III.

Organizing

Organizing is the third part of the P-O-L-C framework and represents a management
function that is required after having plans and goals to set the way for the
organization to achieve these things, including designing the organizational
structure, dividing work into jobs and departments, coordinating organizational tasks,
establishing relationships among these clusters and allocating organizational
resources (Robbins & Coulter, 2016). Organizing in management differs
considerably between small-scale businesses (Mount et al., 1993) and globalizing
businesses (Ghoshal, 1987; Malhotra & Hinings, 2009). In fact, the findings in these
papers indicate what happened with Starbucks — from a local coffee store to an
international coffee-chain brand, in terms of organizing its business. In this part, we
will look depth into the organizing process of Starbucks, mainly in its organizational
structure and people management.

1. Practical activities

Organizational structure

From the start, the organizational structure of Starbucks was simple, it did not follow
any formal structure. However, when Starbucks expanded its business with an
increasing number of stores, its structure changed to a formal way. Howard Schultz,
the CEO of Starbucks, officially led the business on the path to becoming what it is
today and what it aspires to be in the future when the original owners finally sold it to
him. He aimed to build a team of executives with past experience leading
departments and divisions at important corporations including Nestlé, Procter &
Gamble, Corbis, Microsoft, and PepsiCo.

The zone offices coordinate the retail outlets' area operations and help with sales
management, account management, facilities management, human resources, and
account management. Because the district manager is the vital link between the
zone headquarters and each retail store, it is critical to keep in touch with those
district managers. Hourly workers at retail enterprises are supervised by assistant
store managers, store managers, and shift supervisors. These managers are
responsible for running each Starbucks location's daily operations, so they must be
ready to handle problems that might occur at any time, such as when the business
rolls out new goods or uses more effective labor practices. Starbucks has several
domestic and foreign roasting facilities where coffee beans are processed. The
manufacturing team creates coffee and other products at each production line, while
the distribution team manages inventory and delivery of goods to retailers. Every
worker in the production facilities must pledge to guarantee quality control at every
level of the process since product quality is essential to Starbucks' success.
People management

a) Attract potential employees

There is no organization without people - therefore when looking into the organizing
part, we have to consider the way Starbucks manages its human resources.
Starbucks' core values have always been to treat staff with decency and respect and
to assist and encourage them to take calculated risks to advance their careers
(Robbins & Coulter, 2016). In order to provide prospective hopefuls the opportunity
to interact with recruiters face-to-face and submit applications for part- or full-time
positions at any local shop, Starbucks holds recruiting events throughout the year in
a variety of locations around the United States. The business gives students several
internship possibilities throughout the summer (Robbins & Coulter, 2016). Starbucks
uses a variety of methods to attract potential partners because they desire “people
who are adaptable, self-motivated, passionate, creative team players.”

b) Diversity training

Diversity training is crucial since Starbucks strongly opposes discrimination and

embraces equality. Senior executives took part in a simultaneous 360-degree
diversity review to identify their strengths as well as some areas that required
improvement. To enhance their diversity skills, staff members at the vice-president
level and above can also take part in an executive diversity learning series that
includes a full-day diversity immersion exercise (Robbins & Coulter, 2016). To
demonstrate their opposition to segregation, in response to an incident at a store in
Philadelphia where a staff member called the police to arrest two black people for
not placing an order, more than 8,000 Starbucks locations across the United States
were closed on May 29, 2018 (Abrams, 2018). The closures were done to provide
training to employees about racial bias.

In addition, the specifics of Starbucks' additional training programs, which are

available for a range of objectives, may be found on the business website. New
baristas receive the necessary training and abilities through the Barista Basics
Training Program. By helping the store manager operate the business more
effectively, the Shift Supervisor Training Program seeks to enhance the supervisor's
duties. Good management practices are taught in the retail management training
program along with other skills like inspiring others and problem-solving. New district
managers will be given the skills they need to succeed through the district manager
training program.

2. Analysis

2.1. Departmentalization
Starbucks has a matrix organizational structure including three dimensions:
functional, geographical, and product that make up the departmentalization of the
business.

Firstly, the organizational feature of Starbucks's structure is known as "functional

hierarchy", which is accomplished by grouping people with similar specialties,
common skills, knowledge, and orientations so that they can coordinate within the
functional area (Robbins & Coulter, 2016). Three main departments make up the
coffee company: marketing, finance, and human resources, which are most apparent
at the top of Starbucks' organizational hierarchy. The organizational functional
hierarchy, with the CEO at the top, allows for a top-down approach (Musonera,
2021). Depth specialization is increased through this type of departmentalization, but
there is little cross-functional cooperation and the manager's ability to see company
objectives is constrained
(Robbins & Coulter, 2016).

Secondly, geographical departmentalization is one of the classifications of labor

according to distinct regions (Robbins & Coulter, 2016). There are three regional
divisions, which are: Americas, China, Asia-Pacific, Africa-Europe-the Middle East.
Not only in terms of Starbucks stores' operation, geographical departmentalization
also refers to its employees. For instance, a Starbucks district manager, who reports
to the zone headquarters, is in charge of 8–10 retail locations in a local area.
Managers can effectively and efficiently solve the unique problems that develop in
each location because of this level of departmentalization. However, it leads to
function overlap and may make the organizational area feel disjointed (Robbins &
Coulter, 2016).

