Starbucks vs Union Name: Abhinav Gupta

Features of Negotiation Environment

● Context: Starbucks and its employees have locked horns since the 1990s but the
Starbucks Union movement truly materialized since 2022. Starbucks workers have been
strongly voicing their concerns regarding low wages, inconsistent schedules and health
coverage among other issues. The Starbucks leadership are dealing with employee
dissatisfaction and a negative image in public given its recent actions against union
employees. Both parties have since drafted multiple lawsuits against each other [1]. The
matter related to the illegal firing of union employees is currently under consideration by
the Supreme Court.
● No of issues: 6 major issues. See the discussion below in Negotiation Parameters.
● Number of parties: Two parties. Starbucks and Starbucks Workers United (SBWU).
● Nature of Relationship: Ongoing. It’s an ongoing relationship since both workers and
the company leadership have to figure out a way to still work and coordinate with each
other to drive business.
● BATNA: SBWU’s BATNA is to go a strike by seeking support from its unionized
employees and pressuring Starbucks leadership to adhere to their demands. They could
also seek legal options against the company or get employment at other companies like
McDonalds or Dunkin Donuts etc. This is a weak BATNA since although the lawsuits
have gone in favour of some worker unions in the past it takes a lot of time to settle
(~3-4 years) and it’s difficult to keep unpaid employees motivated for strikes for a long
period [2]. Starbucks, on the other hand, can attempt to rehire more employees or utilize
its existing non-union employees to handle more stores. This is also a weak BATNA
since it is illegal to fire the employees on strike and hiring new employees doesn’t
guarantee that they won’t join the union in the future.
● Binding contracts: Written agreements/contracts are legally binding,
● Linkage? This negotiation will have serious implications for both parties. SBWU would
want to bring Starbucks onto the bargaining table and set a favourable starting point for
future negotiations between the union and the company. Starbucks, on the other hand,
would want to avoid any union formation and keep the contract similar to before for most
employees. This will give them a competitive advantage in the future.
● Costs to delay: Costs to delay are serious for SBWU since they can’t sustain
coordinated strikes for long and while they work, old contracts would still apply to them.
Starbucks is also losing both market value and public image due to strikes and lawsuits,
although, they still have much more room for waiting than their competitors.
● Uncertainty: Starbucks is uncertain about how long the union can continue strikes and
the extent of demands. Starbucks would also be uncertain about the outcome of the
judgment in the illegal firing case in the Supreme Court which could have serious
 implications [3]. SBWU on the other hand, is uncertain how flexible Starbucks would be
to bargain with their union and recognise their organization.
● Third-party intervention: SBWU filed over 100 grievances against Starbucks with the
National Labours Relations Board (NLRB), resulting in a ruling against Starbucks for
wrongful termination and bias against unionized workers [4]. The case is now in the
Supreme Court, with the NLRB taking a more prominent role.
● Principal-agent relationship: Starbucks Chief Partner Officer, Sara Kelly, and new
CEO, Laxman Narasimhan, represent Starbucks company leadership. Lynne Fox,
President of Starbucks Workers United represents the union.
● Availability of commitments: Both parties have expressed their desire publicly to
continue negotiations. Kelly mentioned that Starbucks will set an ambition and goal to
ratify contracts and complete bargaining in 2024. Similarly, Fox welcomed the increased
interest of the company to come to the negotiation table [5].
● Are parties monolithic? Starbucks is monolithic and the leadership team has complete
control over actions and decisions. SBWU is still an amateur organization and hasn’t
found the right power balance. Members have most but not all interests aligned and
hence, the power structure is a bit distributed.
● Public or Private: Negotiations are expected to happen in a private closed room,
however, both parties have made several public statements.
● Precedent/History: In December 2021, Buffalo's first Starbucks store unionized. By
January 2024, nearly 400 other stores joined SBWU, demanding better wages and
conditions. Negotiations for a contract between SBWU and Starbucks are ongoing [2].
● People: Lynne Fox is representing SBWU as the president of Workers United since
2016. Starbucks hasn’t made it clear who their negotiation representative is but Sara
Kelly, executive director and chief partner office has made some public statements [5].

