Introduction
Biography
Howard Schultz was born in the year 1953 in Brooklyn, New York. Schultz’s mother worked as a receptionist while his dad held several poorly paying jobs. His father lost his job while Schultz was aged seven and the family had to go through tough times including not being able to afford what to eat.
The experience acted as a motivation for Schultz to excel in athletics while at school. His football skills paid off and enabled him to get a scholarship to further his studies at Northern Michigan University. Finally, he attained a bachelor’s degree in communications.
His first job after graduation was as a salesperson at Hammarplast, a company selling European coffee makers in USA.
He later rose up to the position of a sales director after the corporation noticed that they made high sales to a small company in Seattle called Starbucks Coffee Tea and Spice Company. The achievement gave him the urge to visit the company in the year 1981.
Starbucks was formed in the year 1971 setting up its first retail store in the Pike Place Market in Seattle. Schultz, however, became part of the company in the year 1982 where he occupied the position of a marketing and operations director.
By then the company had only four retail stores in Seattle, which were selling only coffee beans. The company hardly engaged in the sale of coffee drinks (Schultz, 2011).
In the year 1983, Schultz visited Italy where he was moved by the romantic coffee experience in the country. The experience influenced him to work towards bringing the same culture in the American coffee market.
He had a vision of making the coffee bars a home away from home that cultivated communication among people, created connections, and communal sense. The owners of the company did not immediately welcome Schultz’s ideas.
However, by 1984, they finally embraced it leading to the establishment of the first coffee bar in a new store in Seattle. The store soon brought about success by attracting hundreds of customers daily and bringing the coffee culture that Schultz had loved in Italy closer home to Seattle.
The owners of Starbucks, however, were not ready for the big success that was shown by setting up the coffee bar. The condition discouraged Schultz and made him resign from Starbucks and set up his own chains of coffee bars by the name II Giornale.
The company became successful and within two years, Schultz bought Starbucks with the assistance of other local investors. The partners’ finally merged it with II Giornale.
Schultz resigned as the chief executive officer of Starbucks in the year 2000, but returned after eight years to continue with the company leadership. Since then, he has been a pillar for the growth of the company with the focus on customer experience, innovation, and spearheading the company’s coffee heritage.
Starbucks is currently the leading seller of coffee drinks globally. Statistics shows that by the year 2012, Starbucks owned over 17,000 supply chains in about 54 nations across the globe. The company’s market value was approximated to be $35 billion.
The value rose to $60 billion by the year 2014. It is estimated that Starbucks opens two or three new stores daily and has a weekly customer base of about 60 million.
From the beginning of his leadership at the helm of Starbucks, Schultz set out two fundamental principles that have since proved to be vital for the growth of the company.
The first thing he set up was a medical coverage for all the eligible employees of Starbucks. He remains focused on this in spite of all the challenges in the health sector that accrue due to the rise in costs.
He also offered stock to the company employees thus giving the workers a sense that they can share the success of the organization. The measures taken served as a sense of motivation for the employees (Schultz, 2011).
Schultz loves coffee and that is one reason why he worked tirelessly hard to promote the product. Besides, he likes contributing something positive to the lives of others.
According to Schultz, leadership hardly entails hiring the right people for the job, telling people what to do, and getting the job done. However, it is about devotion and conviction to the execution of plans and treading a path that may have been dreaded or ignored by others.
Schultz’s leadership style
In the book The Leadership Experience, Daft states that without good leadership all the institutions in the society would collapse. Some people having taken a step ahead with the claims that leadership would just be mythical.
It may be based on the hopes that someone would come and provide a solution to our problems by just having the willingness to do so (Hackman & Johnson, 2009).
Daft then goes ahead to describe leadership as an affiliation based on the guidance existing between workers and managers with the aim of getting results and actual changes that give a picture of the collective ideas.
From the definition, leadership entails some key elements namely influence, changes, people, and purposes. The element of influence implies that leadership is hardly an impassive affiliation. It also does not involve coercion but is multidirectional.
The leadership relationship involves those who want substantive changes and not those who want to remain in the status quo. The changes that leadership relationship seeks to address are not what the leaders push for but what will fulfill the purposes of the desired future of both the leaders and followers.
The element of intention points out to the fact that both parties are active in pursuing the desired change. Each individual is personally responsible for the achievement of the desired dreams (Daft, 2011).
Schultz has a transformational system of leadership that he implements through various frameworks. These ensure that his leadership is effective in reaching not only his goals but also ensuring the satisfaction of his followers.
