A 'special blend' at Starbucks
How do you use compensation and benefits to promote staff loyalty?
Partners – as employees are known – are at the heart and soul of the so-called “Starbucks Experience”. We believe one of the reasons why it is such a great place to work is because of the human connections customers and partners share every day in our stores around the world.
The company remains committed to sharing its success with its partners and creating the best possible work environment to inspire them to achieve their full potential and realise their career aspirations. Starbucks refers to its employees as “partners” because they directly contribute to its success by helping to build the brand one cup at a time, one person a time.
Since our first Asia-Pacific store opened in Japan in 1996, Starbucks has successfully expanded across the region and we remain committed to our growth here. Asia-Pacific has been, and will continue to be, at the forefront of Starbucks’ international expansion, in extending the “Starbucks Experience” beyond our retail locations, to more customers and partners. Today, Starbucks operates in over 1,500 stores across 10 markets in Asia-Pacific. As a company, we are continuing to build on the momentum we have in our business outside the United States and capitalise on the tremendous global opportunity.
As for Asia-Pacific, we are extremely excited about the growth story we can build across the region.
The majority of our store partners across Asia Pacific are part-timers, as many of them are students. Due to the low birthrate in some countries or, in the case of China, the one-child policy, recruiting and retaining talent at the store level can be a challenge, and this is a trend across Asia. We try to overcome this by designing benefit systems that can give partners motivation.
Specifically, we find that Gen Y partners value career development and planning so we make a concerted effort to focus our retention strategy on addressing these priorities.
Our goal across all our 10 Asia-Pacific markets is to create the best possible workplace environment for our partners, one that attracts and retains talented individuals and is regarded as a great place to work. Our partners are at the core of our success: one of our greatest accomplishments is granting equity in the form of stock options to eligible partners in Australia, Singapore and Thailand – as well as other wholly-owned operations worldwide. Over 100,000 partners are currently receiving Bean Stock worldwide, which is no small commitment on the part of our company – this shows true commitment to [chairman and CEO] Howard Schultz’s original vision of a company that genuinely takes care of its people.
The term “Total Pay” refers to Starbucks’ partner compensation and benefits. Our Total Pay benefits system is one that is extremely market-competitive and unique. It encompasses base pay, allowances, incentives, benefits, retirement, leave and long-term equity (Bean Stock).
We handle Total Pay in a unique way and see our healthcare benefits as one of our key differentiators. This benefit is enjoyed by our part-time baristas around Asia-Pacific as long as our partner has worked a certain number of hours. All partners working for Starbucks company-owned operations are eligible for Bean Stock. This is our Starbucks way of sharing the company’s success with our partners.
Since late 2010, we have also started offering partners restricted stock units which are long-term equity. This gives partners the right to become shareholders on a vesting schedule. This is by no means standard practice in our industry and is another mark of difference we are proud of as most other companies only offer this kind of incentive to their senior executives.
In addition to pay, it is always our belief in differentiating our partners’ total pay experience from other companies, and the two initiatives we have been proud of are the Bean Stock and the provision of a health insurance programme for all our partners – full and part-time – so as to protect their well-being. We have also made available an emergency fund called the CUP Fund in selected markets where partners can apply in case of an immediate financial or health emergency.
When Bean Stock was first introduced, it wasn’t seen as a tool to help with retention. The programme is a way of sharing the company’s success with partners at all levels, and it genuinely recognises the importance of our people. Partners have used money earned from their stocks to fulfil personal dreams, such as building their own home, as aid during times of emergency, or to provide healthcare for their family, among other great causes.
The way Asians look at stock options is very different from their North American counterparts. In Asia, cash is king. Education on the Bean Stock programme is the key to our success.
Over the years, we’ve worked on raising awareness about the advantages of our Bean Stock programme with our Asia-Pacific partners and the level of understanding and appreciation of the programme has increased significantly as a result.
We recognise that our partners have contributed greatly to Starbucks’ success through every single moment of personal connection they have built with our customers. Starbucks’ desire – and our ability – to foster these kinds of connections have always defined our culture.
When we honour our partners, be it through things such as Bean Stock, we inevitably strengthen the connections they have with our customers, and in the communities where we do business. Quite simply, that is what it means to do business, through the lens of humanity, and this has defined Starbucks as a business and an employer.
Starbucks offers a competitive compensation programme that recognises and rewards partners’ contributions toward achieving the company’s strategic goals and business objectives, while aligning with our Starbucks Mission.
In terms of compensation and benefits, we stay very close to industry and market trends to ensure we offer competitive packages to our partners. At the same time, we have also created a culture with a very strong people focus, and we engage partners in areas beyond pay and benefits.
Specifically, giving back to our communities in an active and meaningful way has always been part of who we are as a company. It is a commitment rooted in the belief that we can balance profitability and a social conscience. With that, we encourage partners to play a part in bringing people together, inspiring change, and making a difference in people’s lives. As our growth momentum continues in the region, it is important that we stay true to who we are, that we will leverage our scale for good and be the catalyst for positive change.
As told to Hilda Poon