How Howard Schultz Lost His Way: The Rise and Fall of Starbuck’s Vision

Howard Schultz

SUMMARY: Howard Schultz, the former CEO of Starbucks, was once seen as a model of corporate responsibility, but accusations of union-busting have tarnished his reputation. Schultz’s personal story of his father being fired after an injury has been praised and criticized for his understanding of workers’ struggles. Americans’ attitudes toward unions and large corporations have also evolved, particularly among Gen Z. While public support for unions is historic, trust in large corporations has eroded. As Schultz and Starbucks continue to navigate these issues, whether they can regain the trust of workers and customers alike remains to be seen.

Howard Schultz, the former CEO of Starbucks, was once regarded as a paragon of corporate responsibility. He built a global coffee empire and touted his company’s generous employee benefits, such as health care and college tuition reimbursement. However, in recent years, Schultz has been accused of union-busting, which has tarnished his image as a socially responsible business leader. In this article, we will explore Schultz’s journey from being a model of corporate responsibility to an accused union buster and how the changing attitudes of Americans toward unions and large companies have influenced this shift.

Schultz’s Early Days at Starbucks

Schultz became CEO of Starbucks in 1987 and is credited with turning the small Seattle-based coffee chain into a global brand. He was an early advocate of corporate responsibility and sustainability, and in 1996, he appeared on a panel with President Bill Clinton to discuss these topics. Schultz touted the benefits that Starbucks offered its employees, including health care, stock options, and college tuition reimbursement. Schultz also spoke out against income inequality and advocated for higher taxes on the wealthy.

Schultz’s Recent Troubles

Schultz’s reputation as a model of corporate responsibility has been called into question in recent years. Starbucks has faced accusations of interfering with unionization and collective-bargaining efforts at its stores. Schultz testified before senators on this matter in 2019. Starbucks denied any wrongdoing, but an administrative judge ruled otherwise in 2022. The judge found that Starbucks had violated labor laws by unlawfully interfering with unionization efforts at several stores around Buffalo, New York. The judge ordered Starbucks to reinstate workers who were fired and to post a notice acknowledging its unlawful behavior.

Americans’ Attitudes Toward Unions and Large Companies

According to a recent Gallup poll, public support for unions is at a historic high. The poll found that 68% of Americans approve of unions, the highest level since 1965. However, according to the Bureau of Labor Statistics, only 10.8% of American workers are unionized. Gen Z comprises a significant part of the fast-food workforce and is the most supportive generation of unions, with 75% in favor. However, only 5.5% of Gen Z workers are unionized.

Americans’ attitudes toward large companies have also shifted in recent years. According to a 2021 Edelman Trust Barometer survey, 61% of Americans believe corporations have too much power and are not held accountable enough. This sentiment is strongest among Gen Zers, with 70% expressing negative opinions of businesses and their leaders.

Schultz’s Values vs. Americans’ Mistrust of Big Business

Schultz has often touted Starbucks’ values to win favor with employees and customers. However, as Starbucks has grown into a global company, Americans’ mistrust of large corporations has also grown. Schultz’s message of corporate responsibility and social justice has been called into question, with some accusing him of using it as a marketing tool rather than a genuine belief system. Schultz’s attempts to defend Starbucks against accusations of union-busting have been met with skepticism by some.

Schultz has long touted Starbucks’ values as a way to win favor with employees and customers. However, as Starbucks has grown into a global company, Americans’ mistrust of large corporations has also grown. This is particularly true among Gen Zers, who have the strongest negative opinions of businesses and their leaders.

Starbucks has made various efforts to address this issue, including the recent decision to pause political contributions in response to the Capitol riot. However, Schultz’s reputation has been tarnished by accusations of union-busting, which have further eroded trust in the company.

Schultz’s Story

Schultz has often used his personal story of his father’s dismissal from work after an injury to show his compassion towards workers. He believes his experience has shaped his leadership style, including reinvesting some of Starbucks’ profits in benefits for its employees. However, his anecdote has been both praised and criticized:

  • Some argue it shows his understanding of the struggles faced by workers, making him a relatable and empathetic leader.
  • Others have pointed out that Schultz’s story may work against him. As the CEO of a multi-billion dollar company, he is in a position of power and wealth that most workers can only dream of, making it difficult to relate to their experiences.

During Schultz’s recent congressional testimony, Sen. Ed Markey used the same story to counter Schultz’s argument that Starbucks had been compassionate and empathetic towards workers, pointing out that the company’s workers were trying to unionize and bargain for contracts.

Ultimately, Schultz’s personal story has become a double-edged sword, helping and hindering his image as a corporate leader.

Schultz has tried to challenge the notion that he doesn’t understand the plight of workers with a story about his father, who was fired from a job as a driver after breaking his foot. Schultz has said that this experience informed his approach to business, including reinvesting some of Starbucks’ profits in benefits for its employees.

However, Schultz’s anecdote drew pushback from some senators during his recent testimony before Congress. Sen. Ed Markey used Schultz’s story to argue that Starbucks should respect workers’ attempts to unionize and bargain for contracts. Markey told the story of his father, who lost a finger in an accident at work and was told by his boss to return to work the following week. Markey argued that workers are seeking protection because Schultz’s father could not provide for his own family.

Schultz pushed back against this characterization, pointing to the benefits that Starbucks offers all of its employees, including healthcare and college tuition reimbursement.

Conclusion

Howard Schultz was once seen as a model of corporate responsibility, but accusations of union-busting have tarnished his reputation in recent years. Schultz has tried to position himself as someone who understands the plight of workers, citing his father’s experience as a driver fired after breaking his foot. However, some senators have used Schultz’s story to argue that Starbucks should respect workers’ attempts to unionize and bargain for contracts.

Americans’ attitudes toward unions and large corporations have also evolved, particularly among Gen Z. While public support for unions is at a historic high, only a small percentage of respondents in a recent Gallup poll said they or someone in their household were part a labor union. At the same time, trust in large corporations has eroded, with Gen Zers expressing the strongest negative opinions of businesses and their leaders.

As Schultz and Starbucks continue to navigate these issues, whether they can regain the trust of workers and customers alike remains to be seen.

Sources:

  1. “Former Starbucks CEO Schultz defends company’s stance on unions at Senate hearing.” CNBC, 30 Mar. 2022, https://www.cnbc.com/2022/03/30/former-starbucks-ceo-schultz-defends-companys-stance-on-unions-at-senate-hearing.html.
  2. “Union Busting 101: What Union Busting Is and How It Happens.” SEIU, https://www.seiu.org/what-is-union-busting.
  3. “Americans’ Approval of Labor Unions Surges to 68%.” Gallup, 26 Aug. 2021, https://news.gallup.com/poll/350850/americans-approval-labor-unions-surges.aspx.
  4. “Young Workers And Labor Unions: A Match Made In Heaven?” Forbes, 27 May 2021, https://www.forbes.com/sites/nishandegnarain/2021/05/27/young-workers-and-labor-unions-a-match-made-in-heaven/?sh=3a7c88f56d3e.
  5. “Starbucks CEO Schultz Steps Down, May Consider White House Run: Company.” NBC News, 4 Dec. 2016, https://www.nbcnews.com/news/us-news/starbucks-ceo-schultz-steps-down-may-consider-white-house-run-n691466.
  6. “Starbucks Vows to Fight Judge’s Ruling That It Violated Labor Law.” The New York Times, 7 Apr. 2022, https://www.nytimes.com/2022/04/07/business/starbucks-labor-union-judgment.html.

Leave a Reply

Your email address will not be published. Required fields are marked *