Howard Schultz Leadership Essay Sample
If one believes in the saying that great leaders are not made but are born, anyone has the opportunity to learn how to improve his or her effectiveness as a leader. Successful leadership does not depend on the number of people or the size of organization that an individual is in charge of. However, there are a number of traits that have been mutually determined as the building blocks for an effective leader. First, a leader has to be a person who is able to come up with a vision and inspire others towards pursuing it. A leader must also be optimistic to be able to see positive sides in his followers and assist them in overcoming any doubt or failure to realize the organizational goal. In addition, most employees want to obey honest leaders. Other traits that make a great leader include supportiveness, facilitation of the followers, and effective communication skills, among others. These traits define the leadership style of a particular person. Some of the leadership styles include transformational leadership, autocratic leadership, democratic leadership and visionary leadership. This work considers Howard Schultz as an effective leader through examining his leadership traits and aligning them to the various leadership styles identified.
Development of leadership skills has been identified as a key factor in the leadership of any organization. Today, leaders must learn to identify and adopt the leadership style that can work best for their respective organizations. It means there is a need for potential leaders to develop a number of leadership styles. That is why leadership effectiveness is closely connected with the choice of the right leadership style in an appropriate situation and at the right time. It is important since a given style may not be effective in all situations. However, certain leadership styles do overlap while some are polar opposites and others are not used on a very frequent basis. The work observes leadership styles of Howard Schultz. As will be seen in the next section, Schultz was chosen because of his effectiveness in business leadership (Blanken, 2013).
In brief, Starbucks was established in 1971 as a retailer and a roaster of ground coffee and whole beans, as well as spices and tea. It had only one store located in Seattle. The company has since grown to serve millions of customers daily from across the world. It serves exceptional products in over 21,000 retail stores located across 66 countries. The mission of the company is “to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time” (Starbucks Corporation, n.d.). The company is believed to serve the best coffee for its customers owing to the efforts of its leader Schultz. It also supports its suppliers to ensure that the coffee delivered to the company is grown in an environment that ensures high quality and accordance with ethical standards. The company presents its stores as places for neighborhood gathering where customers can meet with their family members or friends.
The company calls and treats its employees as partners, which greatly contribute to the company’s experience. Thus, they feel respected and dignified, especially due to the company’s unique bean stock and comprehensive health coverage. Moreover, the benefits are open to all part-time and full-time employees. The company offers its customers a number of exceptional products across all the stores. Customers are able to enjoy the products while at home, on the go, and when they visit the stores. The products include coffee, handcrafted beverages, merchandise, and fresh foods. Starbucks consumers also can taste tea and coffee that are ready to drink. As part of its social corporate responsibility, the company is involved in environmental stewardship and community programs, as well as in promotion of ethical sourcing. Its success is attributed to Howard Schultz, who has been its chief global strategist and CEO for a number of years now (Starbucks Corporation, n.d.).
Selection of a Leader
The work analyzes skills and contributions of Howard Schultz who is presently Starbucks Corporation’s chairperson and chief global strategist. The choice has been informed by the level of success achieved by Schultz. As a leader, he transformed Starbucks into a corporation with branches across the world. Thus, it can no longer be compared with a single store that had been situated in Seattle. Today, it is a worldwide chain boasting over 12440 locations of its retail shops across 37 countries. As a leader, Schultz rapidly established the corporation’s vision, which led to unheralded success. Since then, he has received a number of prestigious awards, recognizing the contribution he has made both in the business world and in the community.
Some of these prizes include Managers of the Year awarded by Business Week Magazine in 2002, Top 25 Best Manager by Business Week in 2001, 2001 Botwinick Price in Business Ethics by Restaurant Business in 2000, and Executive of the year bestowed by Restaurants and Institutions in 2000. It is clear that Schultz is credited as the company’s brand image architect. As the chief global strategist and chairman he has continued providing Starbucks with strategic direction while also serving as its brand’s voice and vision.
