Entrepreneurship howard_shultz
An Analysis of Howard Schultz’s Leadership Style

Introduction

Starbuck is a company that place huge importance in its people. It is argued by the company that people are important for the company success, because it is people, but not products that enable Starbuck to attain competitive advantage in the marketplace. Such a competitive edge is not easy copied by the competitors, as contrast to those competitive edges based on the company products. In the words of Starbuck chairman, Howard Schultz, the company will build the Starbuck brand first with their people, but not with consumers. It is their beliefs that the best way to meet and exceed the expectations of the customers is to hire and train great people, because when the employees are happy, they can produce happy customers in return.

In this article, the various leadership theories and leadership styles are discussed, and will be compared to the real life situation. Starbuck will be used as a case study, whereby the leadership style of Howard Schultz will be investigated. The article will seek to understand how the leadership styles followed by Howard Schultz that can enhance the employees’ motivation and satisfaction level, which in turn deliver extraordinary performance for the company.

Literature Review

According to the researchers, leadership can be defined as the ability to influence a group toward the achievement of goals (Robbins, 2005). Leadership is a critical management skill in various firms, which affects and motivates the employees toward the attainment of organizational missions. More important, successful organizations need effective leadership, who are capable of increasing an organization’s employee motivation; in turn improve the overall performance and organizational productivity (Taggart, 1989).

However, leadership must be differentiated from management. Some researchers propose the view that management function includes leadership; that it is possible to be a good manager without being a good leader. In contrast, other researchers argued that leadership is different from the “managership”. The difference is obvious: a leader shows incremental influence beyond his or her authority, he or her will influence instead of purely performing planning, organising, and controlling activities (Kotter, 1990).

Various Theories on Leadership

Leadership in an organization is one of the frequently researched topics in the context of management science. Thus, there are many theories being created on the topic, making the leadership is a complex subject in the studies of management or organization behavior. Nonetheless, according to McShane & Von Glinov (2010), all of these theories can be categories into five perspectives as follow: (a) competency, behavioral, contingency, transformational and implicit. In this article, such a framework will be utilized to investigate how the leadership styles and methods utilized by Howard Schultz in Starbuck to motivate the employees and to achieve extraordinary company performance in the marketplace.

Competency Perspective of Leadership

Under the competency perspective of leadership, it is believed that there are distinguish personal characteristics that differentiate great leaders from the rest of us. Many researches have been carried out. Scholars have also identified several characteristics or traits that are often associated with an effective leader (Robbins, 2005). The various characteristics or traits of effective leadership are the key factors contributing to the leadership competencies of a particular person. Under such approach, the different dimensions of leadership competencies can be categorized as follow: (a) personality, (b) self-concept, (c) drive, (d) integrity, (e) leadership motivation, (f) knowledge of the business, (g) cognitive & practical intelligence, and (h) emotional intelligence (McShane & Von Glinow, 2010).

Behavioral Perspective of Leadership

Under the behavioral perspective of leadership, researchers have been investigating the certain behavioral traits that make a particular leader effective. Generally speaking, the various behaviors can be clustered into two main categories. Firstly, the effective may have a people-oriented. Such a leader exhibit the people-oriented leadership style, whereby the leader will tend to show mutual trust and respect for the employees, demonstrating a genuine concern on the employees; needs, and is taking good care of the employees’ welfare. Not only that, such a leader also often will listen attentively to employee suggestions, to treat employees equally, and to support the employees when it is relevant (Robbins & Judge, 2007). Form the other hand, there are also effective leaders that are practicing a task-oriented leadership style. Such a leader will often exhibit the tendency to clearly define and structure work roles, assigning the employees to specific tasks, ensuring the employees are following company rules and policies, and push the employees to reach their maximum performance capabilities. Usually, the leader will utilize the stretch goals technique to challenge the employees to push beyond the preset high standards (Storey, 2001).

It is worthy to note that both leadership styles are useful and effective. However, there is not convincing conclusion on which leadership style is better in managing employees for better performance. Nonetheless, there are also researchers arguing that each style has the respective advantages and disadvantages. For example, the subordinates under a task-oriented leader may feel too stressful and thus may engage in absenteeism, turnover and job dissatisfaction problems. On the other hand, subordinates working under a people-oriented leader may be less uncertain on the objectives or goals set by a leader (McShane & Von Glinow, 2010).

Contingency Perspective of Leadership

From another perspective, the contingency perspective of leadership argues that the most effective leadership style is based on the situation. Under such a perspective, it is generally assumed that an effective leader should be both insightful and flexible – in the sense that they should be able to adjust their behaviors according to the situations.