Thirdly, product-based divisions are included in Starbucks' organizational structure,

which makes it easier to manage its product lines. For example, the company offers
sections for commodities like glasses or things like baked goods, coffee, and related
stuff. This feature of the company structure allows Starbucks to concentrate on
product development, create and innovate its drinking products and branded
services. When faced with dangers, a firm has to be competitive to prosper, and this
development provides that (Musonera, 2021). This kind of departmentalization
enhances the effectiveness of the job activity flow (Robbins & Coulter, 2016).

Lastly, a flattened organizational structure is most commonly found in each

Starbucks store, where there is little to no middle management between employees
and managers. There are different levels of managers, from store manager to shift
manager, however, they directly manage the workflow of the store and monitor the
baristas and other ‘partners’, rather than having a hierarchy. This kind of structure
facilitates faster and simpler communication therefore enhances the process of
information transmission between managers and non-managerial employees. This is
also the requirement and competitive advantage for such coffee shops in the service
industry to maintain its customer service and other standards.

2.2. Work specialization

In addition, Starbucks' case makes a number of the six fundamental components of

organizational design evident. Work specialization is the second form and it is
utilized in retail establishments and roasting facilities with the purpose of boosting
productivity by delegating parts of a task to certain staff. Work specialization
effectively utilizes the variety of competencies that employees possess and assists
them in developing a high level of skill and knowledge in performing a specific task
(Meier & Bohte, 2000).

2.3. Chain of command

The chain of command in Starbucks starts with the CEO position at the top that
directly controls the group of senior corporate officers, including six chief officers,
seven executive vice presidents, three group presidents, and two managing
directors. These people will discuss and make decisions for the operation as weel as
give the direction for the whole company and manage the work of each department
that are the support center, zone offices, retail stores, and roasting plants.

To the store level which is the backbone of the companies, the zone offices take the
responsibility of monitoring these retail stores through the district managers. Under
the district manager is the store manager, the associate store manager, the shift
manager and the bottom-line is the barista.

2.3. Span of control

Again, it is separated between the executive level and the retail store level. It is
relatively high-demand for the CEO of Starbucks to control the executive team that
comprises several positions with different levels.

The district managers, to a lesser extent, are responsible for 8 to 10 stores.

However, Starbucks decided to reduce the amount of retail stores that each district
manager controls, which is synonymous with more district managers required to run
their business. The reason is simply related to the definition of span of control itself
that is to enhance the efficiency and effectiveness of the management at this retail
store level.

2.4. Recruitment

Starbucks had interesting approaches to finding employees who are "adaptable,

self-motivated, passionate, and creative people" (Robbins & Coulter, 2016).
Starbucks has utilized its website to locate and acquire suitable people, allowing it to
approach a wide range of prospective applicants because recruitment information
has more access to people who are looking for a new job, who can contribute their
skills and expertise, and who want to advance both personally and professionally
(Strauss, J., Frost, R., 2012). Moreover, it holds recruiting events throughout the year
in a variety of locations around the United States to provide a prospective
opportunity to interact with recruiters face-to-face and submit applications for part- or
full-time positions at any local shop.

2.5. Training

Starbucks is a company that exceptionally focuses on providing training to its

employees. The benefits come from both sides: internal and external: employee-side
and customer-side, respectively. Realizing the close relationship between training
and innovation (Robbins & Coulter, 2016), Starbucks put a lot of effort into this field.
The training programs also vary based on the needs of each position - supervisor,
assistant, store manager, district manager, etc. to maximize the values
training-takers receive which consequently comes out to be profitable. Not only that
Starbucks uses both traditional and technology-based training methods in their
training process. Starbucks has implemented its training program based on the
70/20/10 model, which states that 70% of employees' training comes from
professional experience, 20% from feedback and interactions with coworkers, and
10% from formal educational courses (Lee, 2022). The framework has been used
internationally, however, its efficiency in terms of learning transfer has not been
assessed highly. Despite middle managers' knowledge of and willingness to
participate in ongoing skill development, efforts to improve competence through
learning transfer by using the 70/20/10 framework did not have the desired benefits
(Johnson, n.d.).

3. Recommendations

a) Clarify the role’s job and expectation, enhance the communication

This recommendation arose from the organizational structure of Starbucks — the

matrix structure for the back office and the management team. One of the main
disadvantages of this type of structure is the complexity and ambiguity of each
position and this can potentially lower the performance of each organizational
member and therefore the organizational performance. By making the job and
expectation for each position more clear, there will be less uncertainty and conflict in
the working process. More communication channels and an opener
information-transfer organizational culture may further facilitate functioning of the
business following the structure like this.

b) More flexible span of control for the district managers

It is suggested that the number of stores under the responsibility of each district
manager must not be fixed, e.g. 8 to 10 as in the past or a little bit lower as of right
now. The business conditions differ from country to country, region to region, and
culture to culture so the effective span of control can be different for each district
manager (e.g. A district manager in the U.S. may struggle with 6 stores, but the
counterpart in Cambodia perhaps easily manages 8 stores).

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