Maslow Abraham’s hierarchy of wants states the categories of necessities including personal actualization, belonging, security, and physical wants.
Transactional leadership focuses more on the efforts put to enhance communication towards the physiological and safety needs. However, the transformational leadership applied by Schultz focuses on meeting the needs meant to motivate the total person.
Schultz strongly believes in the employee base as one of the main areas of competitive advantage in the market. He, therefore, strives to meet the physiological needs by giving them a favorable pay with a barista in the company earning approximately $34,000 annually.
To satisfy the employees’ security need, he ensures that the employees have a healthcare package, options for acquiring the company stock, and counseling on career issues. These enable the employees to work smarter and harder thereby ensuring the success of the company.
A belief strongly held by Schultz that has also contributed to the success of the company is the belief in treating everyone as a family. He believes in cultivating the feeling of appropriateness in the company. In fact, everyone feels that he or she belongs to one group and each person is loved.
Schultz refers to the Starbucks staff as partners instead of employees. He is quoted to have said that if you treat employees as a family they will become loyal to the company thereby giving all they can to the company (Hackman & Johnson, 2009).
He also says that caring for the customers will make them return for more coffee from the company.
The need for self-esteem is also taken care of by programs, which ensure that employees are recognized, educated, and trained. The partners get the coffee education and learning as a builder of confidence in their jobs.
The company has more than eighteen programs geared towards employee recognition and motivation to increase their willingness to stay with the company, boost happiness and attachment. Due to the company’s high growth rate, it hires 140 partners daily over the world and about 85,000 annually.
Only a few of the partners are replacements for those who leave the organization. However, very few employees leave the organization due to the high employee motivation.
Schultz also ensures that the last need in the Maslow’s hierarchy named the self-actualization needs is met by constantly seeking the opinion of the partners to use in building a common purpose for the company.
He makes phone calls and sends emails to the individual stores seeking feedback and advice on processes, procedures and products. The strategy ensures the recognition of the inner core values of the employees thereby achieving satisfaction for their self-actualization needs.
A transformational leader should possess five characteristics that include visionary, passionate, empowering, interactive, creative and innovative.
Schultz shows his visionary characteristics by communicating with the stakeholders of Starbucks about the obtainable and desirable vision of the company so that they understand the direction in which the organization is headed.
The attribute helps to create a bridge between the present and the future, creates levels of excellence, gives meaning to the followers, energizes the stakeholders, and attracts commitment among them.
Schultz shows his innovative nature by regularly challenging the existing situations through working constantly towards new processes, products, and ideas. The stakeholders from within and without agree that he is skillful in articulating and defining new concepts and ideas.
He is also involved in empowering the stakeholders of the company through promoting their involvement and participation. He always encourages them to make suggestions through several interactive forums one of them being an online platform called mystarbucksvisit.com.
Schultz has a high passion for the organization. The enthusiasm and passion he holds for the company motivates other partners to work hard for the success of the company.
Schultz also possesses characteristics of charismatic leadership. The first characteristic of charismatic leaders is a strong desire for power. Schultz demonstrated this by retaking the control of Starbucks in the year 2008. He felt that the company was slowly drifting into an average performing company that was not its mission.
He, therefore, decided to return to drive it towards excellence, which was in line with its missions. According to him, the company was more focused on what it had already achieved and was contented with it but in the process, it was focusing on the future.
The company had diverted its focus from the mission that Schultz had set up and was focusing more on the price to earnings ratio, the stock price, and other ways of generating shareholders’ long-term values.
Charismatic leaders also target the fears, frustrations, and hopes of the followers in order to create feelings of adventure and excitement.
On his return to Starbucks in 2008, Schultz understood that the changes that he was going to bring in the company were going to have several impacts on the dreams and livelihoods of several external and internal stakeholders of the company.
He used a letter written on the company web to tell the stakeholders of the passion and commitment that he had 25 years earlier when he gained control of the company and how he still had the same passion to ensure that the company moved forward.
The first internal memo that he wrote was also done with an intention of creating raised sensitivity levels between the company and himself.
Since his return, all his memos have been ending with the same word “onward” that shows the confidence and passion that he possesses in advancing and overcoming any challenges that may come in the process.
Several memos also contain the recognition of the involvement of various employees in making decisions for the changes in the leadership and management of the company.