Under such a perspective, the path-goal leadership style is the most outstanding leadership theory in the recent decades. There is also study indicating that the path-goal theory can explain more about effective leadership that other theories outlined in other perspective of leadership. To begin, the path-goal leadership theory can be defined as a contingency theory in which leadership based on the expectancy theory of motivation that relates several leadership styles to specific employee and situational contingencies (Robbins, 2005). There are several crucial points asserted by the path-goal leadership theory. Firstly, under such theory, the effective leaders will ensure that employees who perform their job well will be rewarded accordingly if compared to those who performed badly. Secondly, effective leader also will assist employees by providing the necessary information, support, and other resources required in completion of a task. It is also appropriate to claim that under the path-goal leadership theory, the concept of servant leadership is promoted (Robbins & Judge, 2007). Under the concept of servant leadership, it is argued that leaders exist to serve the followers, where the leader will become the coaches, stewards and facilitators for the followers, in order to enhance the employee performance (Storey, 2001).

The path-goal leadership model specifically highlighted four types of leadership style that may be useful in several different situations. All of the four types of leadership styles are discussed in details as follow:

Directive leadership style. In this style, the leader will often clarify issues that able to provide a psychological structure of subordinates. The issues that commonly required to be clarified include: performance goals, the methods to achieve the goals, the performance appraisal and measurement standards, the relevant rewards and disciplinary actions and the expected behaviors from the subordinates. In fact, people with directive leadership style have much similar to leader practicing a task-oriented leadership style (McShane & Von Glinow, 2010).

Supportive leadership style. Under the supportive leadership style, the leader provides psychological support for subordinates by being friendly, approachable, making the work more pleasant, treating the employees with respect, showing proper concerns on the employees feedback, needs, demands, and feelings, and taking proper care on the employees’ well-being. Such a leadership style is pretty similar to the people-oriented leadership style (McShane & Von Glinow, 2010).

Participative leadership style. The participative leader will often engage employees in the decision making process. The leader will often consults with the employees, asking for their feedback, and taking the various ideas and suggestions into consideration before making any critical decision for the organization (McShane & Von Glinow, 2010).

Achievement-oriented leadership style. Such a leader will often encourage the employees to perform their best to reach their peak performance in the workplace. The leader will typically set challenging goals, and expecting the employees to perform at their highest level of efforts, and to engage in continuous improvement to enhance their capabilities, performance and results in workplace. It is very common that the achievement oriented leader will apply goal-setting theory as well as positive expectations in the theory of self-fulfilling prophecy (McShane & Von Glinow, 2010).

Transformational Perspective of Leadership

Under the transformational leadership perspective, the manner how a particular leader changes a team or an organization by creating, communicating, and provision of a vision for the particular organization is investigated. The transformational leadership process is often about leading the change program in an organization so that the organization can better fit and thrive in the changes business or economic environment. It is asserted by researchers that an effective leader with transformational leadership style often exhibit four elements in the change or management of an organization. These four elements of transformational leadership style are as follow: (a) creation of a strategic and empowering vision, (b) communicating the vision to the employees and other relevant stakeholders, (c) modeling of the vision, and (d) building commitment towards the vision (Robbins & Judge, 2007).

Implicit Perspective of Leadership

Under the implicit perspective of leadership, it is argued that the leadership process in fact also involves followers’ perceptions about the characteristics and influence of a particular leader. As such, people will tend to evaluate a leader’s effectiveness in terms of how well a particular leader fits their preconceived beliefs about the traits, behaviors, attitude and characteristics of an effective leader (Robbins & Judge, 2007).

Theoretical Framework Used in Analysis

As we have discussed above, it is shown that there are various perspective of leadership. Under each perspective, several leadership style, that are perceived as the effective leadership style are proposed. For example, from the competency perspective of leadership, the effective leadership style are those leaders that able to exhibit competency in various dimensions, such as personality, self-concept, drive, integrity, leadership motivation, knowledge in the business, cognitive and practical intelligence. From the behavioral perspective of leadership, two leadership styles are deemed to be effective, namely: the people-oriented leadership style and the task-oriented leadership style. Form the contingency perspective of leadership (under the discussion of path-goal theory of leadership), four possibly effective leadership styles are: directive, supportive, participate and achievement-oriented leadership style. Under the transformational perspective of leadership, the possibly effective leadership style include: charismatic leadership style and the visionary leadership style. Under such a theoretical framework, this paper will investigate the scenario at Starbuck and to investigate the relevant leadership style of Howard Schultz that contribute to the high performance of the company around the world.

