Performance measurement frameworks in organizational success: Starbucks case study

Starbucks: Performance Measures

Starbucks is indeed a ubiquitous part of modern society. However, Starbucks did not always possess this all-pervasive presence. There was a time, just a couple decades ago when Starbucks was not on every corner and not everyone knew about or frequented the coffee chain.

Community Giving

One of the fundamental elements which makes the balance scorecard of Starbucks so positive and the history of the company so compelling, is that it really is steeped in humanity. The founder and CEO of the company, Howard Schulz, explains this in copious examples in his book, "Onward: How Starbucks Fought for Its Life without Losing Its Soul." Schulz gives countless examples of the genuine attempts of Starbucks to funnel money and time to help support "local needs in the communities it serves, promoting sustainable farming communities and ethically sourcing coffee, and packaging and transporting its products with sensitivity to their environmental impact. It's also meant creating what Schultz calls a 'third place' between home and office, where people can connect with each other or spend time alone, comfortably and relatively inexpensively" (Schwartz, 2011). This is truly a tremendous service given to the community at large and one which should absolutely not be underestimated. Any company can give money to help develop the surrounding community where the business thrives so it in turn can thrive; however, the fact that Starbucks does this with such consistency and transparency is indeed admirable, and a factor no doubt, in its success. Too many people don't consider the sheer community development that the "third space" created by Starbucks truly helps to create a convenient middle ground for socializing or meeting outside of work and home. This extra space gives members of society a clean, well-lighted place in which to converse, discuss, complete work, or be alone in public.

Challenging Decisions: Commitment

One of the major decisions that Schulz had to make in order to get the company and brand back on track was to actually make the decision to get rid of hundreds of stores which were not performing adequately, and thus, lay off thousands of employees (Schwartz, 2011). As Schulz fully admits, it was a completely heart-wrenching decision and one which was attempted in the most compassionate manner possible. This marks a shining example of one of the most compelling performance measures of any successful company. A successful company has to be willing to make and follow-through with the most difficult decisions possible, if they mean the ultimate good for the company. Schulz was able to recognize the severe consequences of not shutting down those stores and laying off those employees; the inability to take such short-term negative actions would mean that the company was unable to execute actions that would protect its vested interests. This was indeed a bold move, and one which was certainly public. "Starbucks announced on July 1, 2008, the decision to close approximately 600 company-operated stores in the U.S. As a result of the company's rigorous evaluation of the U.S. company-operated store portfolio. As part of its multi-faceted plan to transform the company, on July 29, 2008, Starbucks announced the reduction of approximately 1,000 open and filled positions within its leadership structure and its non-store organization" (Starbucks, 2008). The entire business community watched, conjectured and scrutinized as Starbucks engaged in such actions, actions that generated a great deal of bad press. Even so, the company continued to have the best interests of the firm at heart. Laying off all those thousands of employees was like a forest fire killing off all the dead brush and dead forestry in a woods somewhere, so that new growth can occur. Real businesses know when to make such decisions and how to follow through on them.

Retraining of Employees

Many companies are reluctant to retrain employees. They often feel that such a move is an additional waste. It wastes time on clarifying lessons already taught to employees. Furthermore, retraining employees also leaves a company open to receiving bad press. Retraining employees looks like a company trained them shoddily the first time and has been using improperly trained employees to do business. However, despite these negative impressions, retraining employees is sometimes an absolute necessity and crucial for the survival of a given company. For instance, in 2008, Schulz concluded that the huge push to expand his brand and company had left many Starbucks stores offering a product that was not as high quality (Schulz, 2011). "With that in mind, Schultz decided to close every one of its stores in order to retrain its 135,000 'baristas' in how to brew the perfect espresso. And that's what he did, beginning at 5 pm on a Tuesday in February, 2008" (Schwartz, 2011). Schulz had enough honesty and integrity to admit that if a given barista doesn't care enough or know enough to create a balanced product, then the entire company has failed and that without the best product, there is no reason for the company to exist (Schwartz, 2011).