Starbucks’ Change Management Plan

Starbucks’ Change Management Plan

SECTION 1: ORGANIZATION

Starbucks is a globally recognized brand that is popular for its unique coffee. It was established in the year 1971 by three friends: Zev Siegl, Gordon Bowker and Jerry Baldwin (Bussing-Burks, 2009). Its mission is “to inspire and nurture the human spirit- one person, one cup and one neighborhood at a time” (Starbucks Coffee Company, 2021). The US-based company operates within the consumer services and restaurants industry (Cheng, 2013). Currently having 349,000 full-time employees, Starbucks deals in the roasting, marketing and retailing of specialty coffee across the world (Yahoo!Finance). Among the specific products offered by the company are coffee as well as tea beverages, iced tea, pastries, lunch items, breakfast sandwiches and a variety of ready-to-drink as well as single-serve beverages. Starbucks operates via three segments: Channel Development, Americas, and International. As of the month of October 2020, Starbucks operated roughly 32,000 stores (Yahoo!Finance).

There is sufficient evidence showing that Starbucks is a good illustration of effective human resource procedures, policies, programs and practices. Nonetheless, a key recommendation made for the company is to consider offering employee sponsorship or financing for higher education as a strategy of enhancing employee development. Funding employee’s education is becoming a common trend in the contemporary workplace. As observed by McDonough and Oldham (2020), today’s professionals have to juggle between family commitments and full-time employment. The burden is so huge that most employees are either financially unable or, due to multiple responsibilities, unable to pursue college degrees. For most employees, the challenge is obtaining funds for higher education. Employers who take the initiative of easing this financial burden usually reap immeasurable gains as employees acquire new skills, becoming invaluable assets to organizations (McDonough & Oldham, 2020).

Although Starbucks offers a variety of training programs to employees of different cadres, it is strongly proposed that the company should adopt the practice of funding higher education for its employees. Specific strategies that Starbucks may use to implement this change are tuition assistance as well as offering reimbursement benefits (McDonough & Oldham, 2020). Although this change can be quite costly to the firm, it is necessary for a number of reasons. To begin with, supporting employees to advance their education is one of the ways companies can deal with the mounting competition in the market. In the words of McDonough and Oldham (2020, para.5), “companies will compete on how well they are able to find, source, develop, advance and retain talent”. This is to say that the skills as well as knowledge that workers acquire when they pursue higher education are an invaluable asset that enables companies to maintain a competitive edge in the market.

A second reason why Starbucks should adopt the proposed change is that the dynamic business environment creates new opportunities and threats that call for appropriate response. The unpredictability of the global market thus poses new risks as well as urgency that call for bold thinking with the aim of upgrading workers’ talent. Regrettably, the current approaches in place for financing education do not meet labor market needs (McDonough & Oldham, 2020). This is where employers must come in and provide financial support to employees who are interested in advancing their education.

The third reason why Starbucks ought to adopt the proposed change is already highlighted: the trend of employers financing employee higher education is becoming increasingly common. In this light, it is only prudent that Starbucks follows suit. The reasons described above are supported by Lewin’s three-step theory, which outlines three processes that characterize a change process (Cummings, Bridgman & Brown, 2016). The first process is unfreezing, which fundamentally reflects the realization that a company needs change, as well as reflecting on how other players in the industry are conducting their business. Equally important, funding employees’ higher education is a good illustration of how to implement change with minimal difficulties, as postulated in Lewin’s model.

To minimize resistance as Starbucks moves to implement the proposed change, it is important that the organization first conducts a thorough assessment of how ready it is for the change. McKinsey 7S model and the Nadler and Tushman Organizational Congruence Model would be most appropriate for assessing Starbucks readiness for the proposed change. For the 7S model, the fact that it measures the degree to which the change strategy aligns with the seven critical elements of an organization makes the model highly appropriate. By applying this model, Starbucks will ascertain whether or not it has the right systems and structure to support the proposed change. In the same way, the Nadler and Tushman Organizational Congruence Model is deemed relevant and appropriate for Starbucks because it will provide a reliable picture of whether or not Starbucks has sufficient resources and other inputs that are essential for a seamless transformation process. More precisely, this model indicates whether or not Starbucks can transform its inputs-resources, culture etc. into a workable strategy that will achieve the desired results.

