Corporate Social Responsibility / Organizational Strategy

Starbucks Targets Higher Education

Walmart, Exxon Mobile, Facebook, Apple, Chevron, Amazon, and Verizon. Obviously, these are familiar-sounding names of some of the largest and wealthiest corporations in the world. In fiscal year 2015, in the United States alone, Walmart hauled in $482.2 billion in revenue. That’s nearly a half of a trillion dollars in revenue in just one year. Walmart is just one corporation. Numerous corporations, some aforementioned, around the world are racking in billions of dollars each and every year.

It’s easy for managers and top executives to stipulate a single goal of maximizing shareholder (owner) wealth every year, that’s every firm’s goal. But even for some shareholders, there may be more to a successful company then maximizing profit and achieving great wealth year after year. In fact, there are plenty of employees who would agree. A 2006 study found that 82% of Americans would actually prefer to be paid less but work for an ethical company than be paid more but work for an unethical company [1]. Do people really care about their company’s ethics and moral compass? Companies have to keep in mind that there are shareholders who evaluate more than just financial data when determining where to invest their money. How companies treat their own employees goes a long way when assessing the ethical principles and values that they stand for (or lack). Employees obviously want to be paid fairly, but sometimes even more importantly, want to be treated with respect and dignity at their workplace (which can coincide with being compensated justly).

Howard Schultz, the CEO of Starbucks, which is one of the more successful and profitable corporations in the world, has gone out of his way to contribute to and bring awareness to significant, everyday issues in American and global society. In 2014, Starbucks and Arizona State University partnered by offering the coffee chain’s employees free tuition towards an undergraduate degree. Thousands of Starbucks employees have already committed to this once-in-a-lifetime opportunity to finally be able to take college courses. Starbucks has said it will invest $250 million to help at least 25,000 employees graduate by 2025 [2]. The statistic that may have gotten Schultz’s attention the most: over 70% of Starbucks employees do not have a bachelor’s degree. Announced in April of this year, Schultz said: “The unfortunate reality is that too many Americans can no longer afford a college degree, particularly disadvantaged young people, and others are saddled with burdensome education debt. By giving our partners [employees] access to four years of full tuition coverage, we will provide them a critical tool for lifelong opportunity. We’re stronger as a nation when everyone is afforded a pathway to success.”

Starbucks takes corporate social responsibility incredibly seriously. Shultz and other members of Starbucks management clearly believe that with great wealth comes great responsibility, and that they have an obligation to society to do more than just sell coffee and coffee-related products. Starbucks serves coffee that is “responsibly grown and ethically traded”, they work with nonprofit organizations by “helping create new pathways to opportunity for young people in communities around the world”, they address climate change by “designing, building, and maintaining stores inclusive of a range of environmental goals”, and do much, much more [3].

As much as Starbucks does for the global society as a whole, this partnership with Arizona State University allows them to give back specifically to the people who make Starbucks the successful company it is everyday. Employees’ tuition fees at ASU are covered by a combination of College Achievement Plan Scholarships, federal aid (Pell Grants), and Starbucks, who covers the remaining tuition fees [4]. ASU president Michael Crow proudly stated that, “the College Achievement Plan has been a powerful demonstration of what is possible when an enlightened and innovative corporation joins forces with a forward-thinking research university” [1]. Starbucks employs hundreds of thousands of people and is rated by Forbes as one of America’s best employers. Starbucks is a publicly traded, for-profit corporation. There’s no requirement or demand by American or international law for Starbucks to be an environmentally friendly, progressive, open-minded, inclusive, and overall generous and philanthropic company. However, Starbucks shows initiative and leadership by the way they choose to develop ethical and honorable relationships with suppliers, partners, laborers, the environment, and their own employees around the world.

Since the 2007-2008 school year alone, average annual tuition at four-year public colleges and universities has increased 29% (about $2,000 annually), and there are no indications of these relentless increases in college costs ceasing anytime soon. For the sake of potential, future college students, and millions of families nationwide (many of them who won’t be able to afford for their kids to go to college), let’s hope to see more corporations like Starbucks make a difference in their communities, and in their employees’ educational aspirations.

John Randolph

Sources:

[1] Treviño, Linda Klebe., and Katherine A. Nelson. Managing Business Ethics: Straight Talk about How to Do It Right. Hoboken, NJ: Wiley, 2011. Print.

[2] http://www.forbes.com/sites/carolinehoward/2015/04/06/from-barista-to-bachelors-starbucks-asu-partnership-offers-full-4-year-online-college-degrees/

[3] http://www.starbucks.com/responsibility

[4] https://news.starbucks.com/views/starbucks-college-achievement-plan-frequently-asked-questions

One thought on “Starbucks Targets Higher Education

  1. John Randolph’s article on Starbuck’s Corporate Strategy was both insightful and encouraging. I gained a new respect for Starbuck’s as they assumed a responsibility not just to their shareholders but to their employees as well. Starbuck’s should be commended for partnering with Arizona State University in this win-win venture. Starbuck’s commitment to their employees is a model for corporations everywhere.Congratulations to John Randolph for highlighting this innovative strategy!

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