Howard Schultz once spoke of the ‘reservoir of trust’ he had with Starbucks employees–but his war on unions risks destroying that bond
When, four short months ago, I wrote an op-ed about the uncertain future of Starbucks, I honestly would not have predicted that things would implode this quickly.
I imagined that Howard Schultz would return to the company as a faithful caretaker who would do what he historically did best: be a likable leader with a fantastic ability to relate to people.
However, in a mid-July letter to employees, interim CEO Howard Schultz set forth his bold vision of the future. Part of his plan for Starbucks to re-imagine its business is to close locations. Last week, videos of employee walkouts went viral–a massive blow to the company’s reputation.
While Starbucks claims that stores are being closed for safety and security reasons, there is another reality at play: The company is locked in a fight to the finish with a surprisingly resilient nascent employee union movement.
The narrative being woven by Starbucks is one of employee safety. As The Wall Street Journal reported, Starbucks was responding to employee reports of drug use in bathrooms by customers and the general public. Initially, Starbucks informed workers that they could deny bathroom access or reduce store operations for safety in these locations.
The same week that Schultz proclaimed the future, Starbucks announced that 16 locations would be shuttered this month. The company is closing six locations in Seattle, another six in Los Angeles, two in Portland, and one each in Washington and Philadelphia. These stores were not unprofitable–and Starbucks has made it clear that this won’t be the end of the closures.
To a critical eye, Starbucks’ positioning is difficult to believe. While workplace safety needs to always be front of mind, many less-than-deal Starbucks locations haven’t been entirely safe for employees for years. What is new is the intersection of some of these locations and a burgeoning union movement.
It’s a little too convenient to craft a new narrative when these very cities are forming part of the foundation of the Starbucks unionization movement. Two of the stores that will be closing recently voted to unionize. At the same time, in the quaint college town of Ithaca, NY, the Starbucks union claims a store is being closed in retaliation for employees voting to unionize.
As Charlie Cartwright, a lawyer who represents employees injured in the workplace, puts it: “Workplace safety is critically important and should drive corporate decision-making where employees are at risk. At the same time, union-busting takes various forms, including closing business locations where employees have chosen to unionize.”
This also needs to be viewed within the totality of the labor battles at Starbucks over the past few months. Issues range from a complaint alleging that the company threatened to stop gender-affirming health benefits to the NLRB having to urge Starbucks to reinstate three Phoenix workers subjected to unfair labor practices relating to union membership. What started as a series of small battles between Starbucks and employees has escalated into a full-scale war.
To navigate these troubled waters, Starbucks needs the reflective Howard Schultz of this iconic 2010 Harvard Business Review interview. Asked what the most significant challenge he faced after returning to the helm in 2008, Schultz shared this prescient view: “The challenge was how to preserve and enhance the integrity of the only assets we have as a company: our values, our culture and guiding principles, and the reservoir of trust with our people.”
Today, this is Starbucks’ greatest failure. The complete absence of trust between Starbucks employees and management has taken all meaning out of one of Schultz’s most beloved terms: “partners.” That’s what Starbucks’s massive PR machine calls their workers.
Even if Starbucks eventually “wins” by shuttering locations and using every union-busting technique, the company will ultimately lose. The Starbucks culture is irrevocably broken–and for many workers, the greatest irony is that the person in charge of fixing it today is the one who actually broke it.
For those who have watched the company closely for years, this is one of the most incredible failed opportunities in American business history. Culture-building is unbelievably hard, but in building the brand, Starbucks had found ways to build the culture.
The same Starbucks stories that are hollow today were once part of its foundation. The ability for their employees to work their way up the ranks of the business to transform what might have started as a part-time job into a career was part of the neo-American dream. Throw in the opportunity to earn a degree, and Starbucks was on to something.
Until they couldn’t help getting in their own way. One day all of this will be required reading in business schools–but today, it’s a cold brew for Starbucks employees to swallow.
In his HBR interview, Schultz shared a personal and professional revelation he hoped would allow Starbucks to avoid the kind of situation it faces today:
“The decisions we had to make were very difficult, but first there had to be a time when we stood up in front of the entire company as leaders and made almost a confession–that the leadership had failed the 180,000 Starbucks people and their families.”
This would be an excellent idea for the latest incarnation of a Schultz-led Starbucks to re-visit. There never needed to be such a profoundly adversarial relationship between the company and its workers.
Aron Solomon, JD, is the chief legal analyst for Esquire Digital, the editor of Today’s Esquire, and a Pulitzer Prize-nominated writer. He has taught entrepreneurship at McGill University and the University of Pennsylvania and was elected to Fastcase 50, recognizing the top 50 legal innovators in the world.
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not reflect the opinions and beliefs of Fortune.
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