The McKinsey 7S model may be applied to Starbucks as follows: regarding structure, Starbucks exhibits a divisional organizational structure where categorizations are made on the basis of brands and geographic location. Key brands are Starbucks, Tevana, Tazo Tea and L Boulange (Yahoo!Finance). Concerning systems, Starbucks operates various systems to ensure that daily business goes on smoothly. Key systems include employee recruitment, selection, transaction processing, customer relationship management, and knowledge management. The company’s business strategy is founded upon product differentiation, emphasis being placed on product as well as service quality. Additionally, the company has intensively integrated technology into different business processes. When it comes to skills, the fact that Starbucks offers a variety of training programs, besides embracing diversity, is proof that the company invests in ensuring that employees have relevant skills. About style, Starbucks exhibits servant leadership where employees are supported in every area key to their growth. A relationship-driven approach to leadership is illustrated in the fact that Starbucks emphasizes friendliness and cordiality among employees. Collaboration together with communication, as well as inclusion alongside diversity, are defining elements of Starbucks’ style (Starbucks Coffee Company, 2021). In reference to the analysis conducted above, it may be concluded that Starbucks is ready for change.

SECTION 11: KOTTER CHANGE PLAN

1. Establishing a sense of urgency

The first step entails creating urgency based on the fact that change is successful only when every member in the organization understands and embraces its significance (Kotter, 2012). For Starbucks, creating urgency will entail engaging in an honest, compelling dialogue with employees regarding the value of offering them sponsorships to advance their education. At the same time, Starbucks will engage employees in a dialogue about how other companies in the market have embraced this change and are reaping notable benefits from it. To accelerate the urgency building process, the HR manager at Starbucks could guide employees in developing scenarios illustrating future trends that could negatively affect employees who fail to take advantages of opportunities to upgrade their knowledge. At the same time, the organization could approach external parties such as colleges and universities offering part-time courses to employed persons. This kind of collaboration will help to create urgency and strengthen the company’s proposal to offer sponsorships to willing employees.

1. Creating a coalition

The second step in the change management model is creating a coalition. According to Kotter (2012), convincing people to accept change often calls for strong leadership as well as support from influential members of an organization. This is because good leaders play a key role in establishing a learning culture, formulating plans, and empowering staff besides transforming operations in organizations (Lv & Zhang, 2017; Weiss & Li, 2020)). In reference to Starbucks’ proposed granting of sponsorships, the guiding coalition will comprise people who are not only influential but also individuals who share in the organization’s objective of employee development. As the organization selects the guiding coalition, it should be taken into consideration that not all people in senior positions in the organization support this idea. It is possible that some managers or supervisors will not be genuinely supportive as they feel that empowering employees in this manner is a threat to their jobs and rank. For this reason, the company should only select people who genuinely embrace the idea. The coalition will also be made up of external players, notably partners, donors and well-wishers who are ready to fund the company’s proposal. Motivational speakers and career guidance experts may also be included.

• Developing vision and strategy

The next step is to create a vision that will guide implementation of change. In decision making, individuals start by generating as many ideas as possible then using the elimination method to narrow down the list to the most feasible ideas. The same case applies in change management: every change proposal attracts numerous ideas together with solutions. To ensure that only those ideas necessary to change implementation are chosen, it is crucial that organizations develop clear visions as these will help members to understand the proposed change (Kotter, 2012). For Starbucks, the third step will entail crafting a vision statement that captures where the company sees itself in the next five or so years. For example, Starbucks’ vision in regard to the proposed change would be something like “To become the company with the most relevantly trained workforce globally”.