2. Negotiation Parameters
● BATNA: See the above section.
● RV: The RV for SBWU should be a bit better than their previous contract as it’ll give
workers some reason to cheer about and join the union in future. As such, their RV
should be $14.5 (+1) per hour [7], a similar basic health insurance plan but with added
mental health coverage and a similar working schedule as their old contract. In addition,
they would want their employee rights realized in the workplace. As for Starbucks, RV
can be derived from the best value other players in the market are offering. This
amounts to $17 per hour, an improved health insurance plan, similar schedules and a
maximum of 50% union representation. In addition, they’d strongly want SBWU to stop
creating negative campaigns against them in public.
● Target: The target for SBWU would be a $16 per hour wage, a full coverage health
insurance plan, more consistent schedules around busy days and total enforcement of
their employee rights [6]. The target for Starbucks would be their old contract i.e. $13.55
per hour pay, basic health insurance, a similar work schedule, 5% union representation
(current percentage), and an improved public image.
● Opening offer: The opening offer for SBWU would be a $18 per hour wage for baristas,
complete health insurance coverage, predefined work schedules and indictment of all
 their employee rights. The opening offer for Starbucks would be their old contract i.e.
$13.55 per hour pay, basic health insurance, a similar work schedule, 0% union
representation, and an improved public image.
● Interests vis-à-vis positions: The interests of SBWU revolve around employee
rights, wages, benefits, and work conditions/schedules. The interests of Starbucks are
mainly focused on avoiding unionization and improving their brand image in public.
● Issues to be negotiated, priority over issues: The reportage in the news
bucketed parties' interests into 5 major issues including employee rights, wages, health
insurance, inconsistent schedules and public image [2]. We further divide employee
rights into Percentage of union representation and working conditions to increase the
integrative potential of the negotiation. For SBWU the priority of issues is as follows: a)
Union representation, b) Wages, c) Working conditions, d) Health insurance, e)
Inconsistent schedules, and f) Public image. The priority of issues for Starbucks is as
follows: a) Union representation, b) Public image, c) Inconsistent schedules, d) Wages,
e) Health Insurance, and f) Working conditions. The differences in priorities highlight the
great integrative potential!

2. Negotiation Approach and Strategy

In December 2021, Buffalo's first Starbucks store unionized, the only one among 9,000+ stores
nationwide. Now, over 400 Starbucks stores are unionized under SBWU. Starbucks faces
accusations of illegal employee terminations to thwart unionization, with over 200 complaints
filed with the NLRB. The case is now in the Supreme Court, with potential wide-ranging
consequences for both parties. A ruling favouring Starbucks could limit the NLRB's injunction
powers, while a win for the NLRB could compel Starbucks to recognize the union, reinstate fired
employees, and embolden union efforts.

Both parties have differing priorities on the concerned issues and a shared interest in preventing
strikes which highlights the huge integrative potential. It is unfortunate, however, that negotiation
efforts from both parties, particularly Starbucks, have been on a very surface level. My first
recommendation to both parties would be to truly understand their own interests and come to
the bargaining table. As detailed in Chapter 12, Malhotra and Bazerman [8], excessive power
posturing and threats worsen the negotiations and drive them based on position rather than
interests.

Both parties can capitalize on integrative bargaining by logrolling major issues strategically. The
key issues highlighted in the news include employee rights, wages, health insurance,
inconsistent schedules and public image. However, employee rights are right on top for both
parties and therefore, to avoid an impasse, which has been the case so far, I’d recommend
them to split employee rights into the percentage of union representation and working
conditions. With this restructuring of issues, Starbucks can go ahead and strongly anchor
around 0% unionization in their opening offer with $14 per hour pay, and similar health
insurance/schedules. In subsequent offers, they should logroll the percentage of union
representation with improved working conditions. Currently, the percentage of union employees
for SBWU is 5% which defines their RV, therefore, there is a healthy ZOPA between 5% and
50% unionization.