An Analysis of Howard Schultz’s Leadership Style

The Leadership Process in Starbuck

Under the leadership of Howard Schultz in Starbuck, the employees are treated as partners. The company had built a solid foundation, emphasizing on the open relationship with the employees. It is mentioned by the company that to provide the employees with positive workplace experience is the main task (Plog. 2005). Under such a system, the company openly value and respect the employees, and treating them with genuine respect and dignity. The company is also proactively taking good care of the employees, whereby the employees are offered comprehensive benefits packages to eligible partners working at least 20 hours per week in the company (Berfield, 2005). Not only that, the company is also providing flexible working hours for the employees. Besides, the employees are also being offered a fair and competitive wages. In one of the interview with Howard Schultz, he explicitly mentioned that he believe in hiring excellent people who are willing to work for excellent results, and then the company will contribute by being committed in development of these people. Specifically, he aims to identify, cultivate, train, reward and promote those exceptional individuals who are committed to move the company forward. To take care of the employees’ well-being, the company had also introduced the employee stock purchase plan. Under such a scheme, the employees can contribute up to 10% of their base earnings to quarterly purchases of the company’s common stock at an 85% discount to the market price (Lee, 2008). By cultivating a caring work place, not only the company has been winning the Fortune’s 100 Best Place to Work award, but also able to lower down the employees turnover rate in the organization. In fact, many researchers are arguing that Howard Schultz leadership style are based on a sense of genuine caring, being considerate, and being true in treating and taking care of the employees. Howard Schultz explicitly admit that is true regarding his leadership style in his book, Pour Your Heart Into It. Accordingly, he mentioned that: “If I hang my hat on one thing that makes Starbucks stand out above other companies, it would be the introduction of ‘bean stock. With it we turned every employee of Starbucks into a partner… My goal was to link shareholder value with long-term rewards for our employees. I wanted them to have a chance to share in the benefits of growth, and to make clear the connection between their contributions and the growing value of the company. (Daniels, 2003)” Besides, Howard Schultz is also a big fan in allowing the employees to participate and involve in the decision making process of the organization. For example, he is often quoted as saying the following statement: “I think it’s very difficult to lead today when people are not really truly participating in the decision. You won’t be able to attract and retain great people if they don’t feel like they are part of the authorship of the strategy and the authorship of the really critical issues. If you don’t give people an opportunity to really be engaged, they won’t stay. (Plog, 2005)”

Leadership Style and Employee Motivation

As we have discussed in the literature review section, a particular leader’s style can be analyzed from various perspective. Under such argument, we shall analyze the leadership styles of Howard Schultz from various perspectives.

From the competency perspective of leadership, it is observed that Howard Schultz does indeed fulfill the various requirements and traits in becoming an effective leader. Specifically, it is discovered that he has remarkable competencies and leadership characteristics in the following areas: (a) personality, (b) self-concept, (c) drive, (d) integrity, (e) leadership motivation, (f) knowledge of the business, (g) cognitive & practical intelligence, and (h) emotional intelligence. However, under such a perspective, it is harder fr us to characterize the leadership style of Howard Schultz, and thus, we will try to fulfill such an onjective from the other perspective of an effective leader.

Under the behavioral perspective of leadership, it is argued that two types of leadership styles are possibly effective in managing an organization. In our case study, it is discovered that Howard Schultz has a strong tendency in adopting and practicing the people-oriented leadership style. As per discussed and presented on paragraph above, he is remarkably caring and taking great and genuine care on the employees well being and benefits. He was committed to a firm that would provide comprehensive medical benefits and stock options for all employees. By taking great care of the people, he will in turn ensure that the customers of the company are being take care off. Specifically, he deeply believes in the idea that the best way to deliver the greatest customer experience is to deliver the best employee experience. Starbucks is consistently ranked as one of the best places to work. As a result, he successfully builds a company with soul, high on trust and motivation. In fact, some researchers are arguing that his leadership style can be more appropriately described as the benevolent leadership style (considering that the extensive care and benefits he has been trying hard to offer to the employees).

From the contingency perspective of leadership, it is discovered that Howard Schultz exhibit a combination of supportive and participative leadership style. It is not hard to understand the fact that he is exhibiting a supportive leadership style; as such a leadership style is remarkably similar to the people-oriented leadership style as discussed above. However, it is also true that Howard Schultz is also actively employing a participative leadership style, because he will often listen attentively to the employees’ feedback and suggestions before making any decision in the organization.

It is not hard to observe that the leadership style practiced by Howard Schultz place huge importance on the people – where when a leader take great care of the employees, the employees will take good care of the customers in return. In fact, it is through such a strategy that the company able to achieve competitive advantage in the marketplace. It is reasonable to believe such a leadership style able to enhance employees’ motivation and satisfaction, as the employees will often feel secured and psychologically respect and willing to go for the extra mile in helping the company to achieve better performance. When a person if taken great care of, it is likely that they will repay the kindness by working harder, having a happier working lifestyle and become more committed to the completion of the tasks assigned to them (Taggart, 1989). In the case study above, Howard Schultz successfully transform the people-oriented leadership style into high employees’ motivation and satisfaction, which in turn creating fantastic growth and financial performance for the company.

Conclusion

There are various theories on leadership style. In this article, the success of Howard Schultz as an effective leader in bring Starbuck to extraordinary performance is discussed. It is discovered that he has a strong tendency on adopting a people-oriented, supportive and participative leadership style. All of these leadership styles concentrate a lot on the people. This is not hard to understand – as when the people are motivated to perform, the company performance will take care of itself (Taggart, 1989). The success of Starbuck is such a story.

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