Starbucks: Crisis Managment

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Successful operations in today’s business world understand the importance of their employees. Paul A. Argenti and Courtney M. Barnes, authors of the book Digital Strategies state, “a company is only as strong as its weakest link, or its employees (Argenti and Barnes 111).” Senior executives today know that their employees can have significant impacts on their companies and that is why it is important for companies to have good employee relation strategies. This is especially true in a crisis, in which internal constituents will have to communicate externally (Argenti and Barnes 113).

Employee Relations/Internal Communications

“Conventional wisdom dictates that happy employees are more productive, motivated, and loyal, not to mention more likely to act as de facto ambassadors for the brand by recommending the company’s products/services to their family and friends (Argenti and Barnes 119).” When it comes to their employees Starbucks:

•  Calls their employees partners and shares a direct and open relationship with them
• Provides all employees with a positive workplace 
• Openly values respect for one another and openly acknowledges that success would not be possible without their employees    
• Offers comprehensive benefit packages for employees
• Provides flexible hours and offers a fair and competitive wage

This employee relation strategy is important and has been very beneficial to the company. For e.g. When Starbucks planned to launch a premium food line in stores worldwide, the company used an internal marketing campaign, called “Coffee Loves Company,” to gain employee support. They were successful with this campaign because of the employee support that came through their employee relations program. Starbucks also uses newspapers & print, video, mail packages, voicemail and meetings to communicate with employees. A newspaper may contain business strategies and information pertaining to overall company direction and a voicemail may contain a motivational message or a urgent message from management.

Investor Relations

Investor Relations is another important part of communication in crisis management. According to Argenti and Barnes a common theme among consumers, voters and investors is a lack of trust for big corporations. This lack of trust was fueled by the Enron and WorldCom scandal and because of this “companies must respond by communicating their IR efforts more transparently and in a more accessible way- namely, via the web (Argenti and Barnes 142).”

Starbucks uses the Internet as their main form of communication to investors. On their website they have a page called investor relations where you can find annual & quarterly reports, corporate news, financial releases, analyst coverage & much more.

The company covers a wide variety of financial aspects to communicate to their investors and to be transparent. This is key to a successful corporation because as Argenti & Barnes tells us “ a company’s IR strategy must address individual shareholders and financial media, as well as institutional investors, credit-rating agencies, activists shareholders and buy and sell side analysts (Argenti and Barnes 145).”

Government Relations

“Business and politics are becoming increasingly intertwined (Argenti and Barnes 195).” Corporations now know that they can increase their reputation and protect their interest through lobbying.

Starbucks like many corporations uses lobbying as a main tool in their government relations. For E.g. In the past the CEO has written letters to Government officials to express his concern that bipartisan leadership in the US is lacking. The company also donates money to political groups that align with their interests. To manage public affairs Starbucks has a public affairs department headed by the CEO who is the main spokesperson.

Spokespeople

Starbucks CEO Howard Schultz

Having spokespeople for a corporation is important in company branding as well as in crisis management. It is imperative to have a person or people that know the company (Vision, culture, mission etc..) to speak on behalf of the company in good times and in bad times. Generally speaking it works best to have a spokesperson that is a recognizable face and has some association with the company for e.g. the company CEO. Spokespeople like this have an established credibility. Some companies choose to have celebrity spokespeople to further their brand image or endorse their product. According to the book, Brandwashed, by Martin Lindstrom, “a celebrity associated product can be a very powerful, subliminal purchase influence (Lindstrom 160).”

Starbucks uses their CEO Howard Schultz, current investors, senior staff and financial analysts as their typical spokes people in the public. The company does not make a constant use of celebrity spokespeople or endorsers like most large corporations do. They use Andy Ritcher, an American actor and writer, Lady Gaga, an American pop star and comedian and Joe Scarborough an American cable news and talk radio host. Andy Ritcher appeared on the Conan show where he was introducing a new Starbucks drink. Starbucks teamed up with Lady Gaga to promote her new album as well as to promote their products. The corporation hosted a Gaga-infused scavenger hunt across its digital properties from Facebook to Twitter. The top winner received special access to her concert as well as free music from the star. Joe Scarborough sips Starbucks coffee on his radio show, which is streamed live over the Internet.

American Pop Star Lady Gaga

I would say the Starbucks spokespeople are and have been used effectively. Using their CEO, senior staff and financial analysts is a good way to go because they are credible and knowledgeable people. In terms of celebrity spokespeople, Ritcher and Scarborough are older and so they appeal to the older demographic which Starbucks aims to target. The two of them have endorsed products on radio talk shows and late night shows in which adults are more likely to be watching. Lady Gaga is one of the most famous pop artists in the world. She appeals mostly to the teenage demographic but also to the older age group. She has a Facebook fan page and a twitter with millions of followers. Starbucks teaming up with her in combination with social media was the right move to appeal to the teenage demographic and to endorse their product.

Crisis Management Analysis

I believe Starbucks has a pretty good system in place to handle a crisis. They use multi-platform communication such as social media and their newsroom; the company places a strong value on honesty and transparency, they have knowledgeable and credible spokespeople like their CEO and key financial analysts and a strong organizational culture in which everyone feels they are a part of the company.
I believe that the most important strategies in a crisis are: 

• Honesty- Being honest and transparent leaves nothing in the dark that can come out and   haunt you later making things worse. You also do not want to lose the trust of the public and or employees. 
• Organizational culture- Having a strong culture that incorporates and makes employees feel like a big part of the company is important because when it comes down to it they can be the companies biggest advocates in times of need. 
•  Using multiplatform communication- So that information is available in multiple communication mediums.

 

 Works Cited

Argenti, Argenti A. and Courtney M. Barnes. Digital strategies for Corporate communications. McGraw Hill, 2009.

Lindstrom, Martin. Brandwashed. n.d.