Starbucks Audit HR CLASS

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Students will select an organization and conduct a review of the HRM programs that support the organizations staffing, training, compensation, performance appraisal, and benefits functions. Students can conduct research using the Internet, library resources and/or they can interview an employee of this organization. A primary source of information may be the organizations employment web page, brochures, employee handbook, or annual report. All parts of this assignment should focus on the same organization. Students may use their current or former employers.Part I of the assignment consists of a 2-3 page description of the organization.Part II of the assignment focuses on summarizing the internal and external recruiting, selection and the training and development practices of the organization.Part III of the assignment focuses on summarizing the benefits, performance appraisal, and compensation programs offered by the organization.Part IV of the assignment consists of a 2-3 page description comparing the organization under study to other organizations utilizing best practices in HRM programs.

Text of Starbucks Audit HR CLASS

MGT 3613- 004

May 1st 2012

2The Organization Mission Statement, Goal Industry Section and Competition Size and Location History Pages 3-4

THE STAFFING & TRAINING FUNCTIONS Internal & External Recruiting Selection Training & Development Pages 5-6

Pedro Hernandez Peter Aveiga Woosub Shim Mark Venegas Nikhil Menon


Companys Benefits Package Performance Appraisal Process Compensation Function Pages 6-8

ANALYZING THE ORGANIZATION Best companies to work for Recommended changes


The OrganizationStarbucks mission statement is: To inspire and nurture the human spiritone person, one cup and one neighborhood at a time.

One of the reasons Starbucks has been a success is through its goals that help shape their company culture. Starbucks, even though their company is spread all throughout the world, likes to treat their company as if it was just a local shop in the neighborhood. Their international development strategy changes to different markets globally addressing the local needs and requirements of each individual market. Starbucks objective seeks to be a global company, making a difference in people live by leveraging their brand and the coffee experience to foster human connections. Starbucks competes in the food and beverage industry with a specialty coffee-bar part of that industry. Starbucks stores offer a choice of regular or decaffeinated coffee beverages ranging from the classic cup of coffee, lattes, frappuccinos; within the last few years they have added large variety of pastries. Starbucks also plays smooth jazz as part of its easy going, nurturing environment. Their closest competitor is called Second cup, which is a Canadian franchiser. McDonalds McCafe can now be included into the conversation due to the fact that McDonalds is known globally and now they are trying to enter and compete in the coffee industry. Some others worth mentioning are Green Mountain Coffee Roasters, Coffee Bean & Tea leaf, Costa coffee, Peets, and Caribou Coffee Starbucks is considered the leader in the coffee bar industry globally. They have over 11,000 locations and annual revenue of about 6.4 billion dollars. Their initial public offering of common stock in June 1992 turned to be one of the most successful IPOs of that year. Overall Starbucks is tied to helping specialty coffee products catch on across the United States increasing the number of cafes in 1992 from 500 to 10,000 by 1999. Starbucks, as of 2011, is the worlds #1 specialty coffee retailer. They have more than


17,000 coffee shops in about 40 different countries. In the United States they have exactly 12,781 stores open. In 2011, they had a total of 149,000 employees recorded in their company fiscal yearend report. Starbucks first store opened in 1971 in Seattle, Washington by three partners: Jerry Baldwin, Zev Siegl, and Gordon Bowker. In1984, the original owners chose to buy out the competing coffee company Peets. After the acquisition of Peets, Starbucks began to expand quickly and opened its first locations outside of Seattle at Waterfront Station Vancouver, British Columbia, and Chicago Illinois in 1988. By the year1992, the company had grown to 165 stores. Currently, Starbucks competes in 55 different countries. The first Starbucks location outside of North America was located in Tokyo, Japan. Even though Starbucks has had much success and competes in different international markets, they still try to continue treating their company as a family run business. Starbucks chairman Howard Schultz has talked about making sure growth does not dilute the companys culture and the common goal of the companys leadership to act like a small company. Starbucks is also very involved in environmentally friendly causes. Starbucks was ranked number 15 on the US Environmental Protection Agencys list of the Top 25 Green Power Partners for purchases of renewable energy in 2008.


