Leadership Practices and Concepts

Leadership Practices and Concepts

Final Paper

MGT 460

Leadership Practices and Concepts

One of the best tools any company has freely at its disposal to achieve success is ethics and governance. The ability in business to decide what is right from wrong is business ethics. Ethical issues are usually dependent on the morality of the issue. In business, it is doubtful that you are ever faced with an ethical question on a situation. These types of challenges are inevitable in any organization, especially when you are a large corporation such as Starbucks. It is how you respond to these challenges and this can be determined by the source of the challenge as well as how it drives the organization. Starbucks is no stranger to challenges within its many years of existence. Being one of the leading coffee companies and coffeehouse chains in the world, Starbucks reputation has been mostly built on the loyalty of its customer base. In the last 48 years that Starbucks has been in existence, it has been able to develop and build upon this loyalty allowing it to be such a success. However, Starbucks is not a stranger to bad press. The organization has been pinpointed by racial activists that state that they discriminate against people of color. With this essay, I will discuss this issue and the impact that it has on this organization.

In 1971, Starbucks opened it’s first location in Seattle’s Pike Place Market. Since 1971, the coffee and specialty drink chain has grown to over 23,391 locations world-wide, with over 170,000 employees. Starbucks originally started with one location that specialized in espresso coffee and blended specialty drinks such as the ones many of us know now, Carmel Macchiato or Latte. Realizing the growing market could be capitalized on, they began to look for cash and investors to invest in the company and expand on their current offerings (Gabbat, 2018). Even though the company is proud of offering some of the best and well known coffee products in the market it is not the core values or the mission of the organization. The company also prides its self on the quality of its locations as well as the atmosphere and interaction of the customers; or what they call the Starbucks experience.

As previously stated, Starbucks mission isn’t only to offer the experience or expectation coffee. According to their website Starbucks mission is ““Our mission is to inspire and nurture the human spirit-one persons, one cup, and one neighborhood at a time”. With the values of the organization being; “With our partners, our coffee and our customers at our core, we live these values: Creating a culture of warmth and belonging, where everyone is welcome. Acting with courage, challenging the status quo and finding new ways to grow our company and each other. Being present, connecting with transparency, dignity and respect. Delivering our very best in all we do, holding ourselves accountable for results. We are performance driven, through the lens of humanity” (Starbucks, 2019).

An organizations reputation can make or break its success. According to a study conducted by Reputations Institute of Cambridge, a company that measures the reputation of over 7000 global organizations by reviewing measuring data it receives states that Starbucks, US RepTrack score in 2018 was 66.6, which is below the 72.5 points that are required to rank on the yearly list of the top 100 most reputable companies in America. However as of June 2019, Starbucks ranked 94th on the list. The success of this ranking is by majority dependent on how the public viewed its response to the accusations of racial bias and prejudice.

Even though a very successful organization, they have several challenges they are facing including several incidents in the last several years of racial discrimination and bias. In April of 2018, 2 black men were arrested in suspicion of trespassing in a Philadelphia location and just days after Starbucks made the news after allegedly a black male was not allowed to use the looked bathroom even though a white customer was granted access right before him. With complaints like this of alleged racial profiling and bias, customers took to social media outlets to coordinate a boycott of Starbucks products and stores. While instances like these are not only found or restricted to cafes and coffee shops, there have been multiple incidents reported in cafes alone. Starbucks made the news again in May 2018 when an employee had written racial slurs on a customer’s cup. Additionally, in 2017 there were complaints of one of its locations handing out Halloween candy to white children and not black children. It was the intendent in April 2018 in Philadelphia that urged Starbucks CEO Kevin Johnson to address the public relations crisis that continued to snowball over social media by resulting in protests and boycotts.

Instead of Johnson putting the blame on the managers, as other organizations may have done, Johnson handled the situation they way he felt would be the most conscientious and responsible way he knew. Johnson along with the chairman of Starbucks met in Philadelphia with the accused, the local police, and the civic leaders to address the situation. The outcome was to close 8,000 locations and provide racial-bias education to its 175,000 employees. Additional to this, the organization began developing training programs for the existing and new employees about both racial and gender discrimination issues. So what was the cause of this incident? It would appear that the manager had failed to create a culture in which everyone is treated the same and accommodated no matter what ethnicity you are. By responding to this incident and the situation is has caused with transparency, dignity and respect, as well as holding themselves accountable on a more human level, Starbucks is showing that is is acting with courage.

With this incident as well as others not only in Starbucks locations, American consumers now demand the consciousness of the companies they do business with, resulting in a crisis trust for many companies. The research that was conducted by the Reputation Institute of Cambridge also showed that there were 36 new companies that made the top 100 list of reputable brands. These brands had a consistent quality between them that was the proper handling of customers. The making of the list was by majority based on their good political, social and economic change attributes as well how the company responded to them. With social media, fake news, and data privacy issues continuing to question the ethics of organization, trusting in a brand has become a major challenge companies face today.

One of the most important factors in an organization’s success is the leadership. Leadership in any organization is expected to lead by example, this is including ensuring that they live by the corporate values. Great leaders don’t sit behind the desk, they are at the forefront of their organization and participate in the community in which they serve. Consumers these days expect the companies they work with and purchase from to take positions on social and value based issues, especially the ones that are in line with the company’s mission statement. With social media being able to make such an impact and bring social issues to light, it is extremely import during emotionally charged times that the actions of the organization and its employees are also aligned with the company’s mission statement and values. Leadership in these organizations need to be prepared to stand up during these times end take responsibility for the actions of anyone involved in the organization as well as make sure that changes occur. This is what Kevin Johnson, the CEO of Starbucks as well as the executive leadership team did at that time. They took responsibility of their staff and intervened and made changes.

