Leadership Strategies: A Case Study on Howard Schultz and Starbucks

This report provides a comprehensive analysis of Howard Schultz's leadership style as the former CEO of Starbucks. It examines his transformational and democratic approaches, highlighting key leadership qualities such as hiring the right staff, innovative communication, commitment to customer service, employee care, and the importance of listening to employees. The report details how Schultz fostered a culture of respect, diversity, and a clear vision for the company, emphasizing partnership and employee empowerment. It classifies Schultz as both a transformational and democratic leader, exploring how he motivated employees, encouraged innovation, and fostered a positive work environment. The report further discusses Schultz's impact on Starbucks' performance, his ability to inspire followers, and his use of expert power and rewards to motivate employees. It emphasizes his commitment to excellence, customer service, and the development of a strong, engaged workforce.

Running head: LEADERSHIP IN BUSINESS
Howard Schultz (former CEO of Starbucks)
Name of the Student
Name of the University
Author Note

1
LEADERSHIP IN BUSINESS
a) Part A- case study
Howard Schultz was the former CEO of the renowned American coffee company
known as Starbucks. His leadership style and skill serve as management lessons to the rest of
the leaders after him (Clark, 2013). Schultz is among the best leaders in the corporate
business and it is because he boosted the sense of responsibility and determination into
Starbucks spirit. He is the best because he not only encourages his team but also motivates
them to push their limits on the ideas that they do not really agree. He has a drive and
perseverance that actually took the Starbucks Company a long way (Schultz, 2012). The
following points describes why Howard Schultz is the best leader-
 He always uses to hire the appropriate staff needed in the company. It is not possible
for him to instruct every person what to do does instead he hired the right employees
for the team. His goals were clear that he would be motivating and encouraging his
managers because he believes that organization needs those employees who have
instinctive skills of leadership. Schultz was very much of an innovative communicator
and thus he can easily manage his team by clearly transferring his messages to his
team, making them more energized (Rubin, 2013).
 Another quality of Schultz that makes him a good leader is that he is very much stable
in delivering the organization’s products and services to their customers. As a leader,
Schultz is always conscious about the services that they are offering. They have stores
globally that offers different types of products but Schultz makes it the priority that in
whichever store the customers go they should get the same perfect taste. However, he
believes in providing his customers with best customer care services and that he does
with the stability in their products (Rowe, 2014).
 He is said to be the best leader because he respect and cares for his employees. This
leadership quality actually helped him to grow and so his employees admire him.
Along with prioritizing his customers, he also thinks for his employees in spite of
being part or full time worker. He not only offers them with health insurance benefits
but also permits them to own stocks in the company. Apart from these employees are
benefited with educating themselves and getting shifting schedules so that they do not
have to work back to back for long hours. The most important and attracting feature
of Schultz that make him the best leader is that he listens to his employees. He tries to

2
LEADERSHIP IN BUSINESS
look after every difficulty an employee is facing and solve them to make a positive
result (Hahn & Kim, 2016).
 A good leader must always respect the various cultures and motivate diversity.
Schultz very cautiously tries that every store that is built in diverse locations must be
designed accordingly and this thought that he has is because for him every place has
their very own priorities and practices. Thus, every store that Starbucks build keeps in
mind those factors that involve the appearance and design of the outlet. Not only
Schultz is limited to this but also they are also open to welcome suppliers who belong
to the diverse communities. Moreover, they also bestow towards the economic
development (Moran, Abramson & Moran, 2014).
 Schultz has a clear vision that what he wants to do. His love for coffee brought him
into this business but his prime mission is always serving the coffee to his customers.
His goals and mission are always on track and he has never been confused in what he
wants, he always wanted to his organization to be focused on treating his customers as
well as employees with respect and guilt. Thus, Starbuck’s mission is to not only
serve their customers with perfect taste of coffee but also offer them a place to meet
up their friends, arrange meetings and a place where they can spend some relaxing
time.
 Schultz has contributed much to this company and has worked passionately. He
believes in partnership that has made his company reach out to the markets. Schultz
believed that collaborating with the right team could increase their brand awareness
and make the path easy to achieve their goal. For instance, Starbucks made
partnership with Apple and Barnes and Nobles, which had helped him, flourished
more in the competitive market.
 Schultz believes that both the customers and the employees are the heart of their
business and fortunately, his team in the company is aware of this fact. Thus, the
company must feel customers special. If customers feel that they are special to this
organization, they will avoid miscommunications and will be loyal to the brand.
However, employees are also another important pillar for the company and thus he
thinks they have many ideas that they can offer. Schultz not only listens to their ideas
but implement them. For instance, the creation of Frappuccino was the idea of one of
the employee that Schultz implemented (Skripak, 2016).

