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Leadership lessons from Howard Schultz’s 3rd stint as CEO of Starbucks

Posted by Grace Townsley

May 27, 2022    |     4-minute read (742 words)

Howard Schultz first acquired Starbucks in 1987. His vision to create cafes where people would sit and visit over espresso for hours on end was revolutionary to American culture. Now, over 30 years later, 70% of Starbucks orders are passed through the drive-thru window. And thousands of employees are fed up with the working conditions. 

That’s why when over 200 of Starbucks’ U.S. locations filed for unionization, Schultz was called back in to steer the ship. This is the leader’s third time in the Starbucks CEO role, and the second time he’s been reappointed to lead the company through a crisis. 

In 2008, Schultz was brought in to bring Starbucks back from the brink after years of dwindling sales. When the Great Recession began, the executive team knew they needed his leadership. And the move paid off. Within months, Schultz had helped Starbucks enhance its cash flow, close underperforming stores, improve employee satisfaction, and boost stock prices. It was a miraculous turnaround story. Schultz stepped down in 2017, after nearly a decade at the helm. 

Since 2017, the company has been run by Kevin Johnson, who served as COO prior to the promotion. With Johnson as CEO, Schultz never planned to return to a full-time role at Starbucks. But when the pandemic accelerated the company’s worker crisis, the leadership team knew he was their best bet at staging a second turnaround. 

Schultz’s listen first, fix second approach

From the minute he picked up his title for a third time, Schultz has been an example of emotional intelligence. One of his first moves as CEO was to start gathering real, candid employee feedback. Not through surveys or reports from leadership, but by actually listening to his frontline employees. Schultz gathered with small groups of these employees in conference rooms across the country. In the meetings, he asked them about working conditions, their unique challenges, what other employees are facing, and how the company can build a healthier, stronger culture. At a time when these workers are feeling unheard and unappreciated, these meetings have been a welcomed opportunity to share with someone who truly wants to listen.  

Why this leadership strategy works

His unique approach to engaging with employees at every level is as strategic as it is emotionally intelligent. Starbucks isn’t facing a crisis of sales like it did in 2008. This time, its employees are pushing to unionize and fighting for benefits. By taking time to listen to his employees, Schultz is helping them become part of the solution. He isn’t imposing his own fixes. He’s giving them the opportunity to have ownership in the new culture. 

This strategy also sets an example for leaders at every level of the company. He’s leveling the field and proving that every member of the team deserves to be heard and supported. If Schultz is willing to travel across the country and take the time to listen to hundreds of employees, just to find the root of the problem, his mid-level leaders have no excuses. He’s effectively creating a new model of problem-solving for the company — don’t guess, ask. 

Schultz has a history of putting people first

He has always said Starbucks is only possible because of people, both employees and customers. His goal has been to put employees first, knowing that business success will follow. When employees are treated well and taken care of, he believes their customers will be too. 

Early on, Schultz proved his commitment to all employees by becoming one of the first retailers to offer affordable, comprehensive health insurance to both full-time and part-time employees and their families. At the time, offering benefits to part-time workers was practically unheard of. Even as the company’s per-worker healthcare costs doubled (and then some), the company has continued offering this benefit.

Fast forward to today, and in his first speech as returning CEO, Schultz announced his commitment to improve conditions, refocus on the team members who make Starbucks great, and never again prioritize shareholder value over staff satisfaction. To underscore his commitment to change, Schultz immediately suspended the company’s stock repurchase program and instead is funneling those resources into improving staff programs and store management. 

It's still too early to tell if Howard Schultz will pull off the second great Starbucks turnaround. But his commitment to people is a leadership lesson for business owners and entrepreneurs in all industries. 

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