THE CEO OF STARBUCKS

AND THE PRACTICE OF

ETHICAL LEADERSHIP
PRESENTED BY:

ABDULLAH SATTAR

RAFFAY REHMAN

MUSTAFA SOHAIB
• Starbucks Corporation is an American multinational chain of
coffeehouses and roastery reserves headquartered in Seattle,
Washington. It is the world's largest coffeehouse chain. As of
November 2021, the company had 33,833 stores in 80 countries,
15,444 of which were located in the United States
BACKGROUND
• One year after becoming CEO of Starbucks, Kevin Johnson faced a leadership
test when two black men were arrested in a Philadelphia Starbucks. The men
were waiting to meet a business associate, but they didn’t purchase anything
while they were waiting. The store manager asked them to leave, and they
refused, explaining that they were there to meet someone. The manager called
the police because the men refused to leave, and the police arrested them.
• Another patron at Starbucks recorded the arrest on her cell phone, and it
quickly went viral. Additionally, the video shows the business associate of the
black men show up during the arrest, and he asks the manager and the police
what the men had done wrong. The general public and those who witnessed
the arrest labeled it as discriminatory and racist.
• This happened on a Thursday and the following Monday, Johnson said that the
manager no longer worked at the store. The arrests led to protests and sit ins at
the Philadelphia Starbucks the days following the event.
• After this, the CEO of Starbucks said the apology statement. In his apology
statement and follow up video release shortly after the arrests, Johnson said, “The
video shot by customers is very hard to watch and the actions in it are not
representative of our Starbucks Mission and Values. Creating an environment that
is both safe and welcoming for everyone is paramount for every store.
Regretfully, our practices and training led to a bad outcome—the basis for the call
to the Philadelphia police department was wrong.”
• Before the incident, Starbucks had no companywide policy about asking
customers to leave, and the decision was left to the discretion of each store
manager. Johnson mentioned this community in his apology when he said
Starbucks works to create an environment that is “both safe and welcoming for
everyone.”
• Also in his apology, Johnson outlined the investigation he and the company would
undertake. Johnson took full responsibility for the actions of his employees, and
he acknowledged that Starbucks customers were hurt by the arrests. Johnson
acknowledged that employees needed more training, including about when to
call authorities, and that the company needed to conduct a thorough analysis of
the practices that lead to this incident.
• The week following the arrests, Starbucks announced it would temporarily close
8,000 stores to conduct unconscious bias training, which they did on May 29,
2018.
• A month after the arrests, Starbucks released a new “Use of Third Place Policy,”
which states that anyone can use Starbucks and its facilities without making a
purchase; it also explains what managers should do if a customer becomes
disruptive. Additionally, the policy says that Starbucks seeks to create “a culture
of warmth and belonging where everyone is welcome. This policy is intended to
help maintain the third place environment in alignment with our mission ‘to
inspire and nurture the human spirit – one person, one cup and one neighborhood
at a time.’”
QUESTION AND
ANSWERS
 Did Johnson use Starbucks’ shared values as the
cornerstone of his decision making after the arrests?

• Yes, Johnson did use Starbucks’ values as the basis of his decision making after the
arrest incident of two black men. Following the event, he issued a statement indicating
that anyone can use Starbucks' facilities without a necessary purchase.
 Did his decision to close all Starbucks stores for
unconscious bias training and to create a new “Third
Space Policy” align with Starbucks’ mission and goals?

• Yes, Johnson’s decision aligned with the firm’s mission and goals. Everyone is welcome
at the company, which is dedicated to promoting a culture of belonging. I believe that
shutting down the businesses was critical because it allowed the company's
management to communicate this mission to its employees.
 Did Johnson openly acknowledge that his decision
was based on ethics and morality?
• Yes, Johnson acknowledged that his decision was rooted in ethics and stated that
this policy is intended to help maintain the third place environment in alignment
with our mission.
 Did it create a positive or negative difference in the
communities Starbucks serves?
• The first disappointment made a good change in the community overall. The new
policy creates a positive atmosphere in the community by creating a free space to
study, to work, to socialize with an option of buying coffee/food.
 Does Johnson explicitly accept responsibility for the
incident and provide direction for a course correction?

• Yes, Johnson accepted the responsibility for the incident. Johnson recognized that a full
investigation of processes leading to the incident was needed. Also, in his statement he
clearly pointed out that training was required for employees.
 Does he identify ways to collaborate with others when
necessary?
• Yes. Starbucks Leadership undertook clear practical actions to learn
from the incident, including contacting local stakeholders to see what
they could improve and what may be done better.
 Does he show he understands what his role is in fixing this
problem?
• Yes, Johnson shows he understands his role in fixing the problem. He
clearly stated the steps he would undertake in his apologies. Within a
month after the accident the necessary training was conducted, and
new policies updated.
 Did Johnson clarify his values and the company’s values in his
apology and with his subsequent actions?
• Yes, Johnson took the problem seriously and tried to resolve it as quickly
as possible.
 Did Johnson’s apology and follow-up actions uphold
Starbucks’ mission and core values?
• Yes, Johnson’s apology as well as follow-up actions upheld the firm’s
mission and core value as well. The updated “Use of Third Place Policy”
establishes a culture where everybody is welcomed; and consistent with
Starbucks’ mission which is “to inspire and nurture the human spirit – one
person, one cup and one neighborhood at a time. The "one person, one
cup, and one neighborhood at a time" aspect show that Starbucks
ensures a valuable impact on all its employees and customers. It also aims
to continuously grow its business, one neighborhood or place at a time.
 Did Johnson’s actions have an impact beyond
Starbucks?
• The video of the arrest went viral, detentions led to protests in the Philadelphia
Starbucks causing that all eyes were fixed on that story. In my opinion Johnson’s
action has an impact beyond Starbucks. His apology, taken actions and
responsibility could be an example to other organizations employees engage in
boorish conduct.
 Did they send a precedent for other companies to
follow?

• Yes, Starbucks CEO published a video with apologies and a follow-

up message, both can be found at Starbuck.

 Did his apology create a conversation about unconscious

bias in the workplace?

• Yes, the apology created a conversation about unconscious bias in

the workplace. The decision about closing 8,000 businesses to
perform the training indicates the action that had to be taken.
 How do his apology and the subsequent follow-up
actions compare to other companies and CEOs that have
faced similar problems?
• Following Johnson apologies, he Went to Philadelphia and met both men face to face to
engage with them in a discourse. He, personally, with full responsibility took necessary
actions and fixed the problem.
THANK YOU