Introduction
Starbucks is a leading global roaster and retailer of specialty coffee. It operates in the Quick Service Restaurants industry and is the largest coffeehouse chain in the world. In 2022, Starbucks reported a total revenue of $30.4 billion and had approximately 245,000 employees across the globe (Financial Times Magazine, 2023). The company is in over 80 countries and serves beverages and food items in more than 30,000 stores (Forbes, 2023).
Additionally, the company has diversified its product portfolio to include products such as tea, juices, and non-coffee beverages. Starbucks also offers a range of food items, including sandwiches, salads, and wraps. Moreover, Starbucks provides its products using different channels, such as company retail shops and online stores (Starbucks, 2023). Despite this success, the company is undergoing a staffing crisis as the company is experiencing high turnover, diversity problems, understaffing, and inconsistent hiring processes, which can be solved by creating better compensation and reward programs, temporary staffing, and strategic inclusion policies.
Issue Description
When companies begin to expand, this can be a chance to enhance profitability or deal with a crisis. Starbucks experienced a rise in sales and profits in the 21st century, creating a surging need for qualified employees (Starbucks, 2023). The lack of experienced workers made it challenging for the company to address the staffing shortage, which led to a staff crisis. This led to a need for more standardization in the hiring process, which caused inconsistencies in the quality of employees hired.
The reason is that employees hired during the period of hiring distress need to be aligned with the company’s objectives. However, they are looking for ways to build their careers as they seek the presenting opportunities (Starbucks, 2023). This situation created a high turnover rate, as employees left for more competitive wages and better opportunities.
In addition to the issues stemming from the rapid expansion, Starbucks also needs help with employee diversity. The lack of diversity in the workforce has been a long-standing issue for Starbucks, and it has been historically challenging to address (Financial Times Magazine, 2023). The reason is that the company has not initiated a clear plan showcasing how they plan to deal with the staffing crisis.
For instance, the company’s workforce diversity is 71.6% female and 22.4% male as of October 2022. The ethnic breakdown can be described as 30.5% Latinos, 8% Blacks, 5.8 Asians, and 6% other racial groups. (Starbucks, 2023). This staffing is imbalanced, considering that the gender and ethnic representation is unequal, indicating a deficiency in the staffing process.
The COVID-19 pandemic has compounded the staffing crisis at Starbucks. The pandemic has resulted in a major fall in consumer traffic and sales, resulting in a substantial decline in the number of Starbucks employees. To keep the situation solvent, several Starbucks locations have had to cut their employees.
This crisis has resulted in increased employee turnover and understaffing, as well as a decrease in worker diversity. A report by the Guardian News indicates that the COVID rules brought intense work structures that led to staff abuse (Sainato, 2021). For instance, the rules intensified the workload for the remaining workers during this period, leading to long working hours and underpayment as the company was making less profit at the time.
Starbucks’ inconsistency in the employment process exacerbates the company’s staffing crisis. Applicants with the same qualities may be hired at varying times due to Starbucks’ “first come, first served” employment policy. This can make it challenging for Starbucks to keep its workforce representative of the communities it serves (Starbucks, 2023). For instance, most frontline workers in the US are Hispanics due to the company’s focus on hiring more employees from this ethnic group. This can have significant consequences due to the difference in culture and communication barriers that can lead to customer and employee dissatisfaction.
The company executives established several interventions to address the crisis in their staffing process. One of the approaches entails establishing an assorted workplace environment that is welcoming and inclusive. They are also investing in career training and growth to aid in the employee hiring process and retention strategy. Additionally, they are attempting to reduce employee turnover rates by providing better benefits and more flexibility for employees (Lucas, 2023).
For instance, since the COVID-19 pandemic, executive employees have been working remotely. However, the current management has requested that the members report working in person at least three days a week (Lucas, 2023). This move is established to ensure that production is enhanced to improve profitability, which can help enhance processes such as better employee benefits and other organizational processes such as effective hiring.
The executive teams in the organization have initiated the approaches to proper staffing. For instance, the new rule requiring employees to return to work in person was driven by the company’s Chief executive officer, Howard Schultz. This strategy is intended to enhance productivity and address understaffing issues (Forbes, 2023). However, this new solution only addresses some of the issues in the company, including high turnover, diversity problems, and inconsistent hiring process, since it only focuses on addressing understaffing (Forbes, 2023). Therefore, this approach must comprehensively address the issues, considering that the implemented strategy is abstruse and has no specific timeline for enhancing the staffing process.
