Starbucks Consulting Project

Organizational Design and Change

Team 2Zishan Xu

Ian KerwinSeth Breedlove

Sivaporn RatanavilaiwanManatsanan AnuwatmateeValentinos Themistocleous

Diagnosing Organizational Effectiveness During Difficult Economic Times.

Agenda

• Client Introduction• Presenting Problem• Congruence Model• Expectancy Theory• Data Collection• Findings• Recommendations

• Conclusion

• History 1971 - present

• Mission statement: To inspire and nurture the human spirit - one person, one cup, and one neighborhood at a time

• Employee-oriented

• Our client organization, located at 390 Stockton Street, San Francisco

• Performance• Structure

Client Introduction

Agenda

• Client Introduction• Presenting Problem• Congruence Model• Expectancy Theory• Data Collection• Findings• Recommendations

• Conclusion

• Lack of Presenting Problem.

• There is always room for improvement and efficiency in Starbucks’ operations. Resulting in an overall increased organizational effectiveness.

• Downsizing and restructurings : 600 under performing stores were shut down in the U.S. But Starbucks plans to open another 100 globally by 2010.

• Psychological contract between the organization and its employees.

• Prelude to discoveries.

Presenting Problem

Agenda

• Summary Overview • Presenting Problem• Congruence Model• Expectancy Theory• Data Collection• Findings• Recommendations

• Conclusion

OutputInput

Environment

Resources

History

Strategy

System

Unit

Work(Processes)

People(Skills/

Competencies)

FormalOrganization

(Structure, Systems, etc.)

InformalOrganization

(Culture)

Congruence Model

Alignment =Organizational Effectiveness

Agenda

• Client Introduction• Presenting Problem• Congruence Model• Expectancy Theory• Data Collection• Findings• Recommendations

• Conclusion

First Round Interview: Internal communication appears weak at Starbucks.

If the employees' motivation is enhanced, Starbucks can achieve higher level of efficiency.

Expectancy Theory

Components of Expectancy Theory

• Expectancy is Effort-Performance Relationship.

• Instrumentality is Performance-Reward Relationship.

• Valence is the importance that the individual places upon the expected outcome.

Motivation Force = Expectancy * Instrumentality * Valence

Agenda

• Client Introduction• Presenting Problem• Congruence Model• Expectancy Theory• Data Collection• Findings• Recommendations

• Conclusion

• Unobtrusive measures• Observations• First round interviews• Surveys• Second round interviews

Data Collection

Agenda

• Client Introduction• Presenting Problem• Congruence Model• Expectancy Theory• Data Collection• Findings• Recommendations

• Conclusion

• Employees enjoy working at Starbucks.• 93% are satisfied with company benefit package.• 93% feel the supervisor help them develop their skills.• 100% agree that Starbucks provides necessary training to

perform their job properly.• 100% are satisfied with their performance.• 86% would recommend Starbucks as an employer to a

friend.

• Formal Organization - Informal Organization - People - Work

Findings

• Employees are not a big part of this decision making process.• 87% would like to take part in company decision-making.• 54% feel they were not allowed to participate in decision

making process.

• People - Formal Organization

• Communication among all levels is not very good.• Varied opinion about the quality of communication

between employees at all levels.• 93% would like to get updated about the company's

current situation.

• People - Informal Organization

Findings (cont.)

• Employees question the company's effort to support their growth.

• Varied opinion about whether their personal goals are aligned with company goals.

• Varied opinion about whether the company supports their personal growth.

• Varied opinion about whether the company provides them the tools to advance their career.

• Formal Organization - People

Findings (cont.)

Expectancy

• Starbucks provides necessary training to perform my job properly

• My supervisor helps subordinates develop their skills

Expectancy

• Expectancy is high

o 100% of the employees agreed that if they put more effort, not only could they outperform their partners, but they could also help their branch to increase revenue, attract more customers and increase customer loyalty

Instrumentality

• 34% of the employees disagreed when we asked if they consistently perform well at their jobs, would they be rewarded

• 100% agreed that they will be rewarded fairly by their supervisor

Instrumentality

Instrumentality is high• The 6-month evaluation feedback system in

Starbucks is designed to reflect employee performance.

• The employees reported noticing that if they work harder, they will receive a better reward (from second round interviews)

Valence

• I am not satisfied with my compensation package

• Working at Starbucks helps me work on my outside goals. (i.e. education, personal projects)

Valence

Valence is medium

• Regarding the variance as it pertains to instrumentality, the degree of matching individual needs and the respective rewards is not that high

Independent Variable Question: “My supervisor gives me the incentive to exceed expectations.” r =0.72 – “M supervisor encourages partners to participate in important decisions”.r= 0.76 -“I do not have an opportunity to take part in making decisions”.r=0.59 - “Working at Starbucks helps me work on my outside goals”

H1 There is a positive correlation between employee self-efficacy (the ability to exceed in a specific situation including their outside goals) and their

motivation to remain at Starbucks

H2: There is a positive correlation between employee awareness of their Starbucks compensation package and benefits and their motivation to remain

at Starbucks.

