From the Starbucks Newsroom Starbucks Leadership Team (2014) article, “Starbucks and Howard Schultz Recognized for Leadership”, for the eighth year in a row, Starbucks is one of the worlds most ethical companies. The driving force behind this recognition is their CEO Howard Schultz. Mr. Schultz has been at the forefront of ethical business leadership since his return to the company in 2008 where he new he needed to take a new approach to running Starbucks as well as his own life. He now exemplifies what it means to be an ethical leader. Focusing on the behaviors of Schultz, we can examine the chain of events where Kohlberg’s (1984) six stages of moral development may have been responsible for his transition to one of the worlds most ethical business leaders.
Schultz bought Starbucks in 1982 where he decide he wanted to create an experience for United States coffee drinkers that resembled Italian coffee houses. After many years of success and Schultz stepping down from his position of CEO, there began to be backlash from the consumers toward the coffee conglomerate. The four dollar coffee began to wear on the masses and Schultz who was still a chairman was faced with a moral dilemma that was driven by an external force, the customers. In Stage 1, Obedience and Punishment, the individual is egocentric and sees morality as external to self. Rules are fixed and handed down by authority. Obeying rules is important because it means avoiding punishment (Northouse, p. 331). Although there was no formal punishment for selling mediocre coffee at a ridiculous price, selling a good product could be seen as the rule handed down by the consumer and the closing of the company that you built could be seen as the punishment. Ultimately I believe it was an external force that kicked off Schultz becoming CEO once again in an attempt to right the ship.
During Schultz’s time away from Starbucks, he purchased an NBA basketball team in which this business venture failed miserably resulting in the team leaving Seattle. In stage 2, Individualism and Exchange, the individual makes moral decisions based on self-interest. An action is right if it serves the individual (Northouse, p. 331). Pride and pocketbook subjectively much lower than normal, Schultz’s moral decision to save the Starbucks name and once again be in the favor of the nation could be driven by his self interest of boosting his pride, revamping his public image, and re emerging as a shrewd business leader.
In stage 3, Interpersonal Accord and Conformity, the individual makes moral choices based on conforming to the expectations of others and trying to behave like a “good” person (Northouse, p. 332). Schultz was reappointed CEO and immediately had his company wide staff of baristas retrained. Additionally, Schultz flew over 4,000 employees to New Orleans to help with the aftermath of Hurricane Katrina. I believe that an individual with the resources to contribute to the relief efforts of a natural disaster has a moral obligation and is expected to contribute. Not to take anything away from the great work that the Starbucks company did for all of the victims, it could be seen that Schultz was behaving like a good person through interpersonal accord and conformity.
Schultz has been improving on the way Starbucks treats it’s employees. Currently any employee that works at least twenty hours a week is eligible for healthcare. Additionally, recently Starbucks announced that any employee working twenty hours a week is eligible for free tuition to Arizona State for their major of choice. Relevant to these moral decisions, stage 4, Maintaining the Social Order, the individual makes moral decisions in ways that show concern for society as a whole, and stage 5, Social Contract and Individual Rights where the individual makes moral decisions based on a social contract and his or her views on what a good society should be like. (Northouse, p. 332). Schultz realizes that healthcare and education are a necessity. With stores all over the nation, providing his employees these crucial benefits is by all means contributing to a better society.
Schultz lives and runs his company by a different set of morals and ethics these days. In stage 6 Universal Principles, the individual’s moral reasoning is based on internalized universal principles of justice that apply to everyone. Decisions that are made need to respect the viewpoints of all parties involved (Northouse, p. 333). From the Starbucks Newsroom, Starbucks Company (2014) article, “Howard Schultz: Redefining the Role and Responsibility of a For-Profit, Public Company
”Schultz cited three examples of Starbucks efforts to build a “performance-driven company through the lens of humanity.” In 2011 Starbucks collaborated with the non-profit Opportunity Finance Network to launch the Create Jobs for USA program, which funds loans to small businesses who face challenges getting credit. Last October in the middle of the 16 day federal government shutdown, Starbucks launched a nationwide petition in its nearly 7,000 company-operated U.S. stores and amplified it across the company’s digital channels. In less than a week, the company collected and delivered nearly 2 million signatures to the U.S. Congress and the White House. Starbucks is committed to hiring 10,000 veterans and military spouses by the end of 2018 and to open five community stores that will make a contribution for every transaction to non-profit organizations that support veterans entering the civilian workforce and spouses of active-duty military personnel.
Following Schultz’s behaviors and actions over the last eight years and correlating them to Kohlberg’s (1984) six steps of moral development, it is evident that there has been a transition from a monetary driven individual to a social and humanity driven business leader. I believe that Schultz story provides a great foundation to understand the development of an ethical leader.
References:
Kohlberg, L. (1984). Essays on moral development, Vol. 2: The psychology of moral development. New York: Harper & Row.
Northouse, P. (2016). Leadership theory and practice (7th ed.). Los Angeles, CA. Sage Publications
Starbucks Company (2014). Howard Schultz: Redefining the Role and Responsibility of a For-Profit, Public Company. Starbucks News Room. Taken from https://news.starbucks.com/news/howard-schultz-redefining-the-role-and-responsibility-of-a-for-profit-publi
Starbucks Leadership Team (2014). Starbucks and Howard Schultz Recognized for Leadership. Starbucks News Room. Taken from https://news.starbucks.com/news/starbucks-and-howard-schultz-recognized-for-leadership
Morgan Dreisch says
Hi William!
I think you found a perfect example of this theory. It could also fit in with the Skills Approach, too! As you said, ” Mr. Schultz has been at the forefront of ethical business leadership since his return to the company in 2008 where he new he needed to take a new approach to running Starbucks as well as his own life.” This could be an example of the Conceptual Skill, in knowing that a change needs to be made for success.
“He now exemplifies what it means to be an ethical leader,” is an example of not only Conceptual Skill, but also Human Skill. He has come to realize his business needed the change, and how to do it. The perfect example of his Human Skill, though, is when you state, “Schultz has been improving on the way Starbucks treats it’s employees. Currently any employee that works at least twenty hours a week is eligible for healthcare. Additionally, recently Starbucks announced that any employee working twenty hours a week is eligible for free tuition to Arizona State for their major of choice.”
Thank you for the well-though post!
Carla Maria Fernandez Macchiavello says
I think your blog post reflects and explains the theory perfectly. The only problem I am seeing with your post is that you don’t give a personal experience you have had with this theory. A blog post is meant for people to relate with it. I think if you give a little more personal perspective your reader will be much more hooked to your work.
Information about the theory is concise and easy to understand. Very good!