Schultz’s successful leadership was evident even when the world was facing recession and most businesses were going bankrupt. This was evident in 2008 when he returned to Starbucks as the Chief Executive Officer. He came up with a strategy, which enabled him to significantly decline sales reversal. He also managed to turn around the dismal financial performance at the time when the company had been presumed to have lost control over its innovative edge. This is when he decided to close 300 stores based in the U.S. and cut down about hundred jobs. Instead, he opened new stores outside the U.S. market. He wanted to downsize in the country’s market in order to expand Starbucks operation in the global market. The result was more store traffic as well as renewed earnings marked by the company’s share rising to $24 per share. A year later, Starbucks managed to announce its initial dividend, which was to be paid in cash to those who had invested in it. By April the same year, the company’s profit had risen more than eightfold. It managed to gain increasing number of loyal customers who were also willing to spend more money.
Howard Schultz was born to a low middle class family in 1953 in Brooklyn, New York. He was the first born among three children. His mother lived in New Jersey while his brother and sister lived in New York. Currently, Schultz is living in Seattle’s Madison Park together with his family.
He has drawn much of his inspiration from his father. He studied in Canarsie high school and graduated in 1971, being the first in his family to graduate from college owing to hard work. Since he excelled in sports, Schultz won an athletic scholarship, which helped him enter the Northern Michigan University to take a degree in Communications. He later secured employment in Xerox Corporation upon completion of his course in 1975. Schultz continued to work for a Swedish drip coffee maker after working for Xerox for four years. Finally, his employment in Hammarplast gave him an opportunity to visit Starbucks Coffee Company, which was by then a coffee bean shop (Gore, 2014).
This was to change the future of the young leader for life. Schultz was greatly inspired with the level of dedication that he witnessed at Starbucks, realizing that the company had a great business opportunity. He joined them a year after as the new Marketing Director. His inspiration was furthered by his visit to Italy during which he witnessed a dozens of shops selling coffee in almost all the streets. In his view, these were not simply places where people bought coffee and went away, but there were places for meetings and relaxation. This made him propose to add traditional espresso beverages to the initial Starbucks’ menu. However, he was frustrated by the refusal of the owners to adopt his idea for the entire company.
He decided to take risk and opened his coffee shop il Giornale in 1985. However, he purchased Starbucks two years later. After that, Schultz embarked on expanding the company to all parts of the country. His strategy was to remain generous to employees while keeping possession of all the company’s outlets. He won the loyalty of his personnel through initiation of certain practices meant to help develop their skills. His main aim was to make the company serve “a great cup of coffee” through “building a company with a soul”. His employees only worked 20 hours every week and were given a stock option plan as well as health insurance. These strategies helped the company to expand heavily in the 1990s and even go public from as early as 1992.
Since then, Schultz has won many awards for the achievements of Starbucks. For instance, apart from the ones mentioned above, in 1998, he won “Israel 50th Anniversary Tribute Award for his role in promoting close alliance/ peaceful coexistence between Israel and the U.S.” A year later, he received National Leadership Award for philanthropic efforts he made towards combating AIDS. Five years later, the University of Manitoba gave him the International Distinguished Entrepreneur Award for his success as well as Starbucks’ admirable conduct. Three years later, Schultz won the FIRST Responsible Capitalism award. Later in 2011, he was entitled the “Business Person of the Year” by the Fortune magazine (Schultz, n.d.).
Theoretical Analysis of Schultz’s Leadership Styles
Leadership embodies a complicated phenomenon, which can be understood and defined in various ways. In this context, leadership will be defined as a process in which an individual influences other members in the team to enable the attainment of a common goal. Thus, it is necessary that leaders possess much confidence and faith in his/her leadership style. They must be able to motivate the employees through positive attitude and effective communication, being able to facilitate organizational performance. It must be elucidated in terms of roles, traits behaviors, interactions, relationships, influence, as well as occupation considered to be an administrative position. The responsibilities and roles of leaders can reveal the importance of effective leadership in any organization. Leaders must be able to influence those they lead towards the realization of the set goal whether it is a formal position or informal one. Generally, leaders should be flexible and able to adjust to any change depending on the prevailing environment.
