Lessons for managers from Howard Schultz on employee motivation

Write a formal academic essay on "Lessons for managers from Howard Schultz on employee motivation".


In the era of Rapid Globalization, the competition was becoming more intense and rapid for the service industry that is dealing with the similar products and services. The most critical aspect for the business to success is not only in terms of quality of products supplied but it relates to the motivational level of the employees that how well they are working in the organization.
The employees are the one who is in direct contact with the customers and it is essential for the organization to motivate and reward their employees to make them the quality personnel. In this academic essay, we are taking the case study of an entrepreneur Howard Schulz, who is the CEO of Starbucks Corporation, the famous retail coffee shop, by having more than 4000 branches in the world.
Howard Schulz is famous for its leadership style by the adoption of best motivating style for its employees, which make Schulz the business model for the Strategies of employee motivation (Bratton, 2015). This paper helps the future managers to learn the lesson from the motivational style of Schulz so that they can also make the organization the success one in the future.
This paper also highlights that how the managerial implications of Schulz motivation will help the managers in the contemporary workplaces in the context of high productivity, job satisfaction, and employee turnover.

Analysis and discussion

Starbucks is famous for its job motivational strategy, which will highlight the organization in the context of job satisfaction and low turnover rate of employees. Motivation is considered as the important factor in the business, as it fosters the positive relationship between the employees and managers.in the words of (Kefenie, 2015) he reported that the workers are having strong social needs, which they will try to satisfy by the informal memberships at the workplace.
The CEO of Starbucks Corporation Howard Schulz meant that the success of the company is not coffee but its employees. The behavior and priorities of Howard Schulz are heavily influenced due to motivation. Schulz as the CEO and leader motivates the employees, which helps in understanding the motivating theories given by eminent scholars. In an interview conducted with Scott Smith, the CEO told that the quality and client satisfaction is based on the employee motivation level at the workplace. Howard Schulz leadership style is the adoption of the motivational theories which includes Maslow’s Theory, Herzberg Theory and Equity Theory of Adam.
Abraham Maslow conducted the theory named Hierarchy of needs, which consist of five levels. This model helps in outlining the basic need of the individual who is working in an organization. The lowest level of pyramid depicts the physiological needs, which are termed as the basic needs. This stage is successfully used by the Starbucks by providing their employees with breakups in order to fulfill the needs of hunger, as well as the company, pay the employees the healthy pay scale to the full-time employees and the hourly rates to the part-time employees.
Another benefit which is offered by the company to the staff is the discount on the products on the offerings of a company (Jordan, 2015). The next level is the safety needs which involves secure environment in terms of safety and health. For this level, Starbucks offer the number of health-related benefits to its employees, which includes medical insurance, mental health care, vision and dental care, and short and long-term life insurance for disability.
The third level is defined as the social needs which demand for affection from employers, in terms of respect from colleagues and friendly rapport in the eyes of managers. Starbucks provides this to the employees as the job title for the employees will be given as “partners” rather than termed as workers or labors. The respect is also provided in the organization in terms of teamwork, which is highly encouraged in the organization for knowing each other and helps in improving the relationships.
The fourth level outlines the Esteem needs which includes promotion and job status. For this, the strategy that is adopted by the company is that the employee who is showing outstanding performance in the organization will be promoted to Barista on the position of store managers or to the District Manager role (Phetkaew, 2015). This shows that the company does not limit the employees when it comes to promotion (The brilliant management strategies of Howard Schultz, who just announced a pay raise for US employees of his $82 billion Starbucks empire.
The top of the pyramid highlights the Self Actualization needs, which includes that the employee wants the sense of achievement in the job. In this, the company offered the training sessions for the employees which enable the employees to choose the right career path and helps in fulfillment of achievement goals. According to the survey of the workforce, the most important reason of the employees to be working in Starbucks is “to work in the place, where I feel I have a value".
The next theory is the Adams Smith Equity theory which was developed in 1963, and the theory is based on the outline that every employee will receive the balance between the input of work and the output which they receive from the employer (Riaz, 2014). So, in this, the CEO of the company adopted the strategy of equal treatment for all the employees of same grades.
In this way, the employees of the company feel that hard work is treated equally on the part of the organization. For this Schulz develop the well-organized communication system, between the employees and the managers at Starbucks (Business Insider, 2018) The example is: In Starbucks, the managers interview the employees and schedule the time off and working hours as per the requirements of employees in which they are comfortable.
In addition to that, the employees have the freedom to provide suggestions and develop plans for the goal accomplishment. This strategy of motivation develops the positive outcome in the employees if their suggestions ate taken into consideration by the managers. This strategy results in high retention rate in the organization. The average retention rate that was noticed in Starbucks is 65% which is much higher in comparison with other retail chains.
