Management Styles in Service Operations of Starbucks

Management Styles in Service Operations: A Case of Starbucks
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Executive Summary
Introduction
Different managers used different management/leadership styles to meet organizational goals. The goal of service firms is to provide customers with quality services. This report explores Starbucks' management style, its measure of success, its emphasis on quality, and its application of service-profit concepts. It also provides recommendations for improvement.
Company Overview
Starbucks is an American multinational coffee chain operating in the consumer discretionary services industry. It offers food and drinks services in 84 countries.
Management Style
Starbucks has adopted the servant leadership style. This is demonstrated through its open forum initiative that allows employees to engage in open discussions with leaders. It is also demonstrated through its employee and community empowerment initiatives.
Measure of Success
Starbucks uses profits and people to measure success. It measures success based on its consistency in growing its revenue and income. It also measures success based on how much it has empowered its employees, whether through free college education or other personal development opportunities.
Emphasis on Quality
Starbucks' management has emphasized quality by training its employees on service quality and incorporating quality goals into its business plan. However, training on service quality has not been extended to managerial hierarchies, and as such, it has failed to emphasize quality as espoused by Juran.
Application of Service-Profit Chain Concepts at Starbucks
Starbucks has applied the service-profit chain concepts through servant leadership, employee empowerment and support, employee satisfaction, loyalty, and retention, as well as customer satisfaction and loyalty. It has over 16 million loyal consumers who account for 40% of its total sales.
Recommended Improvements
To improve its service operations, this report recommends that Starbucks should:
1 Train its entire managerial hierarchies on quality improvement to ensure its management sets better quality goals and participates in quality improvement activities.
2 Develop ways to measure its service operations quality to ensure that any gaps between current service quality and expected service quality are identified and addressed.
3 Create quality circles to ensure that every employee participates in quality improvement by suggesting and implementing innovative solutions to quality issues. 
           
Table of Contents TOC \o "1-3" \h \z \u Executive Summary PAGEREF _Toc103842273 \h 2Introduction PAGEREF _Toc103842274 \h 4Starbucks: An Overview PAGEREF _Toc103842275 \h 5Industry PAGEREF _Toc103842276 \h 6Services PAGEREF _Toc103842277 \h 6Starbucks’ Management Style PAGEREF _Toc103842278 \h 6What is Servant Leadership? PAGEREF _Toc103842279 \h 7How does Starbucks Demonstrate Servant Leadership? PAGEREF _Toc103842280 \h 9Measure of Success at Starbucks PAGEREF _Toc103842281 \h 11Starbucks' Emphasis on Quality PAGEREF _Toc103842282 \h 13Application of Service-Profit Chain Concepts at Starbucks PAGEREF _Toc103842283 \h 15Recommended Improvements PAGEREF _Toc103842284 \h 17Conclusion PAGEREF _Toc103842285 \h 19References PAGEREF _Toc103842286 \h 20Appendix PAGEREF _Toc103842287 \h 24
Management Styles in Service Operations: A Case of Starbucks
Introduction
           Different managers and leaders use different management styles to run an organization based on organizational goals and needs. For service firms, the primary goal is to offer quality services to customers. According to Chang et al. (2019), quality services provide service firms, such as those in the hotel industry, with a competitive advantage. In addition, the leadership style adopted by service firms plays a significant role in influencing the quality of the services offered. For instance, servant leadership has been associated with an improvement in the quality of services provided by employees (Qiu et al., 2020). As such, it is essential to explore the management styles of service firms and understand how these management styles influence service quality. Management styles can influence how service firms maintain customer satisfaction and loyalty. Chang et al. (2019) indicate that service firms can retain existing and attract new customers by maintaining high-quality services that bring satisfaction to customers. This indicates that there is a connection between management styles, quality of services, and customer satisfaction. The purpose of this paper is to explore the management styles in service operations. The paper will particularly focus on Starbucks, which operates in the service industry, to analyze its management style and demonstrate how the management at the organization measures success. In addition, the paper will explore whether Starbucks places emphasis on quality in the way espoused by Juran and examine the application of service-profit chain concepts. Finally, the paper will provide recommendations for the improvement of Starbucks' service operations.
Starbucks: An Overview
Starbucks is a multinational chain of coffeehouses headquartered in the United States (US). The company was founded in 1971 in Seattle and has since grown to become one of the largest multinational coffeehouse chain stores in the world (Starbucks, n.d.). It has experienced steady growth, as shown in figure 1 (Lock, 2021). As of 2022, Starbucks has over 34,000 stores in 84 countries (Starbucks, 2022). This has allowed the company to serve millions of customers from across the world.
