Strategic Human Resource Management: Starbucks Report Analysis

This report provides an in-depth analysis of strategic human resource management (SHRM) practices within Starbucks. It explores the relationship between business strategy and HR, examining concepts like vertical and horizontal integration. The report delves into SHRM models, including the Best Fit and Resource-Based View, and analyzes HR practices such as performance management and reward systems. Furthermore, it examines the nature of employee relations, theoretical perspectives, and the impact of globalization. The report also includes recommendations and a conclusion summarizing key findings related to Starbucks' approach to SHRM and employee relations. The study highlights the significance of these practices in fostering a positive work environment and achieving organizational goals, emphasizing the importance of aligning HR strategies with overall business objectives.

STRATEGIC HUMAN
RESOURCES
MANAGEMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Relationship between business strategy and human resources practice .....................................1
vertical and Horizontal integration..............................................................................................3
Model of SHRM..........................................................................................................................3
HR practices of Performance Management and Reward-...........................................................6
TASK 2............................................................................................................................................8
Nature of employee relation ........................................................................................................8
Theoretical perceptive of employee relation ...............................................................................9
Globalization and employee relation ........................................................................................12
Recommendation ......................................................................................................................13
CONCLUSION..............................................................................................................................13
REFERENCES .............................................................................................................................15

INTRODUCTION
Employee relation or industrial relation is formal and informal bond share by employee
and employee. Earlier this role is limited to render reasonable and fair remuneration, salary and
benefit to employee. But now its role has been changed due to increases competition due to
globalisation. This study describe relation between HR policies and business strategy because
HR policy are made upon objective of organisation. Report also cover situational HR model used
is star buck, theories of employee relation, role of different actor in IR and direct machinsm use
by star buck to establish direct communication with its staff. Star buck is most popular coffee
making brand in the world. USP of star buck is its commitment to provide high quality coffee to
customer. Company has huge global presence, so study industrial relation management of
company has worth. Within UK only, it has 28,218 employee and almost 2,38,000 are attached
with Firm in whole world.
TASK 1
Relationship between business strategy and human resources practice
Long term plan formulated by organization to achieve particular objective is called
business strategy. These strategies render idea about effective way to conduct business activities,
so that goal can be achieved. Different types of business strategy are Differentiation, Focused
Approaches, Competitive Advantage and Cost Leadership(Ahimbisibwe, Cavana. And
Daellenbach, 2015) Human resources function deals with finding the right people. Provide
training to human capital so that they can help in achieve the organizational vision, mission,
future needs. Business stargazes and HRM have an interrelation with each other for instance
Business can not perform a single activity without employee and employee needs some
objectives to be accomplish. Following is the relation between HRP and business strategies is
given below:
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Differentiation strategy and Human resource-
in differentiation business strategy, business focus on developing unique product and
service, that is distinctive from its competitor's product and service. It provides opportunity to
business to charge premium price from customer for uniqueness. Develop different product
required innovation, support , ability and motivation. Starbucks Human resource manager use
different HRM practice, that helps company to take competitor advantage. For instance ability of
employee is enhanced by facilitating training and development session as per the need of
individual learning(Albrecht.and.et.al., 2015). Company send its employee to international tour
and conference so that they get exposer and experience. Monetary and non-monetary benefits
given to staff for their contribution in competitor advantage. These all Hrm practices support
innovation and differentiation organization culture. These practice help employee in its carrier
development.
Cost leadership and HRM
In cost leadership strategy Starbucks try to cut down its production cost and increase efficiency.
In differentiation business strategy recruitment, selection, T&D and employee development
practices are focused on bringing innovation in product, where in cost leadership these function
2
Illustration 1: business strategy and human resource management
Sources: (Relationship between business strategy and human resource
management practices)