A leader may demonstrate a number of leadership styles. In fact, there are a number of ways of perceiving and interpreting the meaning of leadership. Apart from being a function of personality, which is the focus of this paper, it can also be viewed as a behavior category. Leadership can also be perceived through consideration of the leaders’ role and their ability to perform effectively. Thus, there are a number of theories and models of leadership styles. They include functional approach, style approach, transformational leadership, traits approach, contingency models, as well as leadership as a behavioral category.
Schultz as a Transformational Leader
Transformational leaders are able to lead through adaptation of their organization to changes within the environment of operation. Thus, change can never occur without planning and execution. Leaders must know that a real change occurs in the character of organizational stakeholders. Any failure to realize this will only provide a cosmetic and short-lived change experience. Thus, a transformation leader must be able to progressively restructure an organization by eliminating approaches, which do not properly work. However, it is vital to keep those methods, which contribute to implementation of new cultures, structures and systems. This will require the leader to be able to identify, improve and utilize the complete potential of the employees. The leaders must also be able to align cultural and structural processes with the organizational goal.
When Schultz took over the leadership of the company from Jim Donald, he perfectly represented those strategies, especially in 2002. Though Donald tried to achieve the expansion goal, obtaining 40,000 retail outlets globally, he faced serious challenges. The company quickly lost focus on its original commitment to create incomparable service experience. Although it had its outlets spread everywhere, there was nothing that made the company’s coffee different from the others. On his return in 2002, Schultz’s main commitment was to reignite the attachment of the consumers to the company’s coffee. He overcame the reduction in sales with the aim of bringing Starbucks to a level it had not reached yet. He provided a clear direction through his effective leadership while also taking a contingency approach in organizational behavior. He emphasized that Starbucks was more than a coffee business. Instead, he perceived it as a way of life.
Schultz was able to help Starbucks excel in restructuring of the then market by redirecting the country’s focus from constructing more stores/outlets to addressing the needs of employees and consumers. He removed selling of such extra goods as sweets and sandwiches, which he saw as a distraction to the much needed improvement of coffee products’ sale. He taught the company’s employees on the basic principles, which made Starbucks unique in society. Knowing about the inevitable need for growth, Schultz emphasized the essential need for transformation together with growth through three Ps. These are people, passion and product. Despite the fact that Starbucks was an already acclaimed coffee industry and there was limited time for change in its loopholes, Schultz’s approach was to enforce a nationwide training experience. It was meant to help in transformation of the kind of experiences a customer has had with the company. With his belief in the specialty of human resource, he narrowed down the right category of people to carry on the company’s goal.
The training program aimed at equipping Starbucks’ employees with retail business skills as well as basic skills required for making good coffee. He also taught the necessary steps that should be taken in the creation of positive customer experience. The training boosted the employees’ ability to identify and meet consumer needs. However, it helped achieve even more. It enabled Schultz to improve the commitment of his employees since they gained much knowledge on the original purpose of Starbucks, which is not just making coffee and selling it to customers. They understood the need to do their work with passion in a bid to make the company unique and different from its competitors. Much emphasis was put on the kind of experience each of the company’s customers was going to have in order to guarantee their satisfaction.
There are a number of ways through which a leader can transform his or her followers. One of these ways is raising the employees’ awareness of their contribution towards meeting the organizational goals. The leader needs to generate organizational vision and influence the followers towards its realization. Hence, it is necessary for him/her to create a feeling of trust, loyalty and justice.
Specifically, Schultz was An Inspirational Motivator:
Schultz proved himself as the motivational factor behind Starbucks’ success. His inspiring motivation enabled him to confront his employees with a much clearer optimism on where the company should be in future. He has maintained the need for high standard distinguished services through explaining the roles that his employees must play in meeting customer demands and in taking advantage of the available opportunities in the industry. He helped the company in designing employee’s benefits, mission and training programs aimed at developing and motivating them in order to enable the company take advantage of the future opportunities.