1. Communicating the vision

The new vision will be of little use unless it is properly communicated across the entire organization. A key proposition in Kotter’s model is that “what you do with your vision after you create it will determine your success” (Jeston & Nelis, 2014 p.529). The implication of this is that Starbucks must endeavor to communicate the vision of becoming the company with the most relevantly trained employees worldwide not only frequently but also powerfully, embedding this message in every activity that takes place in the organization. This vision will be applied in operational areas such as performance reviews and staff training, both formal and informal.

1. Empowering broad-based action

Looking at the steps described above, one may be led to conclude that resistance to change is unlikely if the organization creates urgency besides creating and communicating the change vision. However, it is still possible for employees to resist change unless they are adequately empowered on how to implement the vision (Kotter, 2012). To avoid this, it is very important that Starbucks ensures that all the necessary systems, resources and tools are available and adequate for all employees. Precisely, the company will review key aspects such as job descriptions, reward systems and organizational structure to keep them aligned with the change vision. Any employees or managers who are identified as opposing the plan will be talked to to identify the problem and help them to understand the short-term and long-term benefits of the proposed change.

1. Generating short-term wins

Providing results indicating that the company is making progress motivates employees to keep working towards a set goal. In regard to change management, such short-term wins help a lot in minimizing resistance (Kotter, 2012). Much as Starbucks’ change vision is to become the organization with the most relevantly trained employees in the world, it pays to develop and work towards smaller targets that are all aligned to this big vision. A practical strategy would be for the organization to begin implementing its big plan by sponsoring employees in lower-cadre jobs to upgrade their skills and education. Here, the company will pay for certificate or diploma courses for those employees whose current education level is high school or certificate respectively.

Since most certificate courses take less than six months to complete, they could be effective short-term targets that will help Starbucks to measure success of the planned sponsorship of all willing and eligible employees. Likewise, diploma courses that take a year or two are equally useful targets that can be used to project the achievability of the organization’s broad goal. An important thing to mention is that Starbucks should provide appropriate rewards to employees who successfully complete the certificate and diploma courses as a way of motivating others to embrace the bigger plan.

• Consolidating gains and producing more change

While it pays to implement change in phases, it should be remembered that celebrating victory too early can be disastrous. In Kotter’s (2012) words, many change initiatives fail due to premature declarations of victory. Managers need to understand that quick wins only indicate areas on which emphasis is necessary for long-term change to be realized. In this light, therefore, Starbucks must be careful not to relax after recording wins with the certificate and diploma programs. Instead, the company should use the results obtained from these short-term wins to identify areas that need improvement when the firm starts rolling out sponsorships for Bachelors, Masters and PhD courses. In other words, the focus should be on continuous improvement and constant generation of ideas on what can be done to achieve the best results.

• Anchoring new approaches into the culture

The final step in the implementation process is to make the changes a part of the company’s core. The rationale behind this is that in most cases, a company’s culture greatly determines its achievements and the extent to which the vision and mission are realized (Kotter, 2012). As such, the change should be reflected in all the organization’s aspects and the leaders motivated and encouraged to support it. To incorporate the change into the company’s culture, Starbucks should constantly talk about the change’s success stories and include its ideals as well as values during the hiring of new staff. Equally important, members of the change coalition should be publicly recognized.

SECTION 111: RESISTANCE AND COMMUNICATION

There is great value in the proposed change in which Starbucks will offer sponsorships to willing employees so that they can expand their knowledge base. Even so, the proposed change is likely to encounter resistance, just like every other change plan. This change can occur at the individual as well as organizational level due to a number of factors. At the individual level, the proposed plan of offering sponsorships by Starbucks to its employees could be resisted due to factors such as perceived loss of control, misunderstanding of change objectives, and lack of tolerance among employees as well as managers. According to Bradutanu (2015), issues such as fear of unknown, lack of confidence, inadequate information regarding the purpose of the proposed change, and concerns of job security are some of the reasons why individuals resist change in organizations.

