388 Part 4 Organizing

PART 4 Management Practice

A Manager’s Dilemma Development (OECD): Australia, 1.57 percent; Canada,

0.99 percent; Greece, –1.09 percent; Ireland, 6.12 per-
Management theory suggests that compared to an indi-
cent; Korea, 2.09 percent; Turkey, 3.06 percent; United
vidual, a diverse group of people will be more creative
Kingdom, 0.23 percent; and United States, 0.36 percent.
because team members will bring a variety of ideas,
Despite fairly strong economic growth and low unemploy-
perspectives, and approaches to the group. For an or-
ment, workforce productivity rate growth across the globe
ganization like Alphabet’s Google, innovation is critical
has been relatively slow in recent years. Since the recession,
to its success, and teams are a way of life. If manage-
labor productivity growth has been about half what it was
ment theory about teams is on target, then Google’s
before the last economic crisis. Companies have been hiring
research and development Hyderabad center in India
more employees as a way to increase productivity growth.
should excel at innovation. Why? Because there you’ll
Low unemployment rates mean that companies have been
find broad diversity, even though all employees are from
forced to hire less skilled employees than they would like.
India. These Googlers include Indians, Sikhs, Hindus,
This makes productivity growth harder to achieve for com-
Muslims, Buddhists, Christians, and Jains. And they
panies. But what an opportunity this situation presents
speak English, Hindi, Tamil, Bengali, and more of
if you are getting into the workforce and have skills and
India’s twenty-two officially recognized languages. One
strong productivity to offer!
skill Google looks for in potential hires is the ability to
work as a team member. As Google continues to grow Discuss the following questions in light of what you
at a rapid pace, new Googlers are continually added to learned in Part 4:
teams. • How might workforce productivity be affected by or-
ganizational design? Look at the six key elements of
Suppose you’re a manager at Google’s Hyderabad fa- organizational design.
cility. How would you gauge a potential hire’s ability to
work as a team member, and how would you maintain • What types of adaptive organizational design might
your team’s innovation when new engineers and de- be conducive to increasing worker productivity?
signers join the group? Which might be detrimental to worker productivity?
• How might an organization’s human resource man-
Global Sense agement approach affect worker productivity? How
could managers use their HR processes to improve
Workforce productivity. It’s a performance measure that’s worker productivity?
important to managers and policy makers around the • Are teams more productive than individuals? Discuss
globe. Governments want their labor forces to be produc- and explain.
tive. Managers want their employees to be productive. • What could managers do to reduce the stress that
Being productive encompasses both efficiency and effec- employees feel due to pressure from managers to in-
tiveness. Think back to our discussion of efficiency and crease productivity growth?1
effectiveness in Chapter 1. Efficiency is getting the most
output from the least amount of input or resources. Or,
Continuing Case
said another way, doing things the right way. Effectiveness
was doing those work activities that would result in achiev- Starbucks—Organizing
ing goals, or doing the right things that would lead to Organizing is an important task of managers. As
goal achievement. So how does workforce productivity Starbucks continues its global expansion and pursues in-
stack up around the world? Here are some of the most novative strategic initiatives, managers must deal with the
recent data on six-year labor productivity growth rates realities of continually organizing and reorganizing its
from the Organisation for Economic Co-operation and work efforts.
 Part 4 Management Practice 389

