Starbucks’ Stakeholders: Employees and Customers

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Introduction

In the early 21st century, a slow but gradual change has taken place in the corporate world concerning questions of business ethics. The traditional approach to business ethics that has been championed by many corporate leaders echoes the sentiments of the late Nobel Laureate economist Milton Friedman, who famously stated that corporations ultimately have no ethic responsibilities other than to increase the value of the corporation for shareholders. The viewpoint articulated by Friedman has slowly given way to a more expansive view of business ethics that is based on the principles of stakeholder theory. Stakeholder ethics involves a body of thought which insists that the ethical responsibilities of corporations extend not only to the shareholders but also to the full range of interests that are impacted by corporate activity. Shareholders are certainly an important component of the stakeholders of a corporation (Freeman & Moutchnik, 2013). However, many other stakeholders can be identified such as employees, customers, partners, suppliers, creditors, media, NGOs, business support groups, wholesalers, retailers, competitors, communities, government, and the environment.

Stakeholder Ethics and Corporate Social Responsibility

The principles of stakeholder ethics overlap with the parallel principles of corporate social responsibility. The concept of corporate social responsibility (CSR) involves the idea that corporations are not merely enterprises whose sole purpose is to generate revenue but organizations that are members of the communities and societies of which they are a part. Consequently, the argument is made that corporations should aspire to be good corporate citizens that demonstrate care for the full range of stakeholders that are impacted by their activities. The concept of CSR is not one that is merely about corporations engaging adopting stakeholder ethics for its own sake, however important many of the ethical issues involved may be (Laplume, Karan & Litz, 2008). Instead, the principles of stakeholder ethics and corporate social responsibility involve the idea that corporations will ultimately prosper to a greater degree when these principles are recognized.

Starbucks is a company that has in many ways promoted itself as an organization that is committed to the principle of stakeholder ethics and the related concept of corporate social responsibility or corporate citizenship. Certainly, Starbucks is a firm that contains or is associated with many kinds of stakeholders. Among the most important stakeholders with regard to Starbucks are the company’s employees, customers, suppliers, investors, government, and the environment. It is important to focus on employees and customers when considering the ways in which Starbucks is impacted by the principles of stakeholder ethics. Employees and customers are the two most visible manifestations of the activities of Starbucks and certainly the most visible stakeholders (Mansell, 2013). Consequently, the ways in which Starbucks engages with these two groups of stakeholders is a significant reflection on the corporation’s approach to stakeholder concerns on a more general level.

Starbucks’ Employees and Labor Relations

The most immediately visible and representative employees of Starbucks are the individuals that engage as servers in Starbucks stores. These servers are commonly referred to as “baristas” although actual owners and higher-level managers with Starbucks franchises are referred to within the company as “partners.” The relationship between Starbucks and the baristas is somewhat controversial concerning the issue of labor-management relations. On one hand, Starbucks is frequently praised as a company that is committed to corporate social responsibility and stakeholder ethics when it comes to labor relations (Miles, 2012). On the other hand, Starbucks has often been criticized as a firm that is hypocritical in his approach to such matters by claiming to be a company that abides by the principles of stakeholder ethics while treating its employees poorly.

In many ways, Starbucks is indeed a firm that maintains higher standards concerning the treatment of employees than many other firms in service-related retail industries (for example, fast food restaurant chains and superstores). Starbucks baristas are paid above the minimum wage, even at the entry-level position. Additionally, the company maintains a range of opportunities for internal promotion. Many baristas have eventually become managers and worked their way up into higher positions within management (Mitchell, Agle, & Wood, 1997). Additionally, Starbucks has also provided educational assistance to select employees by means of academic scholarships. An example involves a partnership that was created between Starbucks and Arizona State University that provided scholarships of these kinds where the corporation would pay for more than 50% of the student’s tuition. Certainly, programs of these kinds that have been maintained by Starbucks have been beneficial to some employees and are consistent with the principles of stakeholder ethics.

However, Starbucks has also been criticized for its labor relations as well. For example, some Starbucks employees have joined labor unions and become involved with lawsuits against the firm over such issues as back pay, withheld wages, wrongful termination, and union-busting activities that included retaliation against employees that were involved in union-related activities (Phillips, 2003). Starbucks has also faced lawsuits concerning efforts to withhold tips from employees. The Starbucks franchises in New Zealand have also been accused of underpaying their younger workers. Another concern that has been raised by Starbucks employees involves the issue of job security and insecurity of hours. Some Starbucks stores have been accused of deliberately higher only part-time workers for limited numbers of hours for the purpose of avoiding the provision of healthcare and other benefits. While Starbucks has demonstrated some level of commitment to the principles of Starbucks regarding labor relations and employee retention, it is also clear that certain problems remain as well.

Starbucks’ Customer Relations

Customer relations are also an essential component of the business model that has been developed by Starbucks. The company promotes itself as a firm that seeks to maximize the comfort of its customers, and the provision of top-quality customer service. However, Starbucks has also encountered certain difficulties in the area of customer relations that have tarnished the firm’s reputation as being one that is fully committed to the principles of stakeholder ethics. Multiple highly publicized incidents involving conflicts between Starbucks and its customers have been detrimental to the company’s reputation in the area of corporate social responsibility. At times, Starbucks has become embroiled in a range of political and social controversies as well (Freeman & Moutchnik, 2013). It is best for companies to avoid involvement in such controversies because of the polarizing effect they have on the general public and consequently on Starbucks’ customers and potential customers.

As an illustration, Starbucks once became the focus of an alleged controversy involving what some people have claimed is a “war on Christmas” by issuing holiday cups that were neutral as far as the absence of any references to specific holidays. Starbucks has also been accused of overpricing its products, particularly concerning its franchises in China, and of underfilling its cups as well (Laplume et al., 2008). Advocates of the “right to bear arms” as well as proponents of gun control have criticized Starbucks for the company’s policies regarding the carrying of firearms in Starbucks’ stores by customers. Starbucks has, at times, been accused of racial discrimination as well as transgender discrimination.

References

Freeman, R. E. & Moutchnik, A. (2013). Stakeholder management and CSR: Questions and answers. UmweltWirtschaftsForum, 21(1), 5–9.

Laplume, A., Karan, S. & Litz, R. (2008). Stakeholder theory: Reviewing a theory that moves us. Journal of Management, 34(6), 1152–1189.

Mansell, S. (2013). Capitalism, corporations and the social contract: A critique of stakeholder theory. Cambridge: Cambridge University Press.

Miles, S. (2012). Stakeholders: Essentially contested or just confused? Journal of Business Ethics, 108(3), 285–298.

Mitchell, R. K., Agle, B. R. & Wood, D. J. (1997). Toward a theory of stakeholder identification and salience: Defining the principle of who and what really counts. Academy of Management Review, 22(4), 853–886.

Phillips, R. (2003). Stakeholder theory and organizational ethics. Berrett-Koehler Publishers.