3
LEADERSHIP IN BUSINESS
b) Part B- teaching note
 What kind of leader was Howard Schultz?
Schultz can be called as both transformational leader as well as democratic leader.
Democratic leadership style that he follows gives him the permission to exercise free opinion
and inputs of his workers. By following this, he sees that all the employee’s ideas are listened
carefully and their ideas are include in decision-making process of the company.
Transformational leadership is the one that is built upon the development of moral and
motivation of higher level (Leavy, 2016). The paths that Schultz follow actually bind him
with his followers who are the employees of the company and help him display his strengths
and leave an impact over his subordinates of respect and admiration. Schultz usually follows
these two types of leadership style and thus it makes him encompass a blend of both
autocratic and democratic leadership. By autocratic it means that the entire team of Starbucks
under Schultz will be following the same goal and tasks that are given to them but they will
have full freedom to speak out and share their ideas and opinions, which will be contributed
to the company. Schultz always motivated and inspired his followers, his leadership style
resolve around this. Moreover, he permits, motivates and receives feedbacks and advices
from his staffs. To reach his employees he even makes personal calls and emails so that they
can give their feedbacks about Schultz as well as Starbucks. As a leader, Schultz was found
to have given more power to his employees in the decision making procedure and giving
them the freedom to choose their flexible working hours. Therefore, Schultz leadership
ideals, goals and approach for the employees are the push to become a successful leader.
Schultz always uses to treat his employees as his partners. The company builds an open
relationship with their staffs. The company under Schultz leadership provides the employees
an experience of a positive work environment. Schultz value and respect every employee of
his and treats him or her with respect and dignity. Schultz was an effective leader and this is
solely because he has the leadership characteristics and competencies in the areas such as-
personality, self-concept, drive, integrity, motivation in leadership, having enough knowledge
of the business, both cognitive and practical intelligence and lastly, emotional intelligence. It
is quite clear that the leadership style that Schultz practice has a huge impact on the
employees. Schultz leadership style made Starbucks an extraordinary performer.
Transformational leader are the one that Howard Schultz is who are very similar to
charismatic leaders but are distinguishable by their ability to bring about innovations and
alterations. This type of leaders usually blends to take a company through vital strategic

4
LEADERSHIP IN BUSINESS
changes. As far as Howard Schultz is concern, he among those transformational leaders who
finds the benefit where his products can be suitably resides and enjoyed by the customers
(Archbald, 2013).
Schultz also encourages his employees to become the shareholders in the organization so
that they can cross their limit of expectation and apply community initiative. Schultz as a
leader has the power to reward their employees thus; whenever the employees perform extra,
they are rewarded for performing the extra mile. Schultz also has the expert power as he has
great knowledge about the various products that Starbucks sell. However, he travels the
world to come up with the best coffees that can serve their customers well. His style of
leadership always provides his employees with a great working atmosphere where each one is
treated with respect and dignity. He applies the biggest standard of excellence to buy, roast
and fresh delivery of the coffees of Starbucks. As a leader he always emphasize upon
pleasing their customers by providing excellent customers services along with knowledgeable
staffs who knows about the products of the organization and pays detailed attention while
preparing the drinks for their customers. Howard Schultz follows both democratic and
transformational leadership styles and so he is a mixture of both the leaders (Daft, 2014). As
a democratic leader, he is more focused in motivating the employees, putting less control
over them and so a motivated group is created. On the other hand, as a transformational
leader he is open to changes and any kind of innovations that can be beneficial to his
organization (Rumelt, 2012).
Transformational leadership theory states that the leaders who fall under this theory are
visionary, inspiring, daring, risk-takers and are contemplative thinkers. They are said to have
a charming affect (Effelsberg, Solga & Gurt, 2014). Only with charming personality,
transformational leaders cannot go a long way rather they need to have certain qualities like-
 Inspirational motivation- transformational leaders assist their followers by bestowing
them with the sense of meaning as well as challenge.
 Intellectual stimulation- new ideas are encouraged by this type of leaders and they
never criticize the followers who commit any kind of mistakes. They thus focus on
the problem itself rather indulging in any kind of blame game.
 Idealized influence- transformational leaders are the role models of their followers
and thus, the leaders are trusted and treated with respect by their followers. Moreover,