Schultz Embraced Intellectual Stimulation:
Over the years, this businessman has been able to come up with new and workable approaches to improve the performance of the company. He has also been able to stimulate and encourage the employees to be innovative in their approach to work. He has also established ways through which the company receives and appreciates employees’ feedbacks. In this way, the customers feel empowered and encouraged.
He Embraced Individualized Consideration:
Schultz is committed to the attainment of particular and unique needs of his followers. He has ensured that these needs are catered for even when the organization is transforming. He treats all his employees differently and personally based on the knowledge and skills they possess. The company’s ‘working solution’ involves assisting the employees to enable them to meet their personal needs. Schultz has also come up with various programs for training of different categories of employees.
Howard Schultz as a Servant Leader
There are a number of facts pointing that Schultz is a servant leader. As one of the most visionary and outstanding leaders in the world, he has been guided by a philosophy of the use of human spirit power in business. This has enabled him to earn numerous prestigious awards in the community as well as business market. Having established the vision of the company, Schultz worked hard to realize its success. He has given a good example of the ideal corporate leader through his vision, servitude, far-sightedness, and integrity. He decided to open five Starbucks stores on a daily basis, which has made the company experience the fastest growth ever in America alongside Wal-Mart the growth of which is considered in terms of the number of stores (TRIPOD, n.d.). All these successful stories are traced from Schultz’s vision and ambition to transform his ideas into a global business. His level of ambition enables him to see possibilities where other leaders have failed to see. It has led to the current company’s coffee culture.
The second aspect of servanthood in Schultz’s leadership is his high degree of integrity as seen in his commitment to remain ethical. He has ordered that a health insurance be given to all those company’s employees working for over 20 hours a week. This is done irrespective of the employees’ marital status. The company also offers stock options to all its workers. It was ready to withstand the effect of expensive coffee in order to pay reasonable healthcare insurance for its employees. It was among the first American companies to offer its employees two unique benefits. In fact, the benefits were extended to cover part-time employees by 1987 and stock options by 1991. A year later, it was the first specialty coffee company to be traded publicly. Thus, its CEO was committed to win his employees passion, which made him write a book “Pour Your Heart into it”. He believed that the company could not succeed in its striving to win the hearts of its customers if the employees did not devote themselves and carry out their duties with great passion (TRIPOD, n.d.).
Schultz acknowledged that for his employees to serve his customers with passion, they had to have trust in the company and be loyal to it. He emphasized that undermining any of the three Ps will make employees perceive their work as any other job. Anyway, the passion and devotion of the employees were the most important elements of a competitive advantage strategy. Equally, the coffee bean growers supplying Starbucks are paid above the market price. It is necessary to win their passion and make them consistent in their supply. It was also observed that Schultz’s leadership actively involves himself in what he wants to be done to show how it should be done. Therefore, he helps his new store employees. This has given him a new reputation in the eyes of his employees. He believes that by fostering care and giving people everything they need in their work environment, one can enable them flourish both physically and emotionally (TRIPOD, n.d.).
Schultz paid attention to his specific employees and partners. It gained him popularity among these partners. In his opinion, serving others comes first before benefiting from their services. He maintains that he had learned the value of giving from his family members, especially the father. His credo was give to you employee, all that you can. Give to your stakeholders what they expected. Act with integrity and loyalty to anyone you come in contact with. And be servant to anyone who you leader. (Schultz & Young, 1997)
In his book “Pour Your Heart into it” he says: A lot of what we ascribe to luck is not luck at all. It is seizing the day and accepting responsibility for your future. It is seeing what other people don’t see, and pursuing that vision, no matter who tells you not to. (Schultz & Young, 1997)
According to him, “it is those who follow the road less traveled who create new industries, invent new products, build long-lasting enterprises, and inspire those around them to push their abilities to the highest levels of achievement.” He believes, “passion is, and always will be, a necessary ingredient. Even the world’s best business plan won’t produce any return if it is not backed with passion and integrity” (Schultz & Young, 1997).
