Question

The CEO of Starbucks and the Practice of Ethical Leadership

Sara Tangdall

Background

One year after becoming CEO of Starbucks, Kevin Johnson faced a leadership test when two black men were arrested in a Philadelphia Starbucks. The men were waiting to meet a business associate, but they didn’t purchase anything while they were waiting. The store manager asked them to leave, and they refused, explaining that they were there to meet someone. The manager called the police because the men refused to leave, and the police arrested them.

Another patron at Starbucks recorded the arrest on her cell phone, and it quickly went viral. In an interview after the arrest, the woman who took the video mentions that she had been sitting there for a while, and she wasn’t asked to leave even though she didn’t order anything. Additionally, the video shows the business associate of the black men show up during the arrest, and he asks the manager and the police what the men had done wrong. The general public and those who witnessed the arrest labeled it as discriminatory and racist.

This happened on a Thursday and the following Monday, Johnson said that the manager no longer worked at the store. The arrests led to protests and sit ins at the Philadelphia Starbucks the days following the event.

In his apology statement and follow up video release shortly after the arrests, Johnson said, “The video shot by customers is very hard to watch and the actions in it are not representative of our Starbucks Mission and Values. Creating an environment that is both safe and welcoming for everyone is paramount for every store. Regretfully, our practices and training led to a bad outcome—the basis for the call to the Philadelphia police department was wrong.”  

Before the incident, Starbucks had no companywide policy about asking customers to leave, and the decision was left to the discretion of each store manager. Because of this flexible policy, Starbucks had become a community hub--a place where anyone could sit without being required to spend money. Johnson mentioned this community in his apology when he said Starbucks works to create an environment that is “both safe and welcoming for everyone.”

Also in his apology, Johnson outlined the investigation he and the company would undertake. The apology detailed actionable steps Starbucks leadership would follow to learn from the situation, including meeting with community stakeholders to learn what they could have done better. Johnson took full responsibility for the actions of his employees, and he acknowledged that Starbucks customers were hurt by the arrests. Johnson acknowledged that employees needed more training, including about when to call authorities, and that the company needed to conduct a thorough analysis of the practices that lead to this incident.

After issuing his apology, Johnson went to Philadelphia and met with the two men face to face to involve them in dialogue on what Starbucks needed to do differently.

The week following the arrests, Starbucks announced it would temporarily close 8,000 stores to conduct unconscious bias training, which they did on May 29, 2018. A month after the arrests, Starbucks released a new “Use of Third Place Policy,” which states that anyone can use Starbucks and its facilities without making a purchase; it also explains what managers should do if a customer becomes disruptive. Additionally, the policy says that Starbucks seeks to create “a culture of warmth and belonging where everyone is welcome. This policy is intended to help maintain the third place environment in alignment with our mission ‘to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.’”

Practice of Ethical Leadership

How is Johnson practicing ethical leadership? Additionally, we can consider what we learn about his character through his actions and his impact.

1. Did his decision to close all Starbucks stores for unconscious bias training and to create a new “Third Space Policy” align with Starbucks’ mission and goals? If so, how?

2. Explain everything Johnson did right and what positive outcomes resulted from his actions?

3. What leadership traits did Johnson exhibit?

Answer 1

1. Johnson is practicing ethical leadership by his acts right after the arrest.

He accepted the fact that the mistake was done by a Starbucks employee. He also took responsibility for this act which shows his leadership skills.

He clearly mentioned that discrimination will not be tolerated and this incident was a bad example.

Moreover, he started a whole training program for the employees so that they learn how to face such situations in future.

Thus accepting the fact that the leadership needed to take positive and strong decisions so that such an incident doesn't occur in future.

2. Starbucks wants to create safe and welcoming environment for everyone. The new third space policy and the decision to implement unconscious bias training are completely aligned to each other.

The store managers should know how to face such situations and that they should never discriminate on the basis of sex, color or race.

3. The most positive outcomes will be -

A) Such incidents will not happen ever again in future.

B) A positive environment will be created in front of the customers who must have got hurt by experiencing such an incident.

C) It will not leave an impact on customer acquisition and revenue generation.

4.Leadership Traits that Johnson exhibit -

A) Leading by example

B) Non Discrimination

C) Being responsive rather than being reactive

D) Credibility

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