The organization is committed to providing the best services and highest standards of quality to satisfy the needs of consumers (Starbucks, n.d.). Its mission is "to inspire and nurture the human spirit- one person, one cup, and one neighborhood at a time (Starbucks, 2022)." To achieve this mission, Starbucks has a vast number of human resources, which it refers to as partners. As of 2022, Starbucks employs approximately 383,000 employees at its various worldwide stores (Bloomberg, 2022).
In addition, Starbucks' values are centered around people and the planet. It aspires to invest in people by providing positive experiences for its employees, customers, and the coffee farmers who supply it with quality coffee beans. One of the sayings that Starbucks uses to show that it values people is, "We like to say that we are not in the coffee business serving people, but in the people, business serving coffee" (Starbucks, n.d.). By satisfying its employees, it satisfies its customers. It is also very focused on protecting the planet by introducing innovative ways of protecting the environment, such as its newly introduced 100% reusable cup program (Starbucks, n.d.). This also satisfies environmentally-conscious consumers.
Industry
Starbucks operates in the food and beverage services market. According to Bloomberg (2022), Starbucks operates in the consumer discretionary services industry and the leisure facilities & services sub-industry because other than providing food and drink services, it also retails and roasts its specialty coffee.
Services
Starbucks offers food and drinks services. Specifically, it offers over 30 premium coffees that include blends and singles. It also offers handcrafted beverages such as freshly brewed coffees, teas, blended beverages, Frappuccino, hot and iced espresso beverages, as well as Starbucks refreshers and cold brew (Starbucks, 2022). It also offers fresh foods such as salads, sandwiches, protein boxes, baked pastries, and snacks. Employees at Starbucks prepare, present, and serve the above-mentioned drinks and foods to their customers, and the customers can enjoy them on the go, at any Starbuck stores, or in their homes. Given that employees interact with consumers by providing food and beverage services, employees have to provide high-quality services to ensure these consumers return to Starbucks for more.
Starbucks' Management Style
Starbucks is an iconic organization whose story began with a leader who understood the value of service. As a result, it has grown to be considered a servant leadership company. In an interview with the Greenleaf organization, former Starbucks president Howard Behar revealed that Starbucks' success had been attributed to the value it places on people through its culture of servant leadership (Greenleaf Center for Servant Leadership, 2015). Starbucks has applied the tenets of servant leadership because its leadership believes that employees will treat customers the same way their employers treat them. As such, if employees are treated poorly and are unsatisfied with the employer, they will project this onto the customers, causing them to be unsatisfied with the company and its services. The opposite is also true. To better analyze Starbucks' management style and how it applies its management style to improve its service operations, it is important first to understand servant leadership.
What is Servant Leadership?
Servant leadership is a leadership approach that has gained a lot of attention in recent years because of its association with ethics and morality in the workplace. According to Qiu et al. (2020), servant leadership has become prominent because it helps address some of the moral issues in the workplace associated with management malfeasance. The workplace has become a place where those in charge are more concerned with meeting their needs rather than the needs of others, including shareholders, which is why there have been many scandals in organizations in the 21st century associated with the mismanagement of funds and other unethical practices. However, the tenets of servant leadership have allowed organizations to address unethical practices because, as Qiu et al. (2020) indicate, servant leadership involves leaders acknowledging their moral responsibility to the organization by meeting the needs of employees, customers, and other stakeholders. Thus, servant leadership is about being of service to others. Chon and Zoltan (2019) define servant leadership as a leadership approach that involves prioritizing the needs of employees as well as having a caring vision for the community at large. It allows for ethical behavior in the workplace and also appreciates employees for their contribution to the organization. Eva et al. (2019) have provided a more detailed definition of servant leadership that is divided into three parts as follows:
"Servant leadership is a (1) other-oriented approach to leadership (2) manifested through one-on-one prioritizing of follower individual needs and interests, (3) and outward reorienting of their concern for self towards concern for others within the organization and the larger community."
The first part of the definition implies that a servant leader is motivated to focus on others first rather than focus on the leader's agenda first, and this is guided by a strong desire to serve others. The second part of the definition implies that servant leadership is not just about prioritizing the needs of followers but prioritizing the individual needs of followers, which are unique and specific to each follower. This involves empowering followers by not only engaging them in decision-making but also by supporting their professional and personal development (Chon & Zoltan, 2019). The third part implies that servant leadership is about being accountable for the well-being of others (Eva et al., 2019). This then encourages followers to shift their focus from serving their needs to serving the needs of others.
