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Coffeehouse Case Study - Does Fighting Unions Really Hurt the Starbucks Image and Culture?

As you may be aware, Starbucks (still love you SB, signed - KD) is in a bit of trouble these days. Let's count the ways.  First, people are generally less willing to pay $3 to $5 for a cup of coffee in this economy.  Even the people who can still afford it are questioning the legitimacy of their caffeine jones being satisfied by the green team at Starbucks. 

Next, the Seattle retailer seems to have hit a growth plateau.  For years, their year over year growthStarbucks targets were satisfied by the fact they opened hundreds (if not thousands) of stores per year.  The Seattle retailer seems to have hit its store saturation point, as evidenced by the fact they closed hundreds of under-performing stores in 2008.  I'm still disappointed a Starbucks hasn't opened at the top of my cul-de-sac, but hey, maybe it will happen after we are out of the recession.

Finally, there are a lot of folks who claim the store environment and the service provided has become average, as Starbucks went from 2 to 50 locations in your town.  Additionally, like any other big retailer, Starbucks has developed some labor relations issues, having to react to small union organizing attempts at specific locations.

More on Starbucks' union organizing blues from BusinessWeek:

"Starbucks (SBUX), once the undisputed leader in premium-price caffeine fixes, has long cultivated a corporate image for social responsibility, environmental awareness, and sensitivity to workers' rights. Now that carefully crafted reputation is under assault, thanks to a messy legal dispute with a group called the Starbucks Workers Union (SWU) (part of the Industrial Workers of the World, or IWW), which started recruiting employees in 2004 and now claims 300 members.

The National Labor Relations Board found on Dec. 23 that Starbucks had illegally fired three New York City baristas as it tried to squelch the union organizing effort. The 88-page ruling also says the company broke the law by giving negative job evaluations to other union supporters and prohibiting employees from discussing union issues at work. The judge ordered that the three baristas be reinstated and receive back wages. The judge also called on Starbucks to end discriminatory treatment of other pro-union workers at four Manhattan locations named in the case. The decision marks the end of an 18-month trial in New York City that pitted the ubiquitous multinational corporation against a group of twentysomething baristas who are part of the Industrial Workers of the World.

Starbucks intends to appeal the decision. The company maintained during the trial that the baristas were fired for perfectly legal reasons, such as disrupting business in its stores or threatening a manager. "This is an issue with particular employees," says Tara Darrow, a Starbucks spokeswoman. "We felt we handled it consistently and fairly. In this particular situation the NLRB disagreed. We're disappointed with that."

Before you envision picket lines at your local coffee shop, let's keep things in perspective.  It appears by the article that no store has been organized or certified via a "yes" vote in an election.  Here's the scope of what we are talking about.  Starbucks has 70,000 employees, the labor union in question has been working for 4 years and counts 300 Starbucks employees who claim to be members.  That's less than half a percentage point.  It's something, but not necessarily impressive or staggering.

Now, let's mix the expectations of a Starbucks customer with the charges the company is appealing, and the normal M.O. of a union.  You know what I like when I walk into a well-managed Starbucks?  Hustle and cheerful service.  Be nice to me and hustle to get me in and out.  Starbucks claims they took action on the employees because they were disrupting business.  Here's how that works with a union - a union contract RESTRICTS the work each employee can perform.  I'm guessing the employees in question were disrupting business by refusing to multli-task behind the counter or other refusals that hurt the customer.  What would you do with that if you were Starbucks?  Is the customer the most important thing to the culture or not?

Finally, a note on the Employee Free Choice Act (EFCA).  If the EFCA passes in 2009 as written (with card check front and center), the employees who disrupted the business flow of Starbucks are the ones who get together and approach co-workers as a team and ask them to sign a card authorizing a union.  Guess what happens with that version of the EFCA?  The employees who most typify the culture of Starbucks (service and hustle) lose the right to a confidential vote regarding whether they want to be unionized or not.  If they give in to the peer pressure or intimidation, they can't vote in private.  Their vote is gone.

So Starbucks, if you're out there and reading, count this frequent customer as one who believes that remaining union-free is in the best interest of the customer and consistent with the brand, culture and image of Starbucks.  

Now can I get that Venti Mild, stat?


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