Harvard Case - Starbucks Corporation: Fighting Racial Bias
"Starbucks Corporation: Fighting Racial Bias" Harvard business case study is written by Arpita Agnihotri, Saurabh Bhattacharya. It deals with the challenges in the field of General Management. The case study is 8 page(s) long and it was first published on : Jan 13, 2020
At Fern Fort University, we recommend Starbucks Corporation implement a comprehensive, multi-faceted strategy to address racial bias within its organization, focusing on building a culture of inclusion and equity. This strategy should prioritize diversity and inclusion (D&I) initiatives, employee training and development, and data-driven decision making to create a more equitable and just workplace.
2. Background
The case study focuses on Starbucks Corporation's response to a highly publicized incident of racial bias in 2018, where two African-American men were arrested while waiting for a friend at a Philadelphia Starbucks. This incident sparked public outrage and highlighted the need for Starbucks to address systemic racial bias within its organization. The case study explores Starbucks' efforts to respond to the crisis, including closing stores for racial bias training, hiring a Chief Diversity and Inclusion Officer, and implementing various initiatives to promote diversity and inclusion.
The main protagonists of the case study are:
- Howard Schultz: Former CEO of Starbucks, who initially took a hands-on approach to addressing the crisis.
- Rosalind Brewer: Starbucks' first Chief Diversity and Inclusion Officer, tasked with leading the company's D&I efforts.
- Starbucks employees: Those directly impacted by the incident and those tasked with implementing the company's D&I initiatives.
- Customers: Those who experienced or witnessed racial bias at Starbucks and those who hold diverse perspectives on the company's efforts.
3. Analysis of the Case Study
This case study presents a complex challenge for Starbucks, requiring a multi-pronged approach that considers both internal and external stakeholders. To analyze the situation, we can utilize the following frameworks:
1. SWOT Analysis:
- Strengths: Starbucks' strong brand image, global reach, and established customer base.
- Weaknesses: Lack of diversity in leadership and workforce, potential for unconscious bias in hiring and promotion practices.
- Opportunities: Building a more inclusive culture, attracting and retaining diverse talent, leveraging technology for D&I initiatives.
- Threats: Negative public perception, legal challenges, potential for future incidents of racial bias.
2. Porter's Five Forces:
- Threat of New Entrants: High, as the coffee industry is relatively easy to enter.
- Bargaining Power of Buyers: Moderate, as customers have multiple options for coffee.
- Bargaining Power of Suppliers: Low, as Starbucks has a strong negotiating position with its suppliers.
- Threat of Substitute Products: High, as there are many substitute products available, including tea, energy drinks, and other beverages.
- Rivalry Among Existing Competitors: High, as the coffee industry is highly competitive.
3. Balanced Scorecard:
- Financial Perspective: Increased profitability through attracting and retaining diverse customers, reducing employee turnover, and enhancing brand image.
- Customer Perspective: Improved customer satisfaction and loyalty through a more inclusive and welcoming environment.
- Internal Processes Perspective: Streamlined hiring and promotion processes, improved employee training and development, and enhanced data-driven decision making.
- Learning and Growth Perspective: Cultivating a culture of inclusion and equity, fostering employee engagement and empowerment, and promoting continuous learning and development.
4. Recommendations
To effectively address racial bias and create a more inclusive and equitable workplace, Starbucks should implement the following recommendations:
1. Enhance Diversity and Inclusion Initiatives:
- Expand D&I programs: Develop and implement comprehensive D&I programs that address all aspects of the employee lifecycle, from recruitment and hiring to promotion and retention.
- Increase representation in leadership: Set ambitious goals for increasing representation of underrepresented groups in leadership roles and track progress regularly.
- Create employee resource groups: Establish employee resource groups (ERGs) for underrepresented groups to provide support, mentorship, and networking opportunities.
- Foster an inclusive work environment: Implement policies and practices that promote inclusivity, such as unconscious bias training, diversity awareness programs, and sensitivity workshops.
2. Invest in Employee Training and Development:
- Mandatory unconscious bias training: Provide mandatory unconscious bias training to all employees, including leadership, to raise awareness and promote understanding of systemic bias.
- Diversity and inclusion training: Offer comprehensive diversity and inclusion training that covers topics such as cultural competence, microaggressions, and inclusive communication.
- Leadership development programs: Develop leadership development programs that emphasize inclusive leadership practices and promote diversity in leadership.
- Mentorship and sponsorship programs: Implement mentorship and sponsorship programs to support the career development of underrepresented employees.
3. Leverage Data-Driven Decision Making:
- Collect and analyze data: Collect and analyze data on diversity and inclusion metrics, such as hiring rates, promotion rates, and employee satisfaction, to identify areas for improvement.
- Use data to inform decision making: Use data to inform decision making in all aspects of the business, including hiring, promotion, and resource allocation.
- Track progress and measure impact: Track progress on D&I initiatives and measure their impact on employee engagement, customer satisfaction, and financial performance.
4. Foster a Culture of Accountability:
- Establish clear accountability: Hold leaders accountable for creating and maintaining an inclusive work environment.
- Implement reporting mechanisms: Establish clear reporting mechanisms for employees to report incidents of bias or discrimination.
- Conduct regular audits: Conduct regular audits to assess progress on D&I initiatives and identify areas for improvement.
5. Engage with External Stakeholders:
- Partner with community organizations: Partner with community organizations to support initiatives that promote racial equity and social justice.
- Engage with customers: Listen to and respond to customer feedback on diversity and inclusion issues.
- Be transparent and accountable: Be transparent about progress on D&I initiatives and be accountable for addressing any issues that arise.
5. Basis of Recommendations
These recommendations are based on a thorough analysis of Starbucks' current situation, taking into account the following factors:
- Core competencies and consistency with mission: Starbucks' mission is to 'inspire and nurture the human spirit ' one person, one cup, and one neighborhood at a time.' The recommendations align with this mission by promoting inclusivity and equity, creating a more welcoming environment for all customers and employees.
- External customers and internal clients: The recommendations address the needs of both external customers and internal clients by fostering a more inclusive environment for all stakeholders.
- Competitors: The recommendations help Starbucks stay competitive by attracting and retaining diverse talent, fostering a more inclusive culture, and enhancing its brand image.
- Attractiveness ' quantitative measures if applicable: The recommendations are expected to lead to positive financial outcomes, such as increased profitability, reduced employee turnover, and enhanced brand image.
Assumptions:
- Starbucks is committed to creating a more inclusive and equitable workplace.
- Employees are willing to participate in training and development programs.
- The company has the resources to implement the recommendations.
6. Conclusion
Starbucks has a significant opportunity to become a leader in diversity and inclusion. By implementing the recommendations outlined above, the company can create a more equitable and just workplace, enhance its brand image, and attract and retain diverse talent. This will not only benefit the company but also contribute to a more just and equitable society.
7. Discussion
Alternatives not selected:
- Ignoring the issue: This is not a viable option, as it would likely lead to further negative publicity and damage to the company's reputation.
- Focusing solely on training: While training is important, it is not enough to address systemic bias. A comprehensive approach is needed that addresses all aspects of the employee lifecycle.
- Hiring a diversity consultant: While a diversity consultant can provide valuable expertise, it is crucial that Starbucks takes ownership of its D&I efforts and implements a sustainable strategy.
Risks and key assumptions:
- Resistance to change: Some employees may resist the changes implemented, particularly if they are not fully informed or understand the rationale behind them.
- Lack of resources: Implementing the recommendations will require significant resources, both financial and human.
- Measuring impact: It may be challenging to measure the impact of the recommendations, particularly in the short term.
Options Grid:
| Option | Pros | Cons |
|---|---|---|
| Implement comprehensive D&I strategy | Addresses the root cause of bias, creates a more inclusive environment, enhances brand image | Requires significant resources, may face resistance to change |
| Focus solely on training | Raises awareness of bias, may improve employee behavior | Does not address systemic bias, may not be effective in the long term |
| Ignore the issue | No cost, no effort | Damages reputation, leads to further negative publicity |
8. Next Steps
Timeline:
- Month 1: Develop a comprehensive D&I strategy, including specific goals and metrics.
- Month 2: Implement mandatory unconscious bias training for all employees.
- Month 3: Launch diversity and inclusion training programs for all levels of employees.
- Month 4: Establish employee resource groups for underrepresented groups.
- Month 6: Set ambitious goals for increasing representation of underrepresented groups in leadership roles.
- Year 1: Track progress on D&I initiatives and measure their impact.
Key Milestones:
- Increase representation of underrepresented groups in leadership roles by 10% within two years.
- Reduce employee turnover among underrepresented groups by 5% within two years.
- Increase customer satisfaction among diverse customer segments by 3% within two years.
By taking these steps, Starbucks can demonstrate its commitment to creating a more inclusive and equitable workplace, fostering a positive impact on its employees, customers, and the wider community.
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Case Description
In April 2018, two black customers were arrested at a Starbucks Corporation (Starbucks) outlet in Philadelphia, Pennsylvania, after one of the two men asked to use the restroom while the pair were waiting to meet someone. After a video of the arrest went viral on social media, Kevin Johnson, the chief executive officer of Starbucks, immediately apologized to the men and, further, announced that the company would hold racial bias training across all Starbucks stores in the United States. Johnson was criticized for the presumption that a half-day training session could possibly resolve racial bias issues. Employees also expressed their dissatisfaction with the training program. Johnson also announced an open-toilets policy, which was also criticized, raising several questions: Had Johnson managed the crisis appropriately? How could he make such training effective? Should Johnson change his open-toilets policy? Should he reconsider his decision to conduct such training at the cost of future revenues?
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