One of the reasons why servant leadership is associated with ethical behavior and accountability is because it is grounded on the theories of social learning, social exchange, and social identity (Chon & Zoltan, 2019). It allows the employees to learn what the organization is about and to identify with the values of the organization. According to Chon and Zoltan (2019), the above-mentioned theories are founded on the premise that employees believe that their leaders are their role models, and as a result, they learn and imitate what their leaders do. They also internalize what they learn from their leaders, which allows them to self-identify with the organization. Thus, when the leaders' behaviors are negative, the employees will learn and imitate these negative behaviors, and when the behaviors are positive, the employees will learn and imitate these positive behaviors.
However, since servant leadership is associated with positive behaviors such as service to others, accountability, and ethical behavior, employees learn and imitate these behaviors, and it reflects on the organization. As such, servant leadership has been associated with positive organizational citizenship behavior, high quality of customer service, and psychological well-being of employees, among other positive attributes, thus driving the organization towards excellent service operations (Qiu et al., 2020). Servant leadership is about other people, and when other people are treated right by meeting their needs, the organization succeeds.
How does Starbucks Demonstrate Servant Leadership?
Starbucks has demonstrated servant leadership in many ways. Its founder believes in the value and tenets of servant leadership. In an opinion article he wrote in the New York Times, Howard Schultz revealed that he believes in servant leadership which the Pope has demonstrated and in his organization where the needs of employees, including part-time employees, have been put first (Schultz, 2015). He indicated that he was not done serving because there was so much more for Starbucks to do to demonstrate servant leadership further. For this reason, he shared that beyond the business community, every American deserves to be led by a servant leader, especially one who puts the needs of others first even when they hold different ideologies (Schultz, 2015). Even when he was retiring as CEO, he made sure that his successor valued servant leadership. In fact, he described the new CEO, Kevin Johnson, as a "true servant leader" who would ensure that Starbucks continues to be in the business of serving others (Dahlstrom & Warnick, 2018). This reveals that servant leadership at top-level management has been instrumental in creating a culture of servant leadership in the organization.
Starbucks, through the leadership of Howard Schultz and Howard Behar as CEO and president, respectively, first created a culture of servant leadership by creating an open forum where employees could engage in open discussion with their leaders (Greenleaf Center for Servant Leadership, 2015). They were asked to share their ideas, ask questions, and discuss their concerns about the organization. As a result, the employees became engaged in the activities of the organization, which is an essential part of employee empowerment as per the definition of servant leadership. Chon and Zoltan (2019) indicate that follower empowerment involves employee engagement in decision-making. The first step towards this is by creating an environment where employees can share their ideas and concerns about the organization so that positive changes can be met. This is what Starbucks did and has since created an environment that encourages open communication and innovativeness.
Further, Starbucks puts the needs of employees first by supporting their development which, according to Chon and Zoltan (2019), is another way of empowering followers in servant leadership. Starbucks provides its employees working in US company-run stores with free education so they can acquire a college degree (Starbucks, 2014). Seniors and juniors are given full scholarships, while sophomores are given partial scholarships and financial aid. Both part-time and full-time employees are eligible, yet there is no mandate for employees to remain with Starbucks after graduation. As a result, over 7,000 Starbucks employees have participated in the program, and the company hopes to have 25,000 college graduates by 2025 (Starbucks, 2017). These are employees whose education dreams will come true because Starbucks puts their needs first. According to Roepe (2016), such education programs not only keep employees happy and satisfied but also help in employee retention. Even though employees are not expected to stay at Starbucks once they complete their college degree, the retention of these employees is two times higher than that of those not participating in the program. Through servant leadership, Starbucks has increased its employee satisfaction and retention.
Starbucks has not only put employees' needs first but has also extended this to the community, which according to Chon and Zoltan (2019), is the very definition of servant leadership. As highlighted earlier, Starbucks' mission is "to inspire and nurture the human spirit- one person, one cup, and one neighborhood at a time" (Starbucks, 2022). This mission statement represents Starbucks' commitment to serving people in the community. It has achieved its commitment to serving people in the community through the Starbucks Foundation, which allows it to invest in initiatives that support the development of the local communities. The Starbucks foundation provides grants to promote youth empowerment, hunger relief efforts, and economic opportunities for the economically disadvantaged (Starbucks People, 2021). It also supports women and girls from communities that grow tea, cocoa, and coffee. While such initiatives are a part of its corporate social responsibility, they also demonstrate Starbucks' servant leadership culture because the company is accountable not only to its employees and consumers but also to the larger community.
Measure of Success at Starbucks
Different firms have different ways of measuring success. Starbucks believes that its success as a respected and renowned global brand can be measured in terms of profits and people (Starbucks Annual Report, 2021). These elements ensure that Starbucks remains a successful global company, which is its primary objecti...