Democratic and Autocratic Styles of Leadership in Schultz’s Leadership
In a democratic style of leadership, the leader involves the members of his/her group in the process. It means that he allows the members of the group to have a greater say whenever a decision is being made. In his own words, Schultz remarked, “I think it’s very difficult to lead today when people are not really truly participating in the decision. You won’t be able to attract and retain great people if they don’t feel like they are part of the authorship of the strategy and the authorship of the really critical issues. If you don’t give people an opportunity to really be engaged, they won’t stay” (Gordon & Schultz, 2012). Schultz is also quoted saying, “When you take on a partner, and when you select employees, be sure to choose people who share your passion and commitment and goals. If you share your mission with like-minded souls, it will have a far greater impact” (Gordon & Schultz, 2012). He added, “When companies fail, or fail to grow, it is almost always because they don’t invest in the people, the systems, and the processes they need” (Gordon & Schultz, 2012).
One of the reasons that helped Starbucks be ranked among the best in the global market is the fact that Schultz has been encouraging employees with passion. He narrowed down those who had shown team players to allow their involvement in the leadership process. He committed himself to treating his employees with much respect and taking good care of them. The leader has since come up with a unique culture of Starbucks. It is a culture in which the leadership values are defined by service and quality as well as empowerment and entrepreneurship. He ensures that the employees enjoy more power when it comes to making decisions. The personnel also enjoy flexibility by being allowed to choose the most suitable work hours. Their feedbacks are considered in any future decision making process. This is a clear indication of Schultz’s democratic leadership (Advice America, n.d.).
The company’s success is also associated with Schultz’s collaborative style of leadership. His management was marked with powerful social essence, empowerment and encouraged followers. He saw the model as less centralized and non-hierarchical. The CEO’s business strategy was boosted by his empowerment of lower-tiered management as well as staff to enable them participate in decision-making activities.
On the other hand, an autocratic leader comes up with all the decisions. In this case, the leader selects the member who is to work in collaboration with him/her in determining the work to be done at a given time. It was observed that there were some elements of this kind of leadership by Schultz during the recession. He realized the need of the company to change e nearly everything if it was going to meet its goals. Starbucks had to change its mode of operation to be more ordinary. He gave a number of orders to this effect. For instance, he ordered to cut the cost by not less than $500 million, shut down 800 stores and lay off many employees. He also carried out more research on the company’s customers and made a sole decision to offer them discounts and advertise Starbucks products.
Moreover, the company has witnessed some level of tensions despite the fact that Schultz provided all his employees with a 401(k) plan as well as the stock option, including health benefits. It happened because the workers’ union of Starbucks has greatly restricted rights. This has limited the extent to which the union can defend its members against such vices as unsociable hours and low-paid work. Schultz is quoted saying, “I was convinced that under my leadership, employees would come to realize that I would listen to their concern. If they had faith in me and my motives, they wouldn’t need a union” (Gordon & Schultz, 2012).
As much as many may not agree with the thought that Schultz showed certain elements of an autocratic leader, it must be noted that styles of leadership represent the way in which leaders can have influence on their followers, either subconsciously or consciously. Moreover, a leadership style is also determined by the circumstances prevailing as well as the leader’s personality. Though Schultz was largely a democratic leader who valued contributions of his followers, he also demonstrated some aspects of an autocratic leader. It was evident in the way in which he made strong decisions during recession.
The Visionary Leadership Style vs. Schultz’s Leadership
Visionary leadership demands leaders to have a clear picture of what the organization stands for, communicating the same to its members in a way that they can internalize and own. It requires that the leaders be weary of the industrial, national and global economic and social changes. Though most leaders have a vision, only a few manage to realize it. The same vision should also be re-evaluated occasionally to ensure that it remains relevant to the changes that come with time. The adjustments must be made in consultation with the followers.