Over the last several years, there have been several incidents that caused individuals to question the values of Starbucks. These incidents allegedly exposed the corporation for discrimination of people of color and the community. After the incident in Philadelphia when two black men were arrested, it became a national debate leading to the closure of some stores so that racial bias training could be held. Most consumer do not believe that these social issues are only in Starbucks locations, however many businesses accuse Starbucks for being responsible for causing them to be branded as the “coffee shop racism” (Scott, 2017).

The gentrification of neighborhoods is one factor that is contributing to coffee shops being placed in the topic of racial bias and divisions. With the expansion off business into urban neighborhoods, as well as new land development neighborhoods are becoming more diverse and changing business dynamics. Gentrification causes interactions between the people who have lived in the neighborhood their entire lives with new families and exposure to new cultures. Coffee shops can act as a place for different races and cultures to interact. Some of the residence of these neighborhoods decide to move because of their inability or desire to accept the changes within their neighborhoods. When Keba Konte, the owner of Red Bay Coffee, hosted a live stream in the wake of the Starbucks closings, he stated that coffee shops are predominantly white and that the black owner of a coffee shop he understood what the men in Philadelphia went through, however he felt that since coffee shops, especially those that are specialty because the culture is white-centered you are in an environment that is built around white culture, and when other ethnicities enter these shops. Konte also stated that there was other video evidence of this type of abuse ending in arrests (Gabbatt, 2018).

Since the Philadelphia incident Starbucks executives have apologized, however this incident sparked protests and threats of boycotts against the chain. The coffeehouse chain has always been known for taking a liberal stand on issues such as same-sex marriage and promotes a diverse workforce. Since, the company reached a settlement in a lawsuit that was brought against the chain by the two men. As precautions to avoid these type of issue from occurring, Starbucks to preventative actions and put into place guidelines that allowed customers to linger and use the restrooms even if they did not buy anything. This in turn caused backlack from the customers because of the security risks this could place on employees and customers as well as allowing the cafes to be places for homeless to hangout. The new policy was later amended to include that non-paying customers would only be allowed to stay in the store as long as they did not exhibit any disruptive behaviors and the guidelines on when to call 911 where further defined (Meyer, 2019).

Shutting down the stores is very costly and sends a clear message that Starbucks is committed to righting this wrong. They are committed to the training of their employees, but Starbucks is still facing some backlash on this idea. Some people believe that the training will not be sufficient since it does not provide enough cultural context that can change the culture of the individuals and the cafes and that the employees need more extensive training in order for this to work. The thought is that one day of training is not enough and will not make an impact because based on psychology, prejudice is motived by your unconscious thought and not by racism its self (Merelli & Goldhill, 2018).

There are further opportunities for Starbucks to invest in its human resources and innovations to help to alleviate some of these images of racial bias and could be a deeper more effective approach than a one-day training. It is evident that the company has already spent time and money on the diversity of the organization, however they need to look further into the current cultural issues they face and at racial discrimination. “One of the major questions the company should be asking is the action they should undertake to empower the voices of color” (Helmore, 2018).

As a country as whole, racism is an ever-present problem. Racially driven headlines liter the press almost daily. The Starbucks Philadelphia incident only brought the fact that they were not impervious to challenges our world is facing today on racial disparities. Starbucks made a good decision to have their employees participate and be more aware of the existence of racial bias. This also helps employees to self-reflect on the possibility of bias in themselves. Implicit bias tends to the affect the decisions when they are made under stress (Calfanas, 2018).

In conclusion, not one organization is impervious to the challenges such that Starbucks faced. However, with a strong leadership who is willing to understand that taking responsibility and putting into place the right actions, most organization should be able to find themselves out of the situation that could potentially damage their organization enough to see if crumble. While previous to 2018, Starbucks did not make the top 100 reputation companies in the United States, the actional that the executive team put in to place after the Philadelphia incident was enough to prove to their customer base that they were a company of values and they were committed to proving this and succeeding in their mission. Because of this, Starbucks has since made the top 100 and will remain a successful corporation for years to come.

Aaron Mak (2018)“What Can Starbucks Accomplish?”, Slate, April 20, 2018, https://slate.com/technology/2018/04/does-implicit-bias-training-work-starbucks-racial-bias-plan-will-probably-fail.html

Calfanas, J (2018). Was Starbucks racial bias training effective? Here’s what these employees throught. Time

Gabbat, A. (2018). Coffee shop racism: where America’s racial divisions are exposed. The guardian.

Helmore, E. (2018). The coffee chain will close 8,000 US shops for retraining on Tuesday in response to a racially charged incident in Philadelphia. The Guardian.

Loeb, Walter. 2013. Starbucks: Global Coffee Giant Has New Growth Plans. january 31. https://www.forbes.com/sites/walterloeb/2013/01/31/starbucks-global-coffeegiant-has-new-growth-plans/#6d8281b94f87.

Merelli, A & Goldhill, O. (2018). Starbucks tactic to address racial bias is not going to work. Quartz

Meyer, Z. (2018). With moral courage Starbucks worker take part in emotional training to avoid racial bias. USA TODAY.

Scott O. Lilienfeld, (2017). “Microaggressions: Strong Claims, Inadequate Evidence,” Perspectives on Psychological Science 12 (2017): 138–69.