Independent Variable Question: “The individual who hired me thoroughly explained my benefits package at the time of hire” 80% Agree r = 0.59 - “I would encourage my friends to work for this company. 86% Agreer = 0.56 - “Starbucks provides employees the tools to advance their career”. 67% Agreer =0.64 “My supervisor encourages partners to participate in important decisions. 60% Agreer = 0.71 “I would like to participate in the company’s decision making. 87% agree

Independent Variable Question: “The success of Starbucks is NOT really important to me”  80% Disagree

r = Negative 0.55- “Starbucks supports my personal growth.” 56% Agreer = Negative 0.67 “Starbucks provides employees the tools to advance their career. 67% Agreer = Negative 0.62 “I am treated fairly” 100% Agreer = 0.62 – “If I were offered a comparable position, I would consider leaving Starbucks” 67% Disagreer = 0.70 – “Starbucks does NOT provide the necessary training to help me achieve desired outcomes. 80% Disagree

Independent Variable Question: “My supervisor helps subordinates develop their skills.” 93% Agree r = 0.74 – “My employer knows what my goals are.” 87%% Agreer = 0.71 – “Starbucks provides partners with a clear career path.” 54% Agreer = 0.62 – “I am motivated to exceed company’s expectations.” 53% Agreer = Negative 0.51 “I only want part-time employment at Starbucks. 59% Disagree

H5: There is a positive correlation between the level and frequency of employee development and their goals, whether they are internal to Starbucks or external goals, and their intent to remain at Starbucks.

H6: There is a positive correlation between the openness and amount of top-down communication regarding the company’s plans and employee’s

satisfaction.Independent Variable Question: “There is good communication between partners at all levels” 60% Agree r = 0.80- “My supervisor gives me incentive to exceed expectations”. 71% Agreer = 0.74 - “Starbucks supports my personal growth 56% Agreer = 0.70 - “I feel I have several options to choose from regarding the direction of my career at Starbucks. 67% Disagreer= Negative 0.63 -“I do not have the freedom to choose my future at Starbucks. 7#% Disagreer= 0.59 “Working at Starbucks helps me work on my outside goals”. 74% Agreer = Negative 0.62 “ The success of Starbucks is NOT really important to me.” 80% Disagree  Independent Variable Question: “I would feel better if I were continuously updated about the company’s current situation. 97% Agree r= Negative 0.53 – “I am treated fairly” 100% Agree Independent Variable Question: “My supervisor keeps subordinates informed about store operations. 80% Agree  r= Negative 0.74 “The success of Starbucks is NOT really important to me. 80% Disagree

Agenda

• Client Introduction• Presenting Problem• Congruence Model• Expectancy Theory• Data Collection• Findings• Recommendations

• Conclusion

• Evolution of the Presenting Problem

• Timing Organizational Changes

• Area of Focus: HR• Communication• Motivation and Empowerment

Recommendations

• Current State• Meetings, Reviews, Informal

• Recommendation• “Five Minute Meeting”

• Reasoning and Results• Two Way Street

Recommendations-Communication

• Current State • Push vs. Pull, Monetary Based

• Recommendation• Matching Expectations and Motivators

• Reasoning and Results• Increased Motivation

Recommendations-Expectancy and Motivation

• Current State • Employee Driven

• Recommendation• Recognize and Channel

• Reasoning and Results• Quality and Productivity

Recommendations-Support and Development

Agenda

• Client Introduction• Presenting Problem• Congruence Model• Expectancy Theory• Data Collection• Findings• Recommendations

• Conclusion

Conclusion

•Recommendations to Follow•Employee Input

•Beneficiaries•Organization•Employees

•Organizational Effectiveness in the Future

• Survey Results - http://spreadsheets.google.com/ccc?key=rhptPrWFGaTt2wJcrHAjvbQ&hl=en

• Correlation Data - http://spreadsheets.google.com/ccc?key=rOjny4FHE5l6aYMfqLVFU1g&hl=en

• 1st Round Interview - http://docs.google.com/Doc?id=dhnr6nqk_4c9csf6f6&hl=en

• 2nd Round Interview - http://docs.google.com/Doc?id=dd3kx5qr_13fqkn6ht&hl=en

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