5
LEADERSHIP IN BUSINESS
the leaders usually focus more on the needs of their followers and establish a high
standard of ethical conduct.
 Individualized considerations- creativity and innovations are highly rewarded.
Followers get chances for taking part in the decision-making and are supported so that
they get equal chances of implementing their ideas. Transformational leaders are thus
the mentors of their followers.
Thus, Howard Schultz can be called as a transformational leader who was highly
adaptable to any kind of changes that are good for the company.
 Has he made any followers? If yes then how?
If transformational leadership style that is adopted by Howard Schultz is looked
through the implicit perspective then it can be said that this type of leadership includes
their followers’ needs and perceptions about the characteristics as well as influence
towards a particular leader. However, the leaders give full attention to listen to their
followers as well as give them adequate chances to share their ideas and thoughts with the
company. However, for Schultz his followers are his employees who have immense trust
and respect towards him. As a leader, Schultz treats every employee equally and
maintains an open relationship with him or her. They take good care of their staffs, values
them and give them respect and dignity. Schultz believes in employing those workers
who are motivated to run behind excellent results and thus, they are ready to assist those
employees for further developing them. Schultz greatly encourages his employees to
participate and involve in the process of decision making of the company. In this way
Schultz, make the employees feel that they are an important part of the organization and
their opinions does matters. Schultz has been supportive and thus, follows a people
oriented leadership style and that is why he has made so many followers inside and
outside Starbucks, who not only appreciate his leadership style but also follows his
footsteps (Kark & Shamir, 2013).
He was found taking great care of his workers well being as well as benefits. By
taking care of his employees in return, he just wants his customers to be satisfied by their
employees’ services and company’s products. As an organization Starbucks has been
ranked innumerable times as the best working place. Thus, as a result Starbucks is built
with soul, trust and motivation. The main reason of so many followers of Schultz is that
he listens to the workers attentively and considers their feedback and suggestions for

6
LEADERSHIP IN BUSINESS
making any decisions for the company. However, when the leader is taking so much care
then the followers will themselves respect and love their leader, which is seem by the
employees of Starbucks. Moreover, because of these strategies of Schultz where he
focuses mainly on the employees and in return they satisfy the customers, this company
has achieves huge competitive advantage in the market. This type of leadership builds
intensifies the followers’ motivation and satisfaction because they will feel a sense of
security and respected, thus employees will satisfactorily work extra so that they can do
something extra for the company to enhance better productivity and performance in the
competitive market (Avolio & Yammarino, 2013).
In the form of leadership that Schultz follows, here the followers seem to get
convinced by their leaders and thus expressing faith, esteem and respect towards their
leader. Schultz uses various ways through which he can transform his followers like
uplifting their awareness of the importance of duty towards the organization, giving
priority to the team and the goals of the company rather than concentrating on personal
needs. Schultz as a leader encourages and co-operates his followers, and thus his
leadership has made huge contribution to the global market and regarded as the best
leadership team. Schultz usually search for those employees in his organization where he
can employee those candidates who are team players and has the willingness to work for
Starbucks. However, leadership styles are the ways in which a leader can influence his
followers. Schultz leadership style high depended on the circumstances in which he had
operated his followers and his personality. However, according to the leader-follower
theory, the relationship between the leader and the follower is the foundation of the
organization. Leadership as defined presumes that the followers will lead them ahead and
thus, if a leader has necessary followers to lead then only a successful leader is evolved
(Braun et al., 2013).
Any organization will be successful if they maintain a healthy relationship among
their leaders and followers. If both works together then only the organization will perform
better and thus, Schultz maintains this perspective has always tries to care and look after
the needs and interests of his employees first. Thus, as a leader, Schultz is always ready to
lead and his followers are always willing to follow him. However, Schultz not only
guides his followers but also train them so that they can also become leader in future.
Thus, there might be chances that a leader may become a follower and vice verse
according to leader-follower theory (Price & Van Vugt, 2014). Schultz provides equal

