Starbucks Reward and Performance

Running Head: STARBUCKS REWARDS AND PERFORMANCE The purpose of my research is to evaluate the effectiveness of rewards on performance of Starbucks Corporation; it contains the evaluation of two main sides of motivation strategy: Extrinsic rewards and intrinsic satisfaction. Motivation is one of the main causes for industry in the process of making their production. In order to find the ways that Starbucks used to motivate their staff, research has to be done during investigation. I have collected several types of data, which are Primary data and secondary data. Normally, I will get the articles from the hunt library and Internet. In the process of analyzing the information, some essential methods will be used, such as Motivation Strategy analysis, Equity Strategy analysis and Goal-setting Strategy analysis. The issue is to investigate and to analyze the rewards and performance structure of Starbucks Corporation. Starbucks Corporation, one of the most famous retail coffee shops chain in the world, specialize in grinding, roasting, and selling special coffee beans and a variety of coffee or tea drinks. Starbuck publicize they are the third place between home and company, where you can get together with families and friends, or just take pleasure in a quiet moment alone with fresh coffee, book and music. Starbucks always meet its customers requirements; they achieve a good motivation staff which will be beneficial on its internal and external customers. Its internal customers includes its shareholders, managers and staff, whereas its external customers are the people who with trend knowledgeable coffee drinker. Someone think that to measure a company success or not, is base on the profit that this company earned. But in these days, the attitude should be changed due to the global market changing. For staff has become one of the most important factors in company, motivation strategy has been used in company, which helps team work more efficiency, also the strategy can attract higher degrees or perfect skills workforce. Motivation strategy has become a very important system for company operation management. However, different company using different motivation strategy. Starbuck is

a good model, they well-known for satisfaction of employees. Starbucks believes that motivation and personal satisfaction should be put into first rank. A respectable connection between managers and employees could maintain a high quality of performance. Intrinsic satisfaction Training Policy Starbucks CEO, Howard Schultz, considers that the key of success in Starbucks is not coffee but employees. He believes that happy employees are the key to competitiveness and growth. On practical level, Starbucks gives opportunity to employees and allow them to learn something new; there is a comprehensive employee training and each participant must take at least 24 hours training. The content of the class covers everything from coffee history to a seven-hour workshop called Brewing the Perfect Cup at Home. This workshop is a set of five different classes which every new employee must complete in the first 45 days with the company. Extrinsic rewards - Fringe Benefits These benefits promote loyalty to a company so employees can stay longer, which also helps employees meet its social need. Starbucks offers its benefits package to part-time and full-time employees. All employees are entitled for insurance coverage after being with the company for at least two weeks. Starbucks comprehensive benefits package includes: medical, vision and dental, short-term disability insurance, as well as holiday and paid vacation, mental health/chemical dependency benefits, a stock option and 401k savings plan. Schultz, the CEO of Starbucks believes that without these benefits, people do not feel economically or spiritually tied to their jobs. He mentioned that stock options and the complete benefits package enhance employee loyalty and promote attentive service to the customer. Extrinsic rewards - Pay for performance According to research firm - The corporate Library, Every organization has different way to give bonuses. Costco Wholesale Corporation awards bonuses based on factors such as goals related to sales, controllable expenses and inventory reduction; Paccar Inc. gives bonuses based on a simpler measure: net profit; furthermore, Amazon.com Inc. does not provide performance-based bonuses.

Starbucks as a successful company is tying reward directly to employee performance to drive unbelievable business results. Pay-for-performance is providing to be successful at all levels and in all functions of the company. Building a pay-for-performance culture may look like an abstract vision for some organization, however, in Starbucks, it is a considered a top tool by senior executives for achieving better financial results. And for good reason: a strong pay-for-performance culture has the capability to release their employee performance potential, keep Starbucks employees happy, and eventually drive a healthier bottom line. Pay-for-performance culture helps Starbucks improved motivation by combining clear direction, quality feedback and tangible rewards, and recognition-key components to job satisfaction and employee commitment. It also improved retention, according to Giga Information Group, retention has improved by meritocratic management or pay-for-performance by up to 27%. Cost savings is another advantage by using pay-for-performance as company can only reward individuals whose performance help attain key corporate objectives. Intrinsic satisfaction Internal Pay Equity The managers in Starbucks take care of each employee equally and all the staffs are called partners. To narrow the gap among managers and employees, managers co-work with the basic level staffs in the front line. When Mr. Schultz took on the extra role of president and CEO of the corporation on 7th Jan 2008. He did not obtain any additional reward in connection with his new position. Mr. Schultzs base salary has stayed the same with former CEO. Intrinsic satisfaction Listen to Employees and Empowerment Starbucks has a well-organized communication channel for employees. It places a huge importance on labors. For example, managers organize the schedule for every employee to hear their necessities. There are weekly interviews to see what their requirements are. A special survey named Partner View Survey is taken off every two years therefore managers can collect feedbacks during the event, and communicate which part should be improved or what issue should be pay more attention on. Employees even

have the right to figure out what is the best policy for them, and directors show respect for each suggestion. Besides above policies, the empowering corporate culture have aided in crafting an outstanding staffs. Starbucks promotes an empowered employee culture through generous benefits programs. Employees are empowered by management to make decisions without management referral and are encouraged to think of themselves as a part of the business. Conclusion Starbucks changes the behaviors and point of view of global consumers to coffee and this thriving example has caught global attention. Based on my research, Starbucks shows that motivation is the fundamental factor of a company policy. In other word, contrary to the ethics of classical management which only concerns about generate revenues but ignore workers opinion. In recent successful business, the suitable management for labors should include both financial and emotional rewards. In addition, motivation and personal satisfaction should be set into first rank. A good connection between managers and employees could sustain a high quality of performance. Just like Starbucks, to apply the correct strategy would show the way to a successful path. References: Hwang, V. (2004). Creating a unique blend: total rewards at Starbucks. Strategic HR Review, 3(4), 12-13. Starbucks Develops Survey to Better Understand Employee Performance. (2012). HR Focus, 89(10), 15. Starbucks - investing in people as a route to profit and growth. (1997). Industrial & Commercial Training, 29(4), 137-138. Sun, P., Hsu, W., & Wang, K. (2012). Enhancing the commitment to service quality through developmental and rewarding systems: CSQ consistency as a moderator. The International Journal of Human Resource Management, 23(7), 1462. Retrieved from

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