consider only “ reduce the cost”. HR alien its function so that its help in lowering the cost.
These function are: increase current employee efficiency, render task specific repetitive training,
enhance the specific/short-term skills, transfer and promotion to manage human capital
requirement, correct behavioural deficiency in employee. Cost leadership is used to achieve
short term goal like, to full fill demand make by narrow market segment or to counter competitor
tactics. So in such case HR try to avoid new hiring, as new people need time to adjust and cost of
training would be high(Bratton. and Gold, 2017)
vertical and Horizontal integration
Vertical integration
Human resources' activity's alignment with organization goal and objective is called
vertical integration. Here HR manager of Starbucks try to fulfill organization objective through
his efforts (Brewster, 2017.)vertical integration activities are Recruitment, Training &
Development,HR Systems Development, Employee Engagement, performance management)etc.
Horizontal integration
Interrelation of human HR policies themselves and its relation with line manager is called
horizontal integration. These inter HR activities reinforce and support each other for the same
competencies. For instance induction program help in communicating performance expectation,
professional development program identify improvement area, performance appraisal are used to
induce motivation in employee etc(Eldor. and Vigoda-Gadot, 2017)
Model of SHRM
3

Best Fit
This model state that HR strategy must alien with organizational strategies. Apart from
organizational culture, operational process, HR practices must fit in different circumstances and
business needs. These business needs are ,structure business environment changes(PESTLE,
PORTER 5 FORCE), change in process, Employee behaviour competency. For instance change
In coffee making technology required training of employee for working on machine. Life cycle,
competitive strategy, strategic configuration are three Best Fit models. Life cycle model
describe need of different HR practice according to life cycle of business i.e. startup, growth,
maturity and decline(Graham, Dust. and Ziegert, 2018) Competitive strategies model comprises
innovation, quality and cost leadership approach. Strategic configuration model divide
organization into four categories like Prospectors, Defenders, Analyses and Reactors.
Advantage of Best Fit approach
4
Illustrati
on 2: Vertical and Horizontal HRM
Sources( integration of HRM,2015)

 It renders great flexibility to HR manager, to adopt HR tool and technique as per the
situation and current requirement.
 Help in setting priorities and directions.
 Organization learn from mistake done by other.
 Encourage change culture in Firm.
 Boost performance via facilitate change oriented T&D(Lin. and Wu, 2014.)
Limitations of Best Fit approaches
 Lack emphasis on internal factor of changes.
 Employee interest ignored in pursuit the environmental and situational changes.
 If HR fail to identify the problem, whole HR practiced will become null.
 Frequent change in Hr practice can evoke lack of trust in employee.
Resource Based view
Alignment of HRM practices, contrasts with internal resources(tangible or intangible) of
Firm is called Resource Based view SHRM. It does consider external performance. For instance
when star buck has tight budget, HR manger will try to take competition advantage within tight
budget. Manager uses VRIO framework to enhance efficiency, which helps in perform best in
adverse condition. VRIO is acronym of Value, Rarity, Inimitability and Organization(Tapia,
Ibsen. and Kochan, 2015)
 Value: HRM practices which create value(monetary and non-monetary monetary) in
origination in unfavorable situations. Like Starbucks HR manager decide to render
flexible working hour in depressive condition so that employee can do work as per their
interest. Cutting headcount will help in addition value(reduce expenses) by saving the
salary payments of extra workers. Absence of value can lead to competitive disadvantage.
 Rarity: in this, Starbucks manager try to develop or wreck the critical characteristics of
organisation. This critical factor may have negative and positive impact in company. Like
HR manager give twice compensation to employee to make ‘heroic effort’. Here critcal
factor is compensation, which is developed by HR.
 Inimitability: Rarity approach cannot be imitate for long time, otherwise it would be
threaten to business. In Inimitability approach HR try to develop characteristics that
cannot be easily surpass by competitor. For instance star buck share unique history and
workplace culture(Valizade.and.et.al, 2016)
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 Organization: Starbucks correct its HR horizontal integration, to develop sustainable
competitive advantage. HR manager try to enhance coordination and co-operation among
HR practices. For instance T&D session are linked with 360 degree appraisal result, so
that employees can get coaching on deficient skills. Once they get training, it will benefit
to company in long run.
HR practices of Performance Management and Reward-
Performance and Management: It is a process in which managers and co-workers works
together for Starbucks to observe, plan and review the work of an employee and his input to the
company. It creates positive work environment for employees to execute the best of their
potential. Rewards are like encouragement, motivation for employees which help them to build
6
Illus
tration 3: Resource based view
sources:(Importance of resource based view,2014)

