Howard Schultz - Hospitalty Leader

Abstract

This paper discusses Howard Schultz, the CEO of Starbucks as a Hospitality Industry leader. It explores various reasons why he is successful, specifically based on leadership and management principles he uses and how he applies them to make them effective. The study mentions such major principles as inspiring, motivating people, and establishing a personal connection with both employees and customers. It describes the future of Howard Schultz for the company as well as the benefits he provides for the work force. The paper also identifies a potential problem for him. It is a limited room for development due to Howards current success. Multiple solutions are suggested, such as the introduction of a new app which would perform more functions, a renewed focus on the local culture and the redesign of the current stores to fit the lifestyle of people. They prefer working at coffee stores. All of the suggested solutions are aimed at creating a multi-dimensional experience at Starbucks.

Howard Schultz is a CEO and chief global strategist of Starbucks, located in Seattle, Washington. The Starbucks brand is widely popular. It has more than 20000 stores all over the world. Howard Schultz has undoubtedly played a major role in the companys phenomenal popularity. The paper will discuss management and leadership principles Schultz applies to contribute to the organizations success and suggest solutions to the possible problems he may face along the way.

Howard Schultz Characteristics

Howard Schultz performs a crucial role at Starbucks. He is a strategic thinker on whom people rely to make rational decisions. He guides his staff in the same direction and joins their efforts to receive the best result for the organization. Schultz also charms people with his passion and commitment. That is why many employees consider him as their role model. His dedication and passion have kept the company together for many years even during tough times. Furthermore, the vision Schultz shares with his employees is vivid and clear. That is why many people share it.

Description, History and Relevant Background

Howard Schultz was working as a director of sales at Hammerplast. It was the company that sold coffee makers, when he noticed that more coffee machines were sold to a small organization in Seattle than to Macys. He gained interest in the organization, which at the time was called Starbucks Coffee Tea and Spice Company. When Schultz walked into a Starbucks store for the first time in 1981, he realized that it was something special. He was hired as a director of retail operations at Starbucks. A few years later on his trip to Italy it occurred to Schultz that the company should sell coffee drinks, not just beans. The organizations owners did not share his vision, so Schultz left and opened his own coffee company Il Giornale. In 1987, he purchased Starbucks and became its CEO. Schultz defines the mission of his company as To source and roast the highest quality coffee in the world and deliver it perfectly to our customers".

The Application of Concepts and Principles of Hospitality Management

Starbucks is considered one of the most ethical companies in the world because of leadership and management principles Schultz applies. Firstly, he is honest and transparent. Schulz states, There are moments when you have to share your soul and conscience with people and show them who you are, and not be afraid of it. Secondly, he emphasizes commitment to excellence. Because his staff looks up to him, Schultzs apparent dedication molds the employees attitude towards the tasks they perform. Thirdly, he inspires his employees by being passionate and personally engaged in their work. As Gallo said, You cannot inspire unless you are inspired yourself (Gallo, 2014). By demonstrating his passion every day at work Schultz inspires his employees to believe in his vision and gets people to join him on his mission. Furthermore, another principle Howard has is authenticity. He does not compromise core values. In addition to that, Howard Schultz creates a personal connection with his employees. When sharing his opinion on hiring staff, Schultz said that first he created the brand by hiring the right people to work with. The style of leadership he applies is commonly referred to transformational leadership. It is based on motivating people and nurturing their individual talent. Schultz encourages creativity, enthusiasm, and thinking in different ways. This style creates a good climate for the companys development and allows it to implement his vision.

True-Life Examples

Howard Schultz develops trust in his relationship with employees. He is honest in his intentions. The proof of that is the memo he has written to Jim Donald, Starbuckss previous CEO in 2007. He expressed his opinion regarding the companys mistakes which went unnoticed prior to that, generating a lot of controversies. Despite the unwanted attention, Schultz was still honest. Therefore, the reason why Starbucks is an enduring brand is because it establishes an emotional connection with people. One of the most vivid examples of how dedicated Howard is to his company is when Starbucks temporarily closed 7000 stores to retrain staff and improve customer service in 2008. That dramatic measure cost the company millions of dollars and at the time almost ruined its reputation. However, this daring move demonstrated how committed Schultz had been to doing his absolute best. Schultz demonstrates his companys authenticity by insisting that Starbucks does not franchise its stores, all of which are owned by the organization. The explanation for that is because Howard wants to maintain high standards of customer service. It would be challenging if a large number of Starbuckss stores were franchised.When it comes to the significance of staff, Schultz stated as follows. Coffee is secondary, because products do not make up the company, people do. Starbucks has high employee retention rates which prove that its employees believe in the integrity of their leader. They are able to trust him. Hence, by motivating the workforce, Starbucks maximizes efforts and revenue.

The Likely Future of Howard Schultz for Starbucks

Howard Schultz plans to stay as Starbuckss CEO for many years ahead. When he decided to step down from his position in 2000, the companys stock considerably declined. But ever since his return, he has been focused on making the organization better. Howard Schultz will most likely attempt turning Starbucks into something more than a coffee store. In the future, the organization will implement new technology and experience redesign, thus reinventing Starbucks stores.

Despite his success, Schultz tries to stay grounded. This principle is reflected in his respect and loyalty to the companys employees. In fact, it a major benefit for the work force. Starbucks provides health care insurance to its employees, even for those who work part-time. From a personal experience, he knows how important it is to treat employees with respect and dignity. When Schultz was a child, his father broke his hip and was unable to work anymore. Because his job did not provide insurance or workers compensation, his family found itself in a financial trouble. Schultz said, I wanted to build the kind of company that my father never got a chance to work for, in which people were respected. Therefore, Schultz strives to create a trusting and respecting workplace where every staff member is taken care of. Starbucks employees also get stock awards and free coffee. Schultz encourages any feedback from his employees and takes their opinions into account. He gives them an opportunity to choose their working hours. As a result, the staff is driven by the same goal, has the same objectives and is interested in doing what is best for the organization. Starbucks creates a dedicated workforce with the benefits it provides. Howard Schultz also promotes diversity within the company as well as outside of it, fostering Starbucks spirit.

Potential Problem

Starbucks has always strived to exceed the customers expectations, which is why people expect a lot from the organization and its leader. It might become difficult for Schultz to constantly innovate and come up with new ideas to improve customer experience. Consequently, it may become a problem as it will limit a room for development. Moreover, the focus on growth might overshadow the importance of improvement. It will lead to stagnation in a long run. Even though the companys success could cover up for the possible lack of development, it will eventually become apparent. Another possible problem is homogeneity, which many brands face nowadays. It consists in having the same variety of products in every country, without regard for local communities. However, there is a number of ways these issues can be solved.

Solution

Starbucks can develop in many ways. In the future, the company has a potential to play even a larger role in peoples lives. A possible solution might be to improve customer experience by implementing ideas based on retail trends. To begin with, the organization can change its app. It allows customers to pay for their orders using their phones. The current app provides the standard information. Instead, the new one can be transformed into a multi-dimensional experience and create a new flow of communication using geo tagging and interest-based marketing. It would make Starbucks experience more efficient and personalized. The app would enable people to make orders before they walk into the store. Therefore, by the time, they arrive their drink is already made. Through interest-based marketing, customers would receive offers depending on their preferences and location. At shopping centers, consumers would order their drink and have it delivered to them through geo tagging. Another idea to be implemented in the future would be to make the organization even more rooted into the local community. The company can collaborate with local chefs to create beverages suited to the local taste. It would reflect the communitys preferences. One of the reasons why Starbucks was not as successful in Australia as everywhere else in the world was because it had tried to impose coffee tastes on Australian customers. Lin stated, Starbucks has been trying to implant itself into Australia rather than glow alongside its existing coffee culture. By emphasizing the local culture more, the company can deliver a more personalized experience and service. In addition to that, it would also allow the stores to incorporate local elements into its interior. The focus on local culture would attract not only people within the community, but also travelers who might be interested in tasting local drinks too. Thus, it would allow Starbucks to create an experience centered near store locations. It is of no doubt that Starbucks has truly created a third place alongside the office and home, and that site can be redefined once again. The company can change parts of its stores to suite the lifestyle of people who prefer working at Starbucks rather than at the traditional working places. The organization can design its stores in order to help people work more efficiently, faster and better. It can be done by creating and equipping spaces to facilitate productive working. What is more, those customers using Starbucks as a work place would get special offers to complement their overall experience. Thus, Starbucks could strengthen the bonds through creating service specially made for customers who work at its stores.

Conclusions

Howard Schultz is a leader whose passionate commitment to Starbucks has helped him create a global brand. His leadership principles, such as honesty, respect for the staff and creating a personal connection with people have set an example worth following. Schultz has showed how effective it is to lead by an example by demonstrating passion and dedication. It is no wonder that he is considered to be one of the most successful CEOs of our time. Despite the issues that may potentially arise as the brand continues to grow, such as limited development, there are many effective solutions that can help Schultz and his company to grow. Therefore, by implementing new ideas, such as developing a new app, re-equipping the stores and focusing on local communities the organization can expand and create an even more personalized experience for consumers.