For the Starbucks case, there is a probability that some supervisors and managers may oppose the planned change out of fear that employees who are sponsored to advance their education will take over their bosses’ responsibilities once they complete their studies. Similarly, some employees may resist the change plan due to the fear that they will not complete the courses successfully. Additionally, unless all members in the organization are given all the information to help them understand why Starbucks is offering them sponsorships, they are likely to oppose the change.

At the organizational level, the proposed granting of sponsorships may be resisted due to a phenomenon known as group inertia. Bradutanu (2015, p.26) observes that “over time, employees get used to certain rules and procedures, form certain habits and establish particular friendships”. As such, any change that threatens to destabilize this kind of stability is likely to be resisted. At Starbucks, the effect of group inertia may manifest as follows: employees who belonged to a certain informal group will feel destabilized when one or more members of their group is selected for sponsorship because they may feel that these people will become different the moment they are enrolled into higher education institutions. Apart from this, there is the issue of resources: before any change plan is implemented, an assessment must be done to ensure that there are enough people to execute all key functions in the organization (Bradutanu, 2015). If it is felt that sponsoring a section of employees for higher education will create gaps and make the other employees overburdened, resistance is likely.

From the above discussion, it can be concluded that resistance to change in organizations is caused by factors such as lack of clarity of mission and objectives, lack of resources, and inability of managers to solve problems linked to the human resource (Lizar et al., 2019). The first and third causes stated above indicate the importance of effective communication in the change process. In other words, maintaining proper communication is a very effective strategy of minimizing resistance to change. In the words of Lizar et al. (2019, p.2), “effective communication can help individuals to understand the logic of the change process that includes what, why, when, who, how, and also what’s in [the change] for employees”. Stated in other words, there is a very strong connection between communication and resistance to change, the explanation being that until all stakeholders recognize the need for change and unless the change agents can convince stakeholders to embrace change, any change effort is bound to fail (Lewis, 2011).

In light of the above, a plan to minimize resistance to the proposed change at Starbucks would entail engaging all stakeholders in an open, detailed discussion of the need for the change, the budget, and how it would affect individuals and the organization in the short-term and long-term. Every stakeholder must be encouraged and allowed to participate in the discussion so that the fears mentioned earlier as reasons for resistance are addressed and dealt with. Other than communication, Starbucks should also ensure that justice prevails in the manner in which selection of candidates for the sponsorship is done. This recommendation is based on the fact that organizational justice is another potential cause of resistance to change. Of particular significance is the concept of distributive justice, which refers to employees’ perceptions regarding how fairly resources are allocated (Lizar et al., 2019). Therefore, Starbucks can minimize resistance to change by making the sponsorships open to any employee who is willing to advance their studies.

Having underscored the role that communication plays in change management, it is important to outline several communication strategies available for Starbucks as it plans to roll out sponsorship programs to employees. Communication strategies include internalizing information, instructing, and adjusting (Cheng, 2018). The instructional communication strategy is one where people are told or given instructions and directions on how to react to a proposed change. In contrast, adjusting is about helping people to understand and respond to the change, while internalizing is about helping people to create a positive picture of their organization in reference to the proposed change (Cheng, 2018). In other words, adjusting may be described  as a communication strategy whose focus is educating people so that they can understand why a proposed change is necessary. On the other hand, communicating with the motive of internalizing information focuses on maintaining conversations and personal connections with employees to encourage and motivate them to wholly support the change process (Cheng, 2018).

Among the three strategies described above, the third is chosen as the most appropriate for Starbucks. Managers of the company and especially the person spearheading the change initiative at Starbucks should keep in mind that forcing people to embrace change by telling them what they should do is nothing but counterproductive. The best approach is to help them emotionally code with the proposed change and reflect and internalize on the benefits of this change both now and in future. As such, regular conversations with employees, founded and mutual respect, would be the most effective for Starbucks as they would help employees to understand the value they stand to add to themselves and their employer if they take up the offer to advance their studies.

Change Communication Plan

Activity	Target Audience	Key messages/specific objectives	Timing
Official announcement of the proposed change	All Starbucks stakeholders	·       Reasons/rationale for the proposed change   ·       Benefits to stakeholders	March 2nd  2021
Senior personnel meeting	All managers, department heads, and supervisors	·       Discussing the proposed change   ·       Developing budget for the change initiative ·       Establishing specific roles and responsibilities of senior personnel	March 5th 2021
First stakeholder meeting	All stakeholders	·       Get buy-in   ·       Obtain stakeholder views, questions and concerns	March 10th 2021
Recruiting of employees for the sponsorship plan	Departmental heads and supervisors	·       Identifying and collecting names of employees who are interested in the sponsorship program	March 15th-31st 2021
Second senior personnel meeting	All managers, department heads, and supervisors	·       Reviewing the list of interested employees   ·       Reviewing the budget	April 5th-6th
Second stakeholder meeting	All stakeholders	·       How the program will be rolled out (key phases)	April 28th 2021

SECTION 1V: SUSTAINING CHANGE

Planning and implementing change is one thing; making that change stick is another thing and perhaps the most difficult to managers. It has been established that two-thirds of all change initiatives fail (Sirkin, Keena & Jackson, 2005). According to a research done by McKinsey& Company, seven out of ten transformation efforts in organizations fail to achieve their vision (Gleeson, 2017). This may happen even when there is leadership competence and effectiveness, the change plan is effectively communicated and the organization’s culture is well aligned with the proposed change. Hodges and Gill (2015, p.373) attribute such outcomes to the tendency of managers to pay “too little attention…to holding on to the gains once the change objectives appear to be achieved”. In other words, celebrating too early is a big change when it comes to change management.

To ensure that change sticks, it is very important that managers include sustainability goals and strategies in the early planning stages when the change is being contemplated and planned. While there is no laid down formula through which organizations can sustain change, several guidelines are considered helpful. To begin with, constant monitoring and frequent evaluation of the change initiative is crucial because in so doing, managers will be in a position to identify the areas of weakness that require adjustment (Hodges & Gill, 2015). For Starbucks, the sustainability of the propose change will be enhanced if the company frequently evaluates whether or not the sponsorship program is effective in terms of set objectives. This way, the company will be satisfied that the initiative is working well and at the pace that the company wants.

Apart from monitoring and measuring progress, sustainable change in organizations is achieved through regular reviewing of the possible benefits and risks. Hodges and Gill (2015) are of the opinion that identification and monitoring of risks together with benefits is vital to sustaining change. According to these authors, benefits from a change process may be financial, operational, customer-related and employee-related. For the proposed change at Starbucks, the operational benefits of the sponsorship program may take the form of increased effectiveness and competence, which in turns generates benefits to customers because employees are equipped with the right knowledge regarding customer satisfaction. Similarly, such a program can be expected or projected to boost employee morale and increase their commitment to their employer.

Starbucks can employ different methods to monitor and measure progress as a way of checking that the change implemented continues as desired. For example, the company may decide to conduct periodic surveys among employees and other stakeholders in order to assess the effectiveness of the program and how it is received and perceived by stakeholders. Through these surveys, employees will give their perceptions or experiences on how the sponsorship program is impacting service delivery as well as their work-life balance. Similarly, managers of Starbucks can utilize the feedback and information obtained from these surveys to make necessary amendments to the proposed change in order to ensure that it lasts and achieves the desired purpose.

Alternatively, the company may identify specific metrics that will be used as key performance indicators when evaluating the effectiveness of the change plan. To assess whether the change plan is delivering intended results, Starbucks managers may use variables such as employee efficiency, number of employees promoted to higher ranks, cost of the sponsorship program to the organization as well as individual employees, and customer feedback regarding service quality as key performance indicators that the program is worth pursuing. Still on the topic of monitoring and evaluating effectiveness, Gleeson (2017) recommends the use of new technologies that help organizations to look at themselves through “the rear view mirror” and see the progress that they have made. In other words, there are new technologies that facilitate a comparison between an organization’s past and its present condition, hence indicating where there is need for an organization to change its direction or approach. Whatever strategy that Starbucks chooses, the idea is to measure the projected outcome or progress against the actual progress so that any deviations are addressed as early as possible.

As stated earlier, it is very important that organizations keep track of the benefits as well as risks associated with change initiatives. In fact, the realization of benefits is cited as the “core management process of any change initiative” (Hodges & Gill, 2015 p.377). This is because managers should organize and manage the change initiative in a way that maximizes achievement of potential benefits. For Starbucks, benefits realization in order to sustain change will comprise six distinct activities as described below.

The first activity focuses on engaging all stakeholders. Here, managers do a thorough analysis of all stakeholders that will be impacted by the change plan. Communication is maintained with these stakeholders so that their views, input and concerns regarding the proposed change are obtained and factored in. the second step comprises development of the business case. Here, the managers will list all the benefits anticipated from the sponsorship program and try to quantify these benefits so that they can easily be measured. At the same time, the company will identify the people responsible for spearheading or overseeing the achievement of these benefits. Identification of benefits goes hand in hand with identification of risks (Hodges & Gill, 2015). Starbucks managers ought to identify all the risks that could potentially arise from the change plan as well as their impacts on the organization. Strategies of mitigating these risks can also be formulated at this stage.

After identifying benefits and risks, the next step will be for the managers to develop a mechanism of tracking benefits. For instance, the company can create baselines against which performance will be measured. Equally important, the company will need to develop an action plan for realizing the benefits. This will be followed by monitoring the benefits and reviewing the progress the company has made as a result of implementing the sponsorship program. An important point to keep in mind is that unless the change initiative enjoys buy-in from the people it affects, it will fail sooner or later. To avoid this, communication of the progress and the extent to which the anticipated benefits have been realized is crucial (Hodges & Gill, 2015). As Harrington, Voehl and Voehl (2015) rightly observe, change sustainment calls for ongoing communication together with dialogue so that all stakeholders understand the significance of certain processes, actions and behaviors. More precisely, the company must observe honesty and sincerity when communicating progress to stakeholders: risks should not be understated or benefits overstated. In conclusion, seeking sustainable change in organizations through measuring benefits realization is a worthy undertaking as it measures “the impact of the change so that adjustments can be made in order for the change to be sustained” (Hodges & Gill, 2015 p.378).

Once Starbucks is satisfied that the planned change generates more benefits than risks, attention should be directed towards ways of making the change sustainable in the long-term. Just to mention, the planned change is for the organization to start offering sponsorship programs to employees so that they can advance their knowledge by furthering their studies. The company can begin by paying tuition fees for interested employees, but it may come a time when there will be so many employees showing interest in the program that it becomes unprofitable or untenable for Starbucks to fully support all employees. This is where the question of sustainable strategies of keeping the program rolling come in. One way of keeping the program sustainable would be for the organization to discuss with employees to have a portion of their salaries deducted and channeled towards their education (Kress, 2021). While there are high chances of opposition to this suggestion, it is the duty of managers at Starbucks to help employees to understand that it is for their own good. Both managers and employees need to acknowledge the relevance of employee development in today’s world, especially given the ever-increasing competition in the market which means, in part, that individuals should be ready to invest in courses that enhance their marketability.

A second strategy that Starbucks could use to make the change initiative sustainable in the long-term is to encourage employees to embrace online forums for learning. As highlighted earlier, one of the reasons why employees may resist the change is when they feel that they are overburdened as they must take up the roles used to be done by their colleagues who are now going to colleges for further education. To minimize this resistance, online learning would be a viable strategy that makes the planned change more sustainable not only in the present but also in the long-run. Specifically, such a strategy would allow employees to learn while also playing their part to keep operations at Starbucks going on.

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