In his own words, Schultz remarked, “You must stand for something, or you’ll fall for everything” (Gordon & Schultz, 2012). He maintained the need for a leader to stand firm with respect to company’s procedures and policies. However, he emphasized that even this cannot measure having a proper vision. From the very beginning of his return to leadership, he clearly defined his vision for Starbucks and communicated the same to his followers. He did this through using words to express what he wanted to the followers. As a way of evaluating his employees understanding of the company’s vision, he continuously asked them to tell him about its main aspects using their own words. In this way, he was able to know if his employees kept pace with his ideas.
A good example of Schultz’s vision was to create 2000 stores by the year 2000. According to some observers, the vision embodied the force behind the great success achieved by the company. He managed to have the vision translated to all the management teams of the company as well as its supervisors who also had micro-level visions in line with their leader’s aims. With his degree in Communications, Schultz possessed powerful communication skills, which enabled him to realize what he stood for as well as the values he wanted to promote across the company. He also connected emotionally with those who were listening to him. He ensured that the vision was internalized to the lower contextual levels. At these levels, the staff received direct support from the management as well as from their supervisors. The stuff was provided with both the opportunities and resources necessary for their growth. It was facilitated through coaching and mentoring, as well as educational and training opportunities. Schultz emphasized that it is vital to share the entrepreneurship’s credit as well as its success since it is a result of the shared vision.
To continue with his vision of the company’s expansion, he advocated for purchasing of other companies. A good example was the Seattle Coffee Company that operated in the United Kingdom. By the year 2003, the company had increased its stores to six thousand. The number advanced to 16,000 by 2010. By this time, the country has extended its operation to fifty countries across the world. The vision was also boosted by the company’s mission statements which were, “To inspire and nurture human spirit – one person, one cup, and one neighborhood at a time” and “Starbucks is committed to a role of environmental leadership in all facets of our business” (Gordon & Schultz, 2012).
As any other company, the main goal of Starbucks is to increase its profits. The effective leadership of Schultz is seen in the strategies he came up with in order to enable the company to maintain its competitive edge. He carried out constant re-invention of the approaches the company took. One approach that he used is the opening of new stores in order to enhance the company’s equity as well as brand name though attraction of new customers.
Starbucks has also been focusing on the strengthening of its organizational culture. It has equipped its stores with comfortable chairs, offering a great tea and coffee collection, ambient music together with wireless internet in most of its outlets. The company has also assured its customers of consistent workforce and a cultural network of Starbucks regulars. Schultz has made all his employees understand the vitality of beliefs and core values of the company for its success. It has made the company flourish irrespective of the saturation in the coffee market.
In years to come, Schultz will need to emphasize more on the quality of products, but not the quantity of sold goods since it is already guaranteed by the market. The unique quality of their products will make people pass other restaurants or food stalls to come and have their coffee in the Starbucks stores. All observations point to Schultz’s ability to realize this. The leader has been carrying out continuous evaluation of the company based on the reaction of the customers and its financial stability as a measure to improve the business. He knows that just like any other company, the success of Starbucks largely relies on continuous change. Moreover, to realize some remarkable achievements, it is essential not just to focus on the company’s final result. Instead, many people remember the outstanding achievements of Starbucks.
Schultz’s focus has been to take Starbucks to new levels by invigorating it with authenticity. He does this through such tools as his passion for the business, dreams and vision, as well as effective economic models. With such leadership qualities, it is not a surprise that the company has maintained its position as the most flourishing coffee shop across the globe. It has Schultz’s vision and leadership as its main assets. The emphasis on the importance of the selection and recruitment of employees as well as their intensive training are core principles in this leadership. Howard Schultz has remained committed to the virtue of respecting his employees as a way of having them motivated. He has also ensured that the stakeholders enjoy his democratic approach to leadership though he also employs certain aspects of transformational and autocratic leadership styles.
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