Structuring Starbucks Although the executive team provides the all-important

strategic direction, the “real” work of Starbucks gets done
Like many start-up businesses, Starbucks’s original at the company’s support center, technology center, zone
founders organized their company around a simple struc- offices, retail stores, and roasting plants. The Seattle-based
ture based on each person’s unique strengths: Zev Siegl support center provides support to and assists all other as-
became the retail expert; Jerry Baldwin took over the pects of corporate operations in the areas of accounting,
administrative functions; and Gordon Bowker was the finance, information technology, and sales and supply chain
dreamer who called himself “the magic, mystery, and management. The Scottsdale, Arizona-based technology
romance man.” Bowker recognized from the start that a center focuses on the digital retail experience, including in-
visit to Starbucks could “evoke a brief escape to a dis- formation security, business intelligence, and digital prod-
tant world.” As Starbucks grew to the point where Jerry ucts for the company.
recognized that he needed to hire professional and expe- The zone offices oversee the regional operations of the
rienced managers, Howard Schultz joined the company, retail stores and provide support in human resource man-
bringing his skills in sales, marketing, and merchandising. agement, facilities management, account management,
When the original owners eventually sold the company to financial management, and sales management. A matrix
Schultz, he was able to take the company on a success- structure is used at the zone offices with each manager
ful path. Kevin Johnson’s transition to the president and reporting to both a regional head and a functional de-
CEO positions at Starbucks was smooth in part because partment head. For example, a human resource manager
he knew so much about the company. Johnson had been working in China would report to both the China/Asia
COO at Starbucks for two years before assuming the Pacific regional manager as well as the head of human re-
CEO role, and before that he served on Starbucks’s board sources for China and Asia Pacific. The essential link be-
for six years. He was able to bring his leadership expe- tween the zone offices and each retail store is the district
rience from other companies as well as sales, marketing, manager, each of whom oversees eight to ten stores. Since
and operations skills. district managers need to be out working with the stores,
As Starbucks has expanded, its organizational structure they rely heavily on mobile technology that allows them to
has changed to accommodate that growth. Starbucks’s suc- spend more time in the stores and still remain connected
cess is credited, in part, to its adaptive organizational struc- to their own office. These district managers have been
ture, and the company prides itself on its “lean” corporate called “the most important in the company” because it’s
structure. Kevin Johnson is at the top of the structure and has out in the stores that the Starbucks vision and goals are
focused on hiring a diverse team of executives from compa- being carried out. Thus, keeping those district managers
nies like Exxon Mobil, Sam’s Club, Kraft Foods, Kimberly- connected is vital.
Clark Corporation, and Macy’s. Johnson realized how In the retail stores, hourly employees (baristas) service cus-
important it was to have an executive team in place that had tomers under the direction of shift supervisors, assistant store
experience in running divisions or functions of larger compa- managers, and store managers. These managers are respon-
nies, and that’s what he focused on bringing in to Starbucks. sible for the day-to-day operations of each Starbucks location.
These senior corporate officers include the following: “C” Finally, without coffee and other beverages and prod-
(chief) officers, executive vice presidents, regional presidents, ucts to sell, there would be no Starbucks. The coffee beans
group presidents, and divisional vice presidents. Because are processed at the company’s domestic roasting plants in
being a global company is important to Starbucks’s strategy, Washington state, Pennsylvania, Nevada, South Carolina,
there are regional presidents for the geographic regions that Georgia, and internationally in Amsterdam. There’s also a
Starbucks covers. Starbucks’s focus on technology also is re- juicing facility in California, and the company set up a cof-
flected in their structure. There not only is a chief technol- fee roasting facility with Tata Global Beverages in India. At
ogy officer, but there also are three senior vice presidents that each manufacturing facility, the production team produces
oversee aspects of technology for Starbucks. A full descrip- the coffee and other products and the distribution team
tion of the team of Starbucks executives and what each is manages the inventory and distribution of products and
responsible for can be found on the company’s website. equipment to company stores.
390 Part 4 Organizing