Others outlined the strategies and visions that he had to ensure that the business foundation was given a long-term adjustment and the emotional bond with the customers was reignited (Hackman & Johnson, 2009).
Power can be defined as the ability to influence others. Schultz makes use of the power he has to influence others by changing their behaviors and attitudes to achieve his visions and promote his leadership strategies.
Power has five bases namely referent authority, adept influence, authentic control, inducement authority, and aggressive authority. Schultz ensures the application of all the five.
Schultz makes use of aggressive control by demoting the underperforming staff. He outlays expectations from each employee and tells them of the consequences that accrue from not meeting the expectations.
In the use of coercive power, the leader must make a follow up on the consequences of failing to meet the expectations. He uses this to gain obedience from the employees. However, in most cases this leads to the draining of employee and losing of commitment and trust.
Schultz makes use of inducement influence by ensuring the deliverance of quality to his followers. He ensures the provision of discounts from the stores, bonuses to the employees, healthcare, and other fringe benefits to the employees. These rewards provide motivation to the employees to work towards the excellence of the company.
Authentic influence is defined as the ability of a leader to prescribe the behaviors of his followers using his rank, title, or role. The degree of the legitimate power is defined by how high the rank, title or position of the leader is in an organization.
Schultz uses the power that he has as the CEO of the company to get obedience from the followers and ensure efficient functioning of Starbucks. The rest of the employees follow his lead as their CEO. The power, however, diminishes over time as it is exploited.
Adept influence is more focused on the individual than the position that the individual holds. Schultz has demonstrated his expertise in acquiring, developing, and transforming the company from one that was headed for a collapse of a successful one.
The power proves that he is an expert in the industry of coffee shops. He relies on the use of this power (expert power) to achieve his organizational goals. The power, however, in a similar way to legitimate power has the capacity of reduction over time if excessively used by the one possessing it.
Schultz also makes use of referent authority by acting as a role model for his followers. The followers admire his personal and leadership traits and desire to follow suit. They show him high levels of respect, esteem, and affection.
The power, however, is not very effective as others (expert, legitimate, reward or coercive power) in gaining obedience from the followers. In understanding this, Schultz makes sure he utilizes all the five categories of power for effective running of Starbucks.
Starbucks sets up its brand around three desires of its consumers, which are economical successful, smart, and sophisticated.
The company continues making adjustments in their brands to ensure the desires of the customers are met. The employees also offer replacement services to a consumer if he is unhappy with the beverage that he is consuming.
In addition to this, Starbucks offers a reward card, a mobile application, wireless internet, and entertainment to ensure that the consumers get a wonderful experience.
Connection with the leadership skills in the book
The Leadership Experience
Daft, in his book, The Leadership Experience, states that there are characteristics that leaders need to possess to enable them act as inspiration and motivation to their followers in order to ensure the success of the institutions that they lead.
The characteristics that Daft states in the book include a leader with a drive, optimism, charisma, and the desire to lead. All these can be shown under the leadership of Howard Schultz. According to Daft, the behaviors of task orientation and people orientation are needed for the success of an institution.
The leader or other people in the system must show concern for the followers using the system. The case is evident in the leadership style of Schultz as depicted in his commitment to ensuring that the needs of the employees outlined in the Maslow’s hierarchy of needs are met so that they are motivated to achieve organizational goals.
Daft states another factor that contributes to success as motivation and empowerment. In the case of Schultz, it has been demonstrated how he ensures that the employees are well remunerated and provided with several other benefits.
The employees are also given additional education and training by the company, in addition to several recognition programs set in place. He also consults them to get their ideas on the way forward for the company and ensures that their ideas are incorporated in running Starbucks (Daft, 2011).
Conclusion
The transformational leadership style of Shultz has enabled him to build a globally successful brand. He ensured that he stayed true to his core values, mission and vision thereby bringing out a leadership style that is admired by his peers and followers.
His commitment to his principles has resulted in high profits for the company, devotion from customers, and high productivity from the employees of the company.
He understands the core concept that is to remain relevant and influential in the industry he must listen to the contributions of all the internal and external stakeholders. However, in the process a leader must not lose focus on his core values for Starbucks.
References
Daft, R. (2011). The leadership experience. Boston, MA: Cengage learning.
Hackman, M. & Johnson, C. (2009). Leadership: A communication perspective. Long Grove, IL: Waveland Press, Inc.
Schultz, H. (2011). Onward: How Starbucks fought for its life without losing its soul. Hoboken, New Jersey: John Wiley & Sons.