In terms of the Herzberg’s theory, the theory is defined in terms of Motivators and the Hygiene factors. Motivators include Achievement, recognition, and responsibility. If these will meet then the employees feel satisfied and if they are not met employees feel dissatisfied (Dwivedula, 2016). For fulfilling the motivator’s factors the company arrange the series of training modules.
These training modules coach the employees for improving their job skills and lead them at the right career path. The culture adopted by Starbucks focuses on the value of people. Schulz believes that each and every employee will be eligible for the care and respect of the leaders. For instance, the suggestions provided by employees will be respected by the team leaders and the managers.
On the other hand, the hygiene needs include the policies of the company, employee-boss relationship, relationship with colleagues and the working conditions (Porter, 2017). If these needs will not be met then the employees feel dissatisfied. So for fulfilling this needs, Schulz focus on the relationship status between the employee and the manager. For this, the managers at the Barista treat the initial level workers as the “partners”, which leads in a reduction of status distance.
The company believes in the small team concept so all the teams at Starbucks are between three to six members so that all the members of the team acquaint with each other easily.
Organizational behavioral modification in Starbucks due to motivating factors:
Behavioral modification is the approach that is focused on the concept of behavioral change. This change is acquired by the modification in the undesirable behavior, with the acceptance of accepted and desired behavior. The behavioral modification will be done only through reinforcement strategies. The most common technique that will be used in the behavioral modification is the positive reinforcement or the motivating reward system.
Starbucks use the positive reinforcement techniques by offering the rewards to the employees in an ethical way, which will motivate the employee’s satisfaction level in an organization (Making Sure the Cup Stays Full at Starbucks: Leveraging Narratives from Glassdoor.com to Improve Recruitment and Retention (2018). On the other side, Starbucks also recommend for negative reinforcement, but it also benefits the employee in terms of motivation.
For instance, at Starbucks negative punishment refers to the withdrawal of something, and in the company, it includes salary deduction as the form of penalty (Ngah, 2015). This will also encourage the employees in the way, that to avoid this kind of punishment, they stay in the right lane, which will ultimately lead to the increase in productivity of the organization.
Organization also focuses on non-monetary benefits as they give the stock option to the employees under the Bean Stock Plan , in which the employees who have completed six months in the organization and worked for the time of 20 hours a week, is eligible for adopting the stock option (Topolosky, 2014). This effort is initiated by the Starbucks only and made the company the first one in term s of initiating the concept.
Flexibility is also one of the aspects of the company, which will empower employees and encourage innovativeness. Frappuccino, a popular cold coffee of Starbucks is the result of innovativeness of employees. As we know that people don’t quit organizations, they only quit bosses.  Lack of communication, negative relationship and backbiting leads to the ineffectiveness and productivity of the organization (Kember, 2016).
To overcome this problem Starbucks adopt the feedback culture.by which the employee directly obtain the information for the effectiveness of the job performance of the organization (How Starbucks Conquered Employee Turnover, 2018). This helps the subordinates in sharing the problems and the issues faced by them with their bosses, which will lead to less conflict in terms of performance and increases the retention of employees in an organization.
The organization also believe in pay for performance culture, which will increase the motivation level of the employees of Starbucks by providing quality feedback in terms of job satisfaction and dedication of employee.it helps in retention of the employee (Larrick, 2016). According to the information group, GIGA retention will be increased by the uses of meritocratic management by 27%.
In addition to that at Starbucks, the gap between the managers and employees are at the narrow level. For example, when Schulz takes the additional role of president and CEO of the company on 7 Jan 2008, he did not receive any additional compensation in respect of his new position , will also motivate the employees , that all the employees are treated equally at Starbucks.
Starbucks is considered as the champion in terms of employee engagement and retention/.CEO Schulz claims that the relationship at Starbucks with the people over there is considered as the competitive advantage for the company. The company is also providing the wide range of perks for the employees, which will attract the manpower towards the company.


As Starbucks is considered as the best place to work as per the magazine Fortune as they will focus on the motivation of the employees on the basis of motivational theories the success of the company has attracted the attention of the worldwide companies. The company is acting as the role model for other retail chains and Schulz the CEO of the company is considered as the role model for the future managers who make the organization a success one in the eyes of the world.
The theories of motivation that are used by Starbucks for motivating the employees provide the framework in terms of analyzing and interpreting the behavior of employees, within the organization. As per the present study that has been conducted on the motivation factor of Starbucks, it is concluded that motivation is considered as the key factor for the success of the organization as the analysis interprets that rewards must be there for increasing the motivation level of employees (Miner, 2015).
As in Starbucks, the concept of equal treatment of employees are there and the workers are named as “partners”, which helps in providing intrinsic satisfaction to the employees. The company also focused on the extrinsic satisfaction by the concept of pay for performance. So to conclude the study, the findings state that this case study proved beneficial for the future managers in making their organization a success one.

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