Staffing & Training FunctionsStarbucks, like most companies, likes to promote from within. They have a very formal policy when it comes to their labor force; Starbucks gives their employees plenty of resources such as training and tuition reimbursement to develop their employees. Starbucks mission includes the commitment to treat its employees with respect and dignity, and to be a force for positive action in the community in which it does business. Starbucks uses an online job bank that allows everybody to see the employment opportunities that are available within Starbucks. For their current employees, Starbucks has which is an online component part of their career site. This allows employees to apply for higher positions and have a job hiring manager overseeing the process which gives the employees general help along the way. Starbucks has many ways for finding candidates to supply its labor market when they dont have the adequate internal candidates or they feel the need for a fresh look. For some of the lower level positions, Starbucks uses employee referral and campus recruiting which are most effective when looking for large amounts of employees without high qualifications. Since this process doesnt tend to produce results for some of the top-level employees, Starbucks uses head hunters to fill some of its more qualified position. If you are selected to interview with Starbucks, you can expect to have two to four interviews with a hiring manager, team mates, cross-functional business partners and other decision makers depending on the position youre applying for. Starbucks does not require drug testing or medical exams; there is the autonomy for a branch location to do drug testing, but thats within the discretion of the particular Starbucks which is stated in hiring process.


Starbucks has a 24 hour 9-block training program. The store manager and the learning coach, which is an established barista, provide guidance, while the partner takes on the self-guided modules. 16 hours are dedicated to bar practices, machine use and drink standards which are led by the learning coach. Once training is complete they receive a Barista 100 Certification. Starbucks structures their training program in 3 categories. On-thejob learning is 70%, Learning through other 20%, and Formal learning 10%. There are a variety of programs emphasized for continual learning in Starbucks such as their Coffee Master Program, which trains barista to be a coffee and tea authority in the store. Their use of a blended training approach consists of in-store training, online portal work and classes, both which have given Starbucks a competitive advantage when it comes to training their employees. Starbucks, like many other companies today, likes to promote from within and to achieve this they have a tuition reimbursement program. Starbucks employees must be at their position for a continuous length of service as of January 1st each year of the maximum calendar year reimbursement.

less than 36 months $500 per year Below director level: 36 but less than 60 months $750 per year 60 months or more$1,000 per year

Director level and higher are $500 a year and length of service doesnt apply, the reason being is that there are limits that Starbucks can provide for well compensated employees according to the IRS. The tuition reimbursement plan covers the cost of tuition, books, class-required supplies and required fees, such as exam or lab fees, charged to students for the approved courses.


THE BENEFITS/PERFORMANCE APPRAISAL/COMPENSATION FUNCTIONS Starbucks benefits include health coverage, income protection, reimbursement accounts and other programs such as Tuition Reimbursement, an Employee Assistance Program, Commuter Benefit Program and Adoption Assistance. Starbucks comprehensive medical plans include coverage for hospitalization, office visits, lab and x-rays, emergency care, prescription drugs, and mental health and chemical dependency treatment. Whats intriguing is that Starbucks has a variety of healthy living information available to each partner. Partners become eligible for benefits on the first day of the second month after they have been paid for at least 160 hours by the last Friday of a two month period. To continue eligibility for benefits coverage A partner must be paid a minimum of 240 hours in each calendar quarter. Paid hours are all hours for which a partner has been paid on pay dates that fall between the first and last day of the quarter. Employees may cover themselves and their dependents. Eligible dependents include a spouse, same- or opposite sex domestic partners, and eligible dependent children. Starbucks provides simple life insurance coverage benefits for eligible salaried and nonretail hourly partners equal to one times annual base pay. Retail hourly partners may purchase life insurance in flat dollar amounts of $10,000, $25,000 and $50,000. Partners may also purchase life insurance coverage for their spouse or domestic partner and dependent children at competitive group rates. These are all paid through payroll deductions of the employee. Starbucks has a 401k retirement plan called Future Roast 401k. The employee has to be over the age 18 and must have been working for Starbucks for 90 days. Partners can contribute 1% to 75% of their pay each pay period up to the annual IRS dollar limit of $16,500 or $22,000 for people over 50. Starbucks has two plans of either the Basic Match of 100% on the first 3% of eligible pay, 50% of the next 2% of eligible pay or the Enhanced Starbucks Match which is a 100% match on the first 6% of eligible pay.


Employees are immediately 100% vested in their entire account balance under the Future Roast 401k. This includes all employer match, 401k and any rollover account balances. Starbucks has a very st