The other issues including wages, health insurance, inconsistent schedules, and public image
can be easily logrolled too since the former two are more important to SBWU. I’d recommend
SBWU to strongly anchor around wages and health insurance issues as per their opening offer
with a $18 per hour wage and complete health insurance. Since there is a healthy ZOPA for
wages between $14.5 and $16 per hour, I expect a potential agreement. SBWU can also
explore the possibility of credit card-based tips in exchange for lower wages. Currently,
Starbucks only accept cash at most primary locations and since tips contribute to as high as
25-30% of workers base salary and come directly from the pockets of customers, it’s a win-win
for both parties. Meanwhile, Starbucks can achieve profitable agreements on inconsistent
schedules which will help them reap profits during ‘Red Cup Day’ or ‘Buy One Get One Free
Day’ [9,10]. In addition, Starbucks should negotiate with SBWU to avoid using their copyright
‘Starbucks’ in their union name and stop defamatory online campaign against the company.
They should additionally offer to reinstate fired workers as a gesture of goodwill to persuade
SBWU to agree. This will be a major face-saver for both parties.

Overall, I believe there is a huge potential for agreement for both parties. Both must utilize their
structural and non-structural sources of power effectively to win a more favourable result.
Starbucks has great structural power as a company that can rehire more employees or relocate
more non-union employees from nearby stores to make up for workers' strikes. SBWU has a
weak BATNA since they can’t sustain strikes by unpaid employees for too long but they have an
immense source of non-structural power. Compared to a decade ago the percentage of union
employees has increased in the food and beverage sector from 3% to 28%. On average roughly
71% of Americans support unions. This indicates wide public support and sympathy and if
SBWU play their cards well, they can put Starbucks under some serious pressure as reflected in
a recent 10% stock price drop [11]. On that note, I’d also strongly recommend SBWU to refrain
from making politically divisive statements on sensitive issues like the Israel-Palestine conflict
[1]. It’ll only deplete their public support and is more or less a self-goal.

Interestingly, SBWU also managed to get complete support from NLRB, which is a federal
organization overseeing labour laws and rights. NLRB ruling against Starbucks helped SBWU
make up a stronger case, but now since the matter is in the Supreme Court which can take
months/years, it’d be wise to resolve the issues on the bargaining table. This is one of the
lessons from the DEC/Riverside negotiation [12]. SBWU has huge costs to delay as they can’t
sustain union strikes for long. Moreover, as reflected in recent events, some workers either
revoted for non-unionization of stores to avoid conflicts or joined other competitor companies.
This might cause a huge blow to their campaign. On the other hand, Starbucks has less cost to
delay as the old contracts in their favour are still valid until they renew them. Meanwhile, they
can also continue to hire new people and replace union workers as needed. Additionally, as
seen from the Elm Tree house negotiations and Stalling for time [12], it’ll give them more time to
assess the interests/RVs of SBWU and be more prepared for negotiations.
References

1) https://apnews.com/article/starbucks-workers-united-union-lawsuit-israel-palestinian-f212
a994fef67f122854a4df7e5d13f5
2) https://www.forbes.com/sites/qai/2022/12/19/starbucks-union-why-are-workers-unionizin
g-now-what-do-unions-really-mean-to-investors/?sh=2aeb0bd62144
3) https://www.forbes.com/sites/jamesfarrell/2024/02/07/starbucks-violated-labor-laws-by-fir
ing-pro-union-employees-labor-judge-rules/?sh=2afc9e5120ac
4) https://news.bloomberglaw.com/daily-labor-report/supreme-court-to-hear-starbucks-case
-over-fired-union-workers-1
5) https://www.localmemphis.com/article/news/nation-world/starbucks-proposes-restarting-
union-talks-reaching-contract-agreements-2024/507-fdaf6abb-cb8e-4d21-84f5-d1d2a92
acc46
6) https://www.theguardian.com/business/2024/jan/11/starbucks-labor-lawsuit-human-rights
-violations-coffee-farm
7) https://www.indeed.com/cmp/Starbucks/salaries?location=US%2FPA%2FPittsburgh
8) Malhotra, Deepak, and M. H. Bazerman. Negotiation Genius. Bantam Books, 2007
9) https://sbworkersunited.org/red-cup-rebellion-2023
10) https://people.com/starbucks-free-drinks-bogo-back-again-this-weekend-8431904
11) https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&ved=2ahUKEwiln
tvD6s-EAxUDFlkFHcZ-DTAQFnoECDQQAQ&url=https%3A%2F%2Fnypost.com%2F20
23%2F12%2F08%2Fbusiness%2Fstarbucks-proposes-restarting-union-talks-reaching-la
bor-deals-in-major-reversal%2F&usg=AOvVaw2qaBDUBtbtZ8AM_vWuwGEo&opi=8997
8449
12) Lecture Readings