Relevance to the Management Course
The staffing process dysfunction occurs when Human Resource Management (HRM) principles are ignored. The reason is that HRM principles entail activities that organizations apply to enhance the behaviors of their employees and maintain a competitive advantage. Therefore, the staffing process is an HRM principle that ensures organizations maintain the required number of employees, retain their talents, and attract new skills (Cerone, 2019).
A textbook approach would be focused on appropriate performance management and appraisal, which analyzes the strategies of retention for employees by implementing new approaches such as integrated talent and performance management processes (Cerone, 2019). This process enables teams to diagnose the problem by assessing areas such as role management and determine if issues such as understaffing and burnout arise.
Identifying stakeholders depends on who is the most affected when organizational processes fail. Some strategies include analyzing if the organization is facing a problem challenging its objectives or management processes (Cerone, 2019). This strategy will enable one to identify the people affected by the dysfunction. For instance, Starbucks’ issues with the staffing process affect the employees, clients, and investors in the company. This information helps identify the most affected people when specific processes are hindered.
There are many gaps in Starbucks’ current initiative in handling the staffing process issue. One of their approaches to addressing understaffing is hiring on a first-come, first-served basis. This strategy can be integral in dealing with understaffing (Cerone, 2019). It creates more problems than it solves. The reason is that the strategy of effective recruitment ensures that the company uses performance management techniques to maximize its hiring process.
This strategy ensures that the organization does not hire seasonal employees who are not loyal to the company but are there until the next opportunity arises (Cerone, 2019). Another gap is their approach to creating an inclusivity training program to enhance diversity in their hiring process and internal employee relations (Forbes, 2023). Training alone is ineffective, considering that the rules can be easily forgotten and are influenced by other factors, such as politics, which affects equity in the approach.
Recommendations
The approach to the organizational change initiative should focus on performance management and appraisal principles. This strategy helps ensure the hiring process focuses on effective workforce planning, employer branding, objective setting, and recognition (Lucas, 2023). These aspects are integral when addressing hiring issues since they restrain the company to specific modalities that ensure equity, diversity, and quality in their selection process.
One strategy for addressing the employee turnover rate is creating a supportive work environment. The strategy includes providing competitive wages, career development, and effective feedback programs. Another strategy to enhance diversity includes setting organizational rules that ensure that specific hiring metrics are adhered to in every election cycle, ensuring that people from all ethnic groups are equally represented (Forbes, 2023).
Additionally, the company should focus on enhancing its recruitment process to create a competitive advantage through people by adopting strategies such as safety and health and performance appraisal. The risk associated with the new approach is that it can increase the cost of production. The reason is that implementing new organizational rules to accommodate diversity, better compensation, and retention requires the firm to incur the costs of this process. Therefore, companies should apply the model strategically when making profits to ensure that the teams do not make losses when trying to improve the organizational processes.
Conclusion
A comprehensive plan that takes into account the goals of the organization, budget, and hiring needs of the organization is crucial to success. By providing Improved compensation and incentive schemes, temporary workforce solutions, and strategic diversity initiatives, Starbucks can address the staffing crisis and create a more diverse and successful hiring process. These solutions can help organizations create better working environments, attract and retain a more diverse workforce, and reduce turnover. Ultimately, these solutions can lead to tremendous success for organizations.
References
Cerone. (2019). Human Resource Management. (Powerpoint Presentation). Pearson Education
Forbes. (2023). Starbucks | SBUX Stock Price, Company Overview & News. Forbes. Web.
Financial Times Magazine. (2023). Starbucks Corp, SBUX: NSQ profile – FT.com. Web.
Lucas, A. (2023). Starbucks CEO Howard Schultz tells corporate workers to return to the office 3 days a week. CNBC. Web.
Sainato, M. (2021). “Coffee-making robots”: Starbucks staff face intense work and customer abuse. The Guardian. Web.
Workforce diversity at Starbucks. (2023). Starbucks Stories. Web.