7
LEADERSHIP IN BUSINESS
opportunity to all his followers to come together and work for the common goal of the
organization. However, as a leader Schultz always cared about and encouraged team spirit
among his employees. He also looked after their medical health where those employees
who have worked for Starbucks at least 20hours in one week will be given a medical
insurance. To motivate his employees further he came up with strategies like stick options
where the best among the employees are awarded with shares. Schultz always gave
opportunities to his subordinates. He always chooses the right employee to pass on work
and make that person push himself beyond his limits and become responsible. However,
Schultz has given important leadership lessons to his subordinates, which are that
inspiring leaders can never be as intense as the products made by the organization rather
they are more focused about how the product can benefit the life of the customers and
employees, leaders like him are never tired of sharing their motivational stories. They
treat their staffs or subordinates kindly and lastly they make themselves and employees
remember that what their goals in the organizations are. Thus, because of these Schultz
made many followers in and outside Starbucks (Hollander, 2012).
 What different type of leadership style is suitable for him?
Leadership styles define that a person is role flexible. That means that any leader can shift
from one style to the next. This shifting highly depends on the situation a particular leader is
in. different leadership styles, some are overlapping where as some are poles apart (Ng &
Sears, 2012). The different leadership styles are stated below-
1. Autocratic style of leadership
2. Strategic style
3. Cross-cultural style
4. Facilitative style
5. Laissez-Faire style
6. Coaching style
7. Team style of leadership
8. Participative or democratic style
9. Transactional leadership
10. Transformational style
11. Charismatic style
12. Visionary style

8
LEADERSHIP IN BUSINESS
The above-mentioned leadership styles are common types that are usually followed by
great leaders in any organization. Howard Schultz of Starbucks has been seen following
transformational style of leadership where he mostly focuses on motivating his employees to
push their limits and do something more than what they are usually capable of doing. This
style of leadership is different from the other styles because it initiates modifications in the
organization, among the employees as well as in the team for its betterment. Schultz who has
been seen following this style has been setting challenges for his team to achieve higher level
of performance. Thus, by following this type of leadership style Schultz was found to have
followers who are more committed towards the organization and satisfied working under
Schultz as their leader (Guay, 2013). Schultz as a transformational leader was immensely
successful in satisfying his followers because he authorizes his followers. He knew that
caring about his employees will keep them happy and in return, they will prove good quality
services to the customers. Thus, this strategy of Schultz actually worked for Starbucks and
helped Schultz became an effective leader. However, at times Schultz has been also found to
incorporate certain styles of Democratic leadership due to the demanding situation. However,
it has immensely helped Schultz to deal with certain situations. This kind of leadership style
includes the staff members to contribute their ideas in the organization’s decision-making
process. Democratic leadership styles focus more on the employee’s contributions (Giltinane,
2013). Here also the leader has the final responsibility, as he is the head and thus, delegates’
authority to his employees. Schultz has been seen taking up these characteristics where he
encourages his employees to come up and bestow their ideas for the organization.
Howard Schultz, has been following the best style of leadership but then also if another
alternative style Schultz should have tired then it would be Transactional style of leadership.
Transactional leaders are those who manage their subordinates by setting particular goals and
objectives. This style of leadership uses the reward and punishment techniques to motivate
and inspire their performance. However, this kind of leaders usually assists those followers
who agree to follow him in executing a fixed activity in change for a particular outcome that
is the reward. Thus, it is called the transactional style of leadership because transaction is
done in between performance and rewards or punishment. Transactional leadership styles are
very much beneficial for the senior executives as well as the CEOs in an organization where
this kind of leaders are appointed so that they can make the company more effective and can
deal efficiently with the daily corporate affairs. This type of leaders usually works to make
the development in the enhanced processes and set certain rules and regulations so that the