People Management at Starbucks order to offer racial-bias training. This training included
multiple videos, discussions about race and identity, infor-
Starbucks recognizes that what it’s been able to accomplish
mation about what people of color experience on a day-
is due to the quality of the people it hires. Since the begin-
to-day basis in public settings, and instructions for keeping
ning, Starbucks has strived to be an employer that nurtures
a personal journal in the months after training. Starbucks
employees and gives them opportunities to grow and be
plans on including racial-bias training in their orientation
challenged. The company says it is “pro-partner” and has
program for new employees in the future.
always been committed to providing a flexible and progres-
Starbucks also offers new employees “Starbucks
sive work environment and treating one another with re-
Experience” classes that get them up to speed on the com-
spect and dignity.
pany’s history, culture, and social responsibility practices.
As Starbucks focuses on enhancing its customers’ ex-
Unless an employee works at a remote location, the Starbucks
perience and expanding internationally, it needs to make
Experience training is offered at regional training centers.
sure it has the right number of the right people in the right
To reinforce this off-site training, each store has a learning
place at the right time. What kinds of people are “right”
coach who guides new hires through hands-on training in
for Starbucks? They describe their ideal employees as hav-
the store. Further online training also is offered to support
ing the ability to create “genuine moments of connection”
in-person training. For instance, Starbucks’s “Solutions
with customers, a willingness to learn, and an openness to
University Online Training” is intended to provide instant
getting the job done while helping fellow team members.
training at the fingertips of their many employees.
Starbucks uses a variety of methods to attract potential
Starbucks’s largest training initiative is their College
partners. The company has an interactive and easy-to-
Achievement Plan. This plan provides reimbursement of tu-
use online career center. Job seekers can search and apply
ition costs for an online bachelor’s degree through Arizona
online for jobs in retail, corporate, and manufacturing in
State University. Any Starbucks employee who has worked
any geographic location. The company also has a limited
with the company for at least three months, works at least
number of summer internship opportunities for students
twenty hours per week, and doesn’t already have a bache-
at their support and technology centers in the US. But the
lor’s degree is eligible to apply. Of the Starbucks employees
company’s efforts don’t stop there.
who have applied to this program, 80 percent have been ac-
The company’s commitment to helping people in
cepted into the program. The goal of this program—which
communities has led to various special hiring initiatives
was introduced in 2014—is to help make college affordable
that focus on particular groups. For instance, Starbucks
and accessible for its employees.
has hired 21,000 veterans and their spouses, exceeding
their initial commitment to hire at least 10,000 military-
related individuals by 2018. Starbucks also has hired Discussion Questions
65,000 low-income individuals and committed to hiring P4-1. What types of departmentalization are being used?
10,000 refugees by 2020. Recently, twenty-five employ- Explain your choices. (Hint: In addition to infor-
ees who know American Sign Language were hired for mation in the case, you might want to look at the
Starbucks’s first US-based Signing Store in Washington, description of corporate executives under “Leader-
DC—where you can order and communicate via sign ship” on the company’s website.)
language. Starbucks opened its first Signing Store in P4-2. What possible problems could Starbucks encounter
with their matrix structure? What could they do to
Malaysia in 2016.
try to minimize these problems?
Starbucks offers a variety of training, but their
P4-3. If Starbucks wanted to offer compressed work-
most high-profile training occurred after two African
weeks, flextime, or job sharing, what would they
Americans were asked by store staff to leave a Starbucks need to consider? What are advantages and disad-
café in Philadelphia when they were waiting for a friend. vantages of offering these employment options at
Starbucks closed more than 8,000 stores across the US in Starbucks?
 Part 4 Management Practice 391

P4-4. Starbucks has said its goal is to expand delivery to ment methods affect how store managers manage
one-quarter of its US stores and increase earnings per their teams?
share by 10 percent. How will the organizing function P4-9. Which of the company’s values affect the organizing
contribute to the accomplishment of these goals? function of management? Explain how the one(s)
P4-5. Starbucks has said that it wants people who have you chose would affect how Starbucks’s managers
the ability to create “genuine moments of connec- deal with (a) structural issues; (b) HRM issues; and
tion” with customers, a willingness to learn, and an (c) issues in managing teams. (Hint: Starbucks’s
openness to getting the job done while helping fel- values can be found on the company’s website.)
low team members. How does the company ensure
that its hiring and selection process identifies those
kinds of people? Notes for the Part 4 Continuing Case
P4-6. Evaluate Starbucks’s training efforts. What other 1. H. Torry and S. Chaney, “U.S. News: Worker-Productivity
type(s) of training might be necessary? Gains Lag Behind,” Wall Street Journal, November 2, 2018,
P4-7. Pretend that you’re a local Starbucks’s store man- p. A2; R. Majumdar, “Understanding the Productivity Paradox,”
ager. You have three new hourly partners (baristas) Deloitte Insights, October 27, 2017, [Link]
joining your team. Describe the orientation you
com/insights/us/en/economy/behind-the-numbers/decoding-
would provide these new hires.
[Link]; Organisation
P4-8. If Starbucks wanted to implement multiperson
for Economic Co-operation and Development, OECD
comparisons or 360-degree appraisals as methods
of evaluating employee performance, what possible Compendium of Productivity Indicators 2018 (Paris: OECD
issues (both positive and negative) might arise? Publishing), [Link]
How might those employee performance manage- compendium-of-productivity-indicators-2018_pdtvy-2018-en.