Starbucks CEO Continues TKE Mission

Starbucks CEO Continues TKE Mission

Frater Howard SchultzSEATTLE, Wash. - Despite its recent difficulties, Starbucks still spends more money on employee health care than on coffee. Given corporations' tendency to cut costs in tough times - sometimes at the expense of workers' happiness and well-being - CEO Howard Schultz's (Theta-Iota, Northern Michigan Univ.) adherence to the principle that Starbucks baristas should have health-care benefits is cause for applause.

Last week, Fortune magazine revealed how Starbucks' Schultz, in the midst of attempting to turn around his company, stood up to a shareholder's suggestion to boost profits by cutting health-care benefits. According to the article, Schultz denied the request, and told the shareholder to sell the shares if he felt so strongly about it. (The unnamed shareholder reportedly did end up reducing his position.)

Many companies did slash various worker benefits amid the worst of the recession. This past April, The Wall Street Journal noted that those axed extras have been slow to return. As recently as October 2009, a Society for Human Resource Management survey of 371 companies revealed that 39% were somewhat or very likely to cut benefits in the following six months.

Though health-care coverage is an expensive cost for many employers, some corporate leaders have refused to waver on that line item, including Whole Foods Market's John Mackey and Costco's Jim Sinegal. Conversely (and ironically), health insurer Wellpoint cut health-insurance benefits for its own workers last October.

Responsible shareholders should applaud corporate leaders who resist pressures to boost short-term profit at the expense of good, solid business principles. Frater Howard Schultz's admirable stance is a wonderful example of TKE’s Building a Better World. If workers feel like their employer cares about them, they're much more likely to do a great job, and extend their happiness to customers. That's a big plus for both long-term profitability and sustainable competitive advantages.

Standing by employees is nonetheless a difficult road for corporate leadership to take. It takes courage to stand up to pressure for short-term sales and profit. Frater Schultz could have easily cut this benefit to prop up short-term earnings, but he didn't. Healthy workers are a healthy decision for publicly traded companies.

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