Strategic Value of Human Resource Initiatives at Starbucks

Human resource strategies in the current highly competitive business environment have become very crucial for a business to have and to maintain a competitive advantage. The effective management of human resources through calculated well-intended human resource initiatives ensures a firm achieves its objectives while keeping the employees happy and willing to provide their best effort for the success of the company. Companies that implement the best human resource initiatives are also ranked the best places to work for in the world. One of these companies that have excelled over the years in employee relations management and efforts is Starbucks. The company has put in place initiatives that not only endear employees to the company but also provide financial gains for the company through excellent service delivery. High levels of customer loyalty can also be attributed to the company’s commitment to superior HR practices. However, there is a need to understand if a commitment to HR initiatives adds any strategic and financial value to a business as other initiatives undertaken at the organizational level. This essay provides five measures that Starbucks should implement to measure the strategic and financial value of human resource initiatives.

Measures of the strategic and financial value of human resource initiatives at Starbucks

            Starbucks has implemented several human resource initiatives that drive the company’s value proposition to the customers and have allowed it to succeed at domestic and international levels. These strategies include training on values and culture of excellence, customer service, and collaboration, inculcating coffee knowledge and expertise on employees at different levels especially coffee baristas who are believed to determine customer satisfaction, and high remuneration (Heal, 2012). Starbucks has also implemented effective human resource recruitment focusing on hiring, developing, and retaining the best talent for the company. Starbucks has put in place strategic HR recruitment and uses social recruitment on its career website to access qualified employees with right cultural fit for the company. Employee development at Starbucks focuses on regular performance evaluation, work-life balance promotion, and involvement in decision-making, training, and providing an environment for the employees to succeed. Perhaps, one of the most crucial elements of Starbucks HR initiatives is how it treats its employees. The company considers employees as its most important asset and considers them partners and believes in “treating our partners with respect and dignity,” proving a clear commitment to excellent human resource management. Therefore, Starbucks should have a way of determining if the HR initiatives have strategic and financial value to the company to which the following measures are proposed as the basis for making the evaluation.        

1. Employee Retention and promotion

            A measure for determining the strategic and financial value of the human resource initiatives at Starbucks is employee retention and promotion. Most of the initiatives by the HR department at Starbucks are geared towards ensuring the employees stay for the long-term and even progress from low level to management positions. These programs include training, knowledge development, and better remuneration than competitors, creating a harmonious environment and even providing stock options. The success of these strategic HR initiatives should, therefore, be linked to retention and promotion. The measure involves calculating the success of the company in retaining employees and determining the percentage of the employees who successfully get promoted to higher positions at the company. A high level of retention at Starbucks also shows the limited loss of company information, training resources, and talent through staff turnover, which could be very detrimental especially in the service industry (Banfield & Kay, 2012). The high retention rates also save the company enormous amounts that could be used to replace employees and train them to meet the quality standards and culture at Starbucks (Reitman, 2013). According to Reitman (2013, 8), in addition to high retention reducing replacement costs, it ”increases employee productivity, customer loyalty, and productivity.”  The higher the levels of retention and international promotion at Starbucks show a clear indication of the financial and strategic value of HR initiatives at the company (Fitzpatrick, 2017).      

2. Employee satisfaction and culture

            The focus of all HR strategies at Starbucks is at promoting the company’s culture of excellence in service provision and augmenting employee satisfaction. Understanding the effectiveness of HR initiatives in achieving these goals will help the company understand the strategic and financial value these undertakings because a highly satisfied employee and excellent culture create customer loyalty and word of mouth advertising translating into high sales and revenue for the company. The strategic benefit of satisfaction and culture at Starbucks also include achievement of widespread recognition for ”creating an exceptional experience and being a great place to work” (1RMA, 2017, 1538). These accolades improve the company’s ability to attract new hires while augmenting customer satisfaction, revenue generation, sales, and profitability hence critical strategic aspects of the business. The company can undertake an anonymous survey of the employees to determine their satisfaction and review the culture owing to high reliability.     

3. Cost analysis

            Any business relies on effective cost management strategies to remain afloat and achieve the strategic goals and objectives. Human resource initiatives are a cost taking undertaking, especially for Starbucks a company that has shown time and again its willingness to spend on HR including paying better and offering more benefits to its employees among other actions. Cost is, therefore, an integral aspect and should be used in determining the strategic and financial value of HR programs. Undertaking budget variance analysis on the HR programs implemented at Starbucks including hiring, training, compliance, management, recruiting, and compensation will help in measuring strategic and financial value (Finler & McHugh, 2008). The costs associated with these programs will be evaluated against set benchmarks, industry standards, budgetary allocations, and revenue generation to assess financial and strategic value. Over budget costs, cost overruns, higher than average industry standards will depict the lack of adequate importance of these initiatives and Starbucks would be better off outsourcing to get better value.     

4. Evaluating the effectiveness of Individual Programs

            The determination of the strategic and financial value of human resources should be linked to the company’s bottom line. The contribution of every human resource initiative implemented at Starbucks should be evaluated on return on investments. Some of the HR programs that could be assessed to determine the financial and strategic value at Starbucks include compensation where the company seeks to establish how the payment made to workers translates to productivity. Starbucks undertakes training for its employees providing another basis to check the correlation between training and level of production. A positive relationship shows the strategic and financial value of training to the company. Recruitment can also be evaluated where the performance of new hires is compared with that of existing staff to check if new employees perform better or poorer to current employees. The strategic impact of recruitment cannot be understated as it determines the company’s ability to meet customer demand and provide excellent service in the future. The implementation of new technology in the human resource can be evaluated based on the differences between prior and after realization productivity to show its value to Starbucks. Understanding the contribution of each initiative provides a picture of human resource financial and strategic value at Starbucks.            

5. Workforce Productivity

            HR programs serve to directly or indirectly provide an environment that augments employee productivity. Starbucks has in place set targets for each employee to achieve depending on their job roles and responsibilities at the company. The development of detailed job descriptions at Starbucks has allowed the company to ensure every employee knows what is expected of them and they seek to achieve these goals as they provide service. The information is very critical in evaluating the strategic and financial value of human resource as it gives the desired outcomes highlighted by the company when engaging the employees and performance can be measured against these benchmarks. The extent to which the human resource department meets these targets provides an effective platform to determine the strategic and financial value of HR programs at Starbucks.

            The measures provided will aid the company in determining the strategic and financial value delivered by HR initiatives. Starbucks should focus on understanding the contribution of HR initiatives towards the financial and strategic value of the business. These initiatives can be evaluated through cost, individual programs evaluation, worker productivity, retention, and employee satisfaction and culture. Undertaking a strategic and financial assessment of HR initiative will provide Starbucks an informed basis for decision-making to improve effectiveness and deliver more value currently and in the future.

References

Finkler, S. A., & McHugh, M. L. (2008). Budgeting concepts for nurse managers. Elsevier            Health Sciences.

Fitzpatrick, H. (2017). Marketing management for non-marketing managers: Improving returns    on marketing investments. John Wiley & Sons.

Heal, G. (2012). When principles pay: corporate social responsibility and the bottom line. Columbia University Press.

Information Resources Management Association (1RMA). (2017). Advertising and branding:       Concepts, methodologies, tools, and applications. IGI Global.

Jayaraman, S. (2016). Forked: A New Standard for American Dining. Oxford University Press.

Reitman, A. (2013). Talent engagement across the generations. American society for training        and development.