DealBook DC Policy Forum: Top Leaders Discuss the Country’s Biggest Policy Challenges

Credit…Amanda Andrade-Rhoades for The New York Times

Howard Schultz thinks the country is facing a “crisis of capitalism”.

It was that crisis that prompted Mr. Schultz to return to Starbucks in April for his third stint as the chain’s chief executive, he told Andrew Ross Sorkin on Thursday at The Times’ DealBook DC policy forum. During his earlier efforts at the helm, Mr. Schultz earned a reputation as a progressive leader who sought to achieve what he described as “the delicate balance between profit and conscience.”

But today, he leads Starbucks as the chain resists a union organizing effort that is sweeping the country. Mr Schultz says the union organization reflects how the government has let young people down, not giving them “a path they believe they deserve”. Younger employees, he said, also have new expectations of their jobs.

“I came back to reinvent the role and responsibility of public enterprise,” Schultz said.

Since late last year, a handful of Starbucks stores have voted to unionize — the first in company history. More than 100 locations in more than 25 states, out of nearly 9,000 company-owned stores across the country, plan to hold elections.

“What’s happening in America is much bigger than Starbucks,” Schultz said. “Starbucks, unfortunately, happens to be the proxy for what’s going on. We’re right in the middle. If a company is as progressive as Starbucks, doing so much and at the 100th percentile, can be threatened by a third party, then don’t anyone can do it.

During Mr. Schultz’s tenure, Starbucks in 1988 introduced comprehensive health benefits for full-time and part-time employees and their domestic partners. In 1991, it was the first private American company to include part-time workers in its stock option program. Starbucks has also participated in debates on social issues such as gay rights, race relations, veterans’ rights, gun violence, and rising student debt.

On his first day back at work, Schultz scrapped stock buybacks, calling the move a way “to invest more profits in our people.” In May, Starbucks said it was raising wages and expanding training at company-owned facilities in the United States. These changes would not apply to newly unionized stores or to stores that may be in the process of unionizing.

Last month, the National Labor Relations Board accused Starbucks of intimidating and retaliating against workers who sought to unionize a Buffalo-area store. The amended complaint also accuses the company of “packing” another store in the area with outside employees ahead of a union election in the fall.

Starbucks said the complaint did not constitute a labor board judgment and that it believed the allegations were false.

At Thursday’s forum, Schultz said he was not “union busting” – but that the need for unions stems in part from companies abusing their employees. Starbucks, he said, is not like those companies.

“We are not in the coal mining business,” he said. “We don’t abuse our people.”

Mr. Schultz went on to say that he doesn’t think “a third party should rule our people”, using a term employers sometimes use to refer to unions. “And so we are in a battle for the hearts and minds of our people, and we are going to succeed.”

Achieving this, Schultz said, requires building trust with customers and employees.

“For 51 years we’ve been able to do that, and now a third is questioning them,” Schultz said. “And so, the burden of proof is on us, and we will demonstrate genuine servant leadership.”

When Mr. Sorkin asked him if he would ever accept the union, Mr. Schultz simply replied “no”.

“My belief is that we have built a company focused on exceeding the expectations of our employees and our customers. And that’s the vision we have for the future of the company.

Starbucks will soon need a new CEO to realize this vision. Starbucks said the chain is actively seeking a full-time chief executive, which it hopes to announce this fall.

“We are looking for someone who is culturally sensitive to the guided and valued principles of Starbucks,” Schultz said. “Someone who is a servant leader, someone who understands the role of our traders, someone who is a visionary, someone who has digital technology credentials, someone who is a globalist who has experience in China, and someone who will understand that, in order to maintain Starbucks’ level of success, our employees come first.

And that leader will likely also have to embrace the reality of remote work — a reality Mr. Schultz says he’s come to.

“I’ll get down on my knees, do push-ups, whatever,” he said. “‘Come back!’ No, they don’t come back to the level I want them to be.


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