9
LEADERSHIP IN BUSINESS
employees can use ideal resources of the organization. However, for Schultz also this style
would have been effective. Schultz use to reward his employees but there were no
transaction, but by using this style of leadership Schultz could have manage his team through
a different but effective approach. However, Schultz believed in motivating his employees
but transactional leadership styles state that individuals are more motivated by rewards or
punishments (McCleskey, 2014).
Schultz has never applied exchange principle in his leadership style, exchange here means
that employees will deliver up to the mark and satisfactory work in a given time limit for
which in return the authority will reward him for their performance. These rewards can be
anything starting from extra pay, bonuses, verbal appreciation, health insurances and so on.
This type of leadership is where the leaders mainly trigger their employees so that they can
give their best performance. Transactional leaders are mainly focused on the task, but the
style that Schultz followed focus mainly on the employees (Chaudhry & Javed, 2012). This
type of leaders though they focus more on the task but along with that they also guide their
team to how they can accomplish that task and what are the sources and requirements they
can find useful to give their best performance. Moreover, to motivate their team leaders
beforehand let their team know that what rewards they will be receiving for completing the
given task successfully. Transactional leaders also try to provide their team with optimal
working environments so that they can do their work well. Thus, transactional leadership
style can be an alternative for Howard Schultz to try out a different type of leadership style.
Being a transactional leader Schultz can keep a close eye on his workers so that he can guide
them whenever he finds thing to go in a wrong track.

10
LEADERSHIP IN BUSINESS
References
Archbald, D. (2013). Vision and leadership: problem-based learning as a teaching
tool. Journal of Leadership Education, 12(2), 136-147.
Avolio, B. J., & Yammarino, F. J. (Eds.). (2013). Introduction to, and overview of,
transformational and charismatic leadership. In Transformational and Charismatic
Leadership: The Road Ahead 10th Anniversary Edition (pp. xxvii-xxxiii). Emerald
Group Publishing Limited.
Braun, S., Peus, C., Weisweiler, S., & Frey, D. (2013). Transformational leadership, job
satisfaction, and team performance: A multilevel mediation model of trust. The
Leadership Quarterly, 24(1), 270-283.
Chaudhry, A. Q., & Javed, H. (2012). Impact of transactional and laissez faire leadership
style on motivation. International Journal of Business and Social Science, 3(7).
Clark, T. (2013). Starbucked. Hachette UK.
Daft, R. L. (2014). The leadership experience. Cengage Learning.
Effelsberg, D., Solga, M., & Gurt, J. (2014). Getting followers to transcend their self-interest
for the benefit of their company: Testing a core assumption of transformational
leadership theory. Journal of Business and Psychology, 29(1), 131-143.
Giltinane, C. L. (2013). Leadership styles and theories. Nursing Standard, 27(41), 35-39.
Guay, R. P. (2013). The relationship between leader fit and transformational
leadership. Journal of Managerial Psychology, 28(1), 55-73.
Hahn, Y., & Kim, D. (2016). Corporate Social Responsibility: A Comparison Analysis. The
East Asian Journal of Business Management, 6(4), 13-17.
Hollander, E. (2012). Inclusive leadership: The essential leader-follower relationship.
Routledge.
Kark, R., & Shamir, B. (2013). The dual effect of transformational leadership: Priming
relational and collective selves and further effects on followers. In Transformational

11
LEADERSHIP IN BUSINESS
and Charismatic Leadership: The Road Ahead 10th Anniversary Edition (pp. 77-101).
Emerald Group Publishing Limited.
Leavy, B. (2016). Effective leadership today–character not just competence. Strategy &
Leadership, 44(1), 20-29.
McCleskey, J. A. (2014). Situational, transformational, and transactional leadership and
leadership development. Journal of Business Studies Quarterly, 5(4), 117.
Moran, R. T., Abramson, N. R., & Moran, S. V. (2014). Managing cultural differences.
Routledge.
Ng, E. S., & Sears, G. J. (2012). CEO leadership styles and the implementation of
organizational diversity practices: Moderating effects of social values and
age. Journal of Business Ethics, 105(1), 41-52.
Price, M. E., & Van Vugt, M. (2014). The evolution of leader–follower reciprocity: the
theory of service-for-prestige. Frontiers in human neuroscience, 8.
Rowe, W. G. (2014). Is Nonprofit Leadership Different from Business or Government
Leadership?. The Journal of Nonprofit Education and Leadership, 4(2).
Rubin, E. N. (2013). Assessing your leadership style to achieve organizational
objectives. Global Business and Organizational Excellence, 32(6), 55-66.
Rumelt, R. P. (2012). Good strategy/bad strategy: The difference and why it
matters. Strategic Direction, 28(8).
Schultz, H. (2012). Pour your heart into it: How Starbucks built a company one cup at a time.
Hachette UK.
Skripak, S. J. (2016). Fundamentals of Business. Virginia Tech.