positive environment for work and make them enough confident to enhance their capacity
towards good work(Lin. and Wu, 2014.)
Benefits of Performance Management and Rewards:
Employees are motivated to improve their performance:
Performance management is important to enhance and improve worker's strength in
Starbucks. Manager puts aims with workers and give well planned assessment to their
performance. Due to these employees better know what knees they have to improve or develop.
Employees understand their job responsibility:
An effective performance management in Starbucks also provide their employees a
better understanding of their regular job and aware of action and outcome required to execute
their work well. Receiving persistent and excellent comeback by employees, this will make them
more self-confidence and intense towards theirwork(Albrecht.and.et.al., 2015)
Employees are more engaged:
A quality performance management and reward system leads to Starbucks towards more
employee engagement. If workers find the performance management and rewards system fruitful
then employees feels more inspired and They don't think to leave Starbucks. Involved employees
are more effective, energetic and committed towards their work and Starbucks goal.
Disadvantage of Ineffective Performance Management:
Loss of Employee Confidence:
In Starbucks performance management should have positive and well organised
feedback system. If it will not conduct in right direction, this will lessen the self-confidence and
self-esteem as well of employee. Like if Starbucks would not give proper attention towards its
employees work, they would never know about what skills they have to work on(Ahimbisibwe,
Cavana. and Daellenbach, 2015)
Unclear Reward System:
Due to bad communication in Starbucks employees may not be able to catch the link
between their work and result and how it would convert into good performance. For example,
employees don't know how their rating will convert into reward. These uncleared links may
demotivate employees to work hard.
Manager Frustration:
7

In Starbucks team leaders give proper and equal attention to their co-worker to correct
them. But these things leads them to restless schedule and sometimes it affects manager and
employee relationship. These internal factors directly affect the team work and can bring lose for
Starbucks(Psimmenos., 2018)
TASK 2
Employee relationship are the efforts made by employer to build positive psychological
relation with employees. These efforts comprise term and condition of employment, grievance
redress al mechanism, sharing knowledge system, learning opportunities, the best HRM practices
etc. Generally trade union represent employees interest in front of higher authorities and do
negotiation for win- win situation. Kessler and Undy(author) describes dimensions of employee
relation, which are shown in figure.
Nature of employee relation
 Employee and employer are the essential parties to make employee relationship. Absence
of any party cannot be consider as employee relation. For instance if Starbucks have any
deal, negotiation with its supplier, than it cannot treat as employee relation, as supplier is
not employee.
 Collective and individual relation both include in employee relation. Individual relation is
relation between one employee and its employer, where collective relation mean contract
between trade union, association and managemen(Eldor. and Vigoda-Gadot, 2017)
 It is multidimensional concept which have other parties involved like government,
institution and regulators. star buck employee has relation with Food Workers Union
(BFAWU).
 Employee Relation is dynamic in nature, they tend to change with change in business
environment and industry structure. Like star buck now has to render training to
employee with every technical change came into food and beverage industry. Social
changes also shape the relation between these two for instance star buck now increase
medical benefit staff as UK society faces serious diseases and infections currently.
 Although HRM and employee relation have so much similarity, but there is clear
distinction in between two. HRM is the part of employee employer relation. It makes
executive policies to improve the relations(Brewster, 2017.) Like training and
8

development(HRM pratice) strengthen the relation as employee feel they are taken care
of by employer.
 It comprises both formal and informal relationship. Apart from formal T&D and other
formal strategies star buck also try to make information relation for mental wellbeing,
happiness and satisfaction to employees. They have fun in hack night, which organises in
every second weekend.
 Mutual respect, support, gratitