Another aspect of the transformational leader is their emphasis on moral responsibility. Starbucks prides itself on being a moral and responsible organization in their community. “From the neighborhoods where our stores are located to the ones where our coffee is grown – we believe in fostering thriving communities. Bringing people together, inspiring change and making a difference in people’s lives – it’s all part of being a good neighbor. By 2015, we hope to contribute one million volunteer hours each year to our communities (Fortune Magazine, Nov.17, 2011).”
Howard Schultz is definitely a leader who places his employees, the community, and the environment over merely making a profit for himself and his shareholders. Schultz believes that being a responsible company is all about finding balance between “profitability and social science (Fortune Magazine, Nov.17, 2011).”
1b. What indicators can you find that suggest his style has changed since coming back to the company in January, 2008?
There are several indicators to suggest that his style changed since coming back to the company in 2008. According to the Fortune article, Schultz was a little less impulsive, a little more relaxed. "Sun Valley and Davos no longer mattered," he says. "For a long time I really wanted to be invited to all those high-profile conferences that CEOs were invited to. I thought that meant something." He was invited, and he went to a few, but he rarely goes anymore. "I no longer needed approval or adulation from the outside world -- maybe because the stock price was at an all-time low and the noise coming from every constituency was so bad and so critical about both the company and me. I just drowned it out. I had to transform both the company as well as myself." He cycled more with friends and family, and went back to playing chess (Fortune Magazine, Nov.17, 2011).” It appears that Schultz determined that maintaining a work-life balance was just as important as leading a highly successful and profitable business.
2a. How might Schultz utilize (or how has he utilized) Expectancy Theory, the JCM of Work Motivation, and Equity Theory to achieve the performance objectives Starbucks has established?
I believe Schultz has effectively utilized expectancy theory in that the basic principle suggests that “employees will be motivated if they feel competent, if they think their efforts will be rewarded, and if they find the payoff for their work valuable (Northhouse, 2013).” This is demonstrated by Starbucks commitment to provide its employees with health benefits and stock options. Principles of expectancy theory are also evident in Starbucks involvement in community initiatives by recognizing and rewarding employees for volunteer work in their neighborhoods.
Schultz might utilize the JCM of work motivation by cross training employees in all facets of the coffee business. By identifying the tasks and steps necessary from growing, harvesting and roasting the coffee beans, Starbucks employees will gain a better understanding and significance of their roles in delivering the final product to the customer.
Schultz will also needed to utilize equity theory with regards to cross cultural contexts to understand how markets outside of the United States operate. Starbucks had recently failed in an attempt to bring Starbucks into the Australian market. On July 29, 2008, Starbucks was forced to close 61 of its 84 stores. Some argued that “in a country with a rich coffee culture, Starbucks had failed to understand the Australian market and struggled to compete (Fortune Magazine, Nov.17, 2011).” Schultz
2b. Please include as part of your answer the key elements of each of these theories.
The key elements of path goal theory are derived from expectancy theory. The theory suggests that employees will be motivated if their work performance is rewarded, they are made to feel competent, and they find value in their work (Northhouse, 2013).” Path goal theory ultimately places the leader responsible for helping subordinates reach their goals.
The are five key elements of the job charcteristics model of work motivation theory. First is the perceived variety and complexity of skills and talents required to perform the job. Second is extent the job is involves an identifiable task. Third is the possibility that the job affects the well being of others. Fourth is the amount the job is seen as allowing for personal initiative in performing the job. Finally, feedback that provides information about the employee’s job performance (Debnath, Tandon & Pointer).
The four key elements of equity theory are identifying contributions that employees bring to their job. Second, rewards or punishments that employees receive. Third, is the persons with whom employees compare their ratio of outcomes to inputs. Fourth, the comparisons employees make that determine whether they perceive themselves to be in an equitable situation or a situation whether they are under rewarded (Bolino & Turnely, 2007).
Q3a. Contrast the leadership style of Howard Schultz with that of Philip Boyer, CEO of Celeritas, Inc., from the in-class case discussed on 10/3. What similarities and/or differences can you identify, particularly in terms of relevant leadership models (e.g., authentic leadership, servant leadership) we have discussed during this class?
The leadership styles of Schultz and Boyer are completely different. Boyer appears to only directly communicate with his senior vice presidents while Schultz chooses to address every employee individually by sending memos and by closing all U.S. stores for three hours to provide reeducation for its employees. Boyer also appeared to have lost the respect of his employees due to a lack of communication and trust between the SVP’s and VP’s.
I think both Schultz and Boyer displayed some transformational leadership traits although Schultz was clearly more successful than Boyer. Boyer at least attempted to change the culture at Celeritas by hiring a consultant and putting all of the SVP’s in a room to discuss the problems the company faced. Unfortunately, Boyer did not have the support of his team to affect any significant changes. Schultz was more successful transforming the culture at Starbucks by providing benefits to his employees and making a public commitment to be an ethical and responsible organization.
I think Shultz can be classified as an authentic leader because as Northhouse discusses “authentic leadership describes leaderships that is transparent, morally grounded, and responsive to people’s needs (Northhouse, 2013).” Providing benefits to his employees because his father did not have those things is an example of being responsive to his employees needs.
I also believe that Schultz fits some of the characteristics of the servant leadership model because “the outcomes of servant leadership are follower performance and growth, organizational performance, and societal impact (Northhouse, 2013).” This is evident in Starbucks community involvement efforts and care for the environment by committing to use 100% recyclable cups by 2015 (Fortune Magazine, Nov.17, 2011).”
3b. Are there leadership circumstances when Boyer’s style would be more appropriate than that of Schultz? Discuss.
I do not think there are any circumstances when Boyer’s style would be more appropriate than that of Schultz, namely do to the nature and complexity of their respective businesses. While both companies are in the service sector, Celeritas must compete in an industry that is constantly changing and evolving. Not only does Celeritas need to market their brand but they must also focus on providing customers with the services they need. Starbuck’s on the other hand it known all over the world, and even if you do not purchase their products you will most likely know their name.
References
Debnath, S., Tandon, S., and Pointer, L.V. “Designing business school courses to promote student motivation: An application of the Job Characteristics Model”. J. of Mgt. Educ., August, 2007, pp. 812-831.
FORTUNE Magazine, November, 2011. Schultz, Howard and Gordon, Joann. Onward. New York: Rodale Publishing, 2011.
Journal of Organizational Behavior. Bolino,Mark,C. Turnley,William,H. 2007. Old faces, new places: equity theory in cross-cultural contexts. John Wiley & Sons
Northouse, Peter G. Leadership: Theory and Practice, 6th ed. Thousand Oaks, CA: Sage Publications, Inc. 2013
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