Mendoza School of Business

Starbucks founder speaks on ethics

Published: March 30, 2007 / Author: Kate McClelland

Starbucks founder and chairman Howard Schultz, who visited Notre Dame Thursday, told an audience on campus that “success is not an entitlement – it must be earned.”

Schultz discussed his business practices and passed on lessons he has learned from leading Starbucks in a talk titled “Entrepreneurship and Ethics” in Mendoza’s Jordan Auditorium.

He emphasized the importance of striking a “balance between profitability and social consciousness,” he said, because companies that are authentic and ethical will do better in the long run than companies simply out to make an immediate profit.

Schultz, the former chief executive officer of Starbucks, received the eighth annual Theodore M. Hesburgh C.S.C. Award for Ethics in Business for his superior commitment to earning respect and success within the business world while maintaining the highest ethical standards in all of Starbucks’ business practices.

Starbucks – listed as No. 16 on Fortune’s list of Best Companies to Work For – has made a commitment to its employees by offering them superior health care and stock options, even for those who well less than 40 hours a week.

Schultz said his dedication to his company’s employees grew out of his early childhood experiences.

While Schultz was growing up in a housing project in Brooklyn, New York, his family suffered when his father was injured on the job and received no benefits or workers’ compensation. Schultz said these memories made him committed to providing health care to his employees.

He encouraged the audience to take an active role in trying to change government policy, saying the nation’s status with 47 million Americans uninsured is “fracturing the humanity of America.”

He also reminded future entrepreneurs of what he believes to be the most important discipline in any business – human resources. While human resources is usually the last division of a company to be funded, it is important that “people feel as if they are a part of something larger than themselves,” Schultz said, adding that human resources is the easiest way to connect them.

The second most important discipline after human resources, Schultz said, is corporate social responsibility – and not simply making charitable donations as a marketing gimmick, but also having an entire program devoted to a company’s ethical practices.

More and more consumers are asking serious questions of companies about how they treat the people overseas who manufacture goods or sell companies raw materials, Schultz said. He said Starbucks is committed to improving the quality of life of the farmers from whom they buy their coffee beans.

He said Starbucks purchases more Fair Trade coffee than any other company and consistently pays above market value for their beans. Schultz admitted that doing the right thing for the company’s employees has been difficult at times. But he said he would rather see a slight loss in the short-term and maintain Starbucks’ ethical commitment to its partners.

He finished his speech with a reminder to young entrepreneurs never to forsake their dreams, saying his own success could not have been predicted based on his early life.

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Advice from Howard Schultz:

-A business may be about making money, but every business needs to achieve a balance between profitability and having a social conscience

-Trust is the hardest thing to build in a consumer brand

-You can build shareholder value by linking the value to the employee

-Don’t forsake your dreams. Follow your heart

-To be genuine, be ethical

-Exceed the expectations of your employees if you want to exceed the expectations of the customer.

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— Michael Clements




Topics: Mendoza