Organizing at Starbucks

What is Organizing?

What is Organizing?

Organizing is an important task of managers. Once the organization’s goals and plans are in place, the organizing function sets in motion the process of seeing that those goals and plans are pursued. When managers organize, they’re defining what work needs to get done and creating a structure that enables work activities to be completed efficiently and effectively by organizational members hired to do that work. As Starbucks continues its global expansion and pursues innovative strategic initiatives, managers must deal with the realities of continually organizing and reorganizing its work efforts.

Like many start-up businesses, Starbucks’s original founders organized their company around a simple structure based on each person’s unique strengths: Zev Siegl became the retail expert; Jerry Baldwin took over the administrative functions; and Gordon Bowker was the dreamer who called himself “the magic, mystery, and romance man” who recognized from the start that a visit to Starbucks could “evoke a brief escape to a distant world.” As Starbucks grew, Jerry

recognized that they needed to hire professional and experienced managers. That’s when Howard Schultz (Starbucks’s well-known former chairman, CEO, and president) joined the company, bringing his skills in sales, marketing, and merchandising into the mix. When the original owners eventually sold the company to Schultz, he was able to take the company on the path to becoming what it is today and what it hopes to be in the future.

As Starbucks has expanded, its organizational structure has changed to accommodate that growth while still retaining a “lean” corporate structure. Schultz focused on hiring a team of executives from companies like Nestlé, Procter & Gamble, Corbis, Microsoft, and PepsiCo, realizing how important it was to have an executive team with experience running divisions or functions of larger companies. Today the senior corporate team includes 13 “C” (chief) officers, 17 executive vice presidents, 2 group presidents, and 4 “partners.” Although the executive team provides the all-important strategic direction, the “real” work of Starbucks gets done at the company’s support centre, zone offices, retail stores, and roasting plants. The support centre provides support to and assists all other aspects of corporate operations in the areas of accounting, finance, information technology, and sales and supply chain management.

The zone offices oversee the regional operations of the retail stores and provide support in human resource management, facilities management, account management, financial management, and sales management. The essential link between the zone offices and each retail store is the district manager, each of whom oversees 8 to 10 stores, down from the dozen or so stores they used to oversee. District managers need to be out working with the stores and use mobile technology to allow them to remain connected to the district office. District managers have been called “the most important in the company” because it’s out in the stores that the Starbucks vision and goals are being carried out.

In the retail stores, hourly employees (baristas) service customers under the direction of shift supervisors, assistant store managers, and store managers. These managers are responsible for the day-to-day operations of each Starbucks location. One of the organizational challenges for many store managers has been the company’s decision to add more drive-through windows in its North American locations, which appears to be a smart, strategic move since the average annual volume at a store with a drive-through window is about 30 percent higher than a store without one. However, a drive-through window often takes up to four people to operate: one to take orders, one to operate the cash register, one to work the espresso machine, and a “floater” who can fill in where needed. Other organizing challenges arise any time the company introduces new products and new, more efficient work approaches.

Finally, without coffee and other beverages and products to sell, there would be no Starbucks. The coffee beans are processed at the company’s North American roasting plants in Washington, Pennsylvania, Nevada, South Carolina, and Georgia, and internationally in Amsterdam. There’s also a manufacturing plant for Tazo Tea in Oregon, and the company set up a coffee roasting facility with Tata Global Beverages in India. At each manufacturing facility, the production team produces the coffee and other products and the distribution team manages the inventory and distribution of products and equipment to company stores. Because product quality is so essential to Starbucks’s success, each person in the manufacturing facilities must be focused on maintaining quality control at every step in the process.