at least 20 hours a week. This move was unprecedented in the industry because virtually no company would give part time workers health coverage, nonetheless the extensive coverage that Starbucks was handing out. Schultz also offered workers a stock-option program to look out for his workers in the future. This shows that while Schultz is focused on making Starbucks a successful corporation, he wishes to do so with integrity by treating every one of his workers right.
Howard Schultz is committed to having Starbucks reflect his value of having a strong sense of community. He wants all of his shops to be involved in the community. After Schultz had stepped down as CEO of Starbucks for 8 years, he took his position back because he thought the company was losing some of the values he initially centered Starbucks around. He was so committed to the company getting back to its old ways that he shut down all 7,000 Starbucks stores in the U.S. for 3 hours one day to retrain all the workers. In this training session, Schultz wanted to emphasize not only working procedures, but also how the workers should interact with customers. Schultz wants the customers to feel as if Starbucks is a real member of their community.
Schultz’s strong sense of community can be expanded to encompass the whole country as well. As the CEO of a very prominent and profitable corporation, Schultz feels responsible to help out those across the country that are in need of help. As the recession has cost millions of Americans jobs, Schultz is urging large corporations such as his own to donate to an organization he created called Create Jobs for America. The organization has already raised over $11 million and created over 4,000 jobs. Schultz has also directly gotten Starbucks involved in helping Americans by locating a new roasting plant in Georgia. Schultz believed he could have saved upwards of 15% by putting the plant in Central America or Asia, but turned away from that because he thought creating at least 200 jobs for Americans was worth the cost.
It’s clearly evident that Howard Schultz’s actions by himself and with Starbucks reflect his strong values. He is committed to doing what he can to make this world better. He has said that when he created Starbucks he wanted to make it a company with soul, and he has certainly backed up those words many times so far.
For Howard Schultz, motivation is not only the process of arousing and sustaining goal-directed behavior, it is the process of maintaining excited, happy employees. Employee outlook and behavior is contagious in the service industry and Starbucks coffee is not short of the top spots on customer loyalty and satisfaction. Howard Schultz believes that the customer’s coffee experience starts with a smile from the employee taking the order, making the beverage, and delivering to the customer. Howard Schultz, CEO of Starbucks once said that he gets employees to smile by only hiring people who smile. He built a company culture around that idea. Mr. Schultz starts by only hiring employee candidates with a happy and positive frame of mind. He maintains that happy personality by providing two programs for his employees: comprehensive health coverage for part-time partners and equity in the company in the form of stock options.
"A gentleman came into my store this morning and told me he would like to try espresso but was afraid it would be too bitter. So I told him that I would pull some perfect shots for him and also make him an Americano. Together we talked about espresso, its origins, and how to enjoy the perfect shot. He enjoyed it immensely and said he would be back for more...I think I now have a customer for life."
This was a personally written letter (taken out of his book, Onward) from a barista in Philadelphia. The barista's experience of putting a smile on that one patron's face and his effort alone goes to show the emotional contagion Howard displays as a leader. Howard values personal connections and employee satisfaction and this was a pure example of a satisfied employee going above and beyond a personal connection in order to share his love of coffee and espresso.
Schultz began with employee security when building the foundation of his corporate motivation. He wanted all of his employees to trust and respect Starbucks management, mission, and vision as a company. He realized that many workers were of college age and could only provide part time hours and still believed they deserved full time benefits. Schultz connected with the request to extend healthcare coverage to part time partners because of the struggles he had had with health in his own family and was eager to ‘pay-it-forward’ to his valued employees. In 1988, Schultz went to the board with the proposal to extend healthcare to employees that work at least 20 hours a week. Schultz defended his position against the concern that the added costs would damper the company’s bottom line by pointing out that the benefits would likely reduce turnover and ultimately deter training and hiring costs. This major turnpike can be related to the physiological and safety and security needs of Maslow's hierarchy; by providing healthcare coverage.Starbucks offers employee equity in the company in the form of stock options, called
. These early investments in people have proven that you can build a business that is profitable while sharing its success with Starbucks employees as well as the community.
Howard Schultz’s company is one that brings a sense of humanity and demonstrates respect and dignity by motivating others. He is very in-tune with his employee’s needs and works hard to strengthen the bond that directly affiliates his partners to the corporate brand.
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