Starbucks is facing significant employee unrest in the US.
And now its veteran CEO Howard Schultz has returned to the helm.
Will Schultz's changes be enough to satisfy Starbucks workers?
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Starbucks was founded in Seattle in 1971 by three entrepreneurs. It is now one of the world’s largest coffee chains with stores in 80 countries across the world.
Howard Schultz took the helm of Starbucks in 1986. He led the company through acquisitions and growth until 2000. He then stepped down, to return after the financial crisis in 2008 until 2017.
In 2017, Shultz was replaced by Kevin Johnson, and is now, after five years, coming backas CEO following Johnson’s resignation. His return comes in the wake of significant employee unrest and unionization efforts across US stores.
The latest news is that its Manhattan, New York, store has voted to unionize. This is the largest to do so to date, but it is also one of three Starbucks roasteries in the US, so it shows that unionization has spread to the manufacturing arm of the company.
WE WON THE NYC ROASTERY!!!
— Starbucks Workers United (@SBWorkersUnited) April 1, 2022
It is expected that 160 other locations in 28 US states will vote on unionizing in the coming months, according to Vox. Starbucks employees are hoping these efforts could lead to better pay, conditions and safety provisions at work.
Schulz ends stock repurchase at Starbucks
In a letter to employees announcing his re-appointment, Schultz wrote: “I am returning to the company to work with all of you to design our next Starbucks — an evolution of our company deep with purpose, where we each have agency and where we work together to create a positive impact in the world.”
He continued: “My first work is to spend lots of time with partners. To lift up voices. To see everything that is already in play to help us become this kind of company. To invent.
“To face challenges — and for us each to be transparent with one another and become accountable for building the future of our company.”
His also moved to end the stock buy-back program; This is an initiative where companies repurchase their own stock, which often raises the share price, benefiting high profile executives and investors.
The New York Times reported that during Schultz’s time as CEO from 2008 until 2017 the company spent $6 billion on repurchases; the company spent $3.5 billion in the first quarter of 2022. US President Biden recently announced a proposal to tax buy banks and ban executives selling stock within three years of a repurchase.
Starbucks and Schulz has now decided instead to use the funds to “invest more into our people and our stores — the only way to create long-term value for all stakeholders.”
Schultz continued: “Our vision is to once again reimagine a first-of-a-kind for-purpose company in which the value we create for each of us as partners, for each of us as customers, for our communities, for the planet, for shareholders—comes because our company is designed to share success with each of us and for the collective success of all our stakeholders.”
Starbucks also took the opportunity to note the benefits it offers its workers. These include healthcare benefits, equity in the company, free college tuition, sick pay and mental health benefits and competitive parental leave.
But will these benefits and the ending of the stock repurchasing program satisfy Starbucks workers both inside and outside the union? Will it help the companies survive and thrive in the ongoing ‘Great Resignation’ that is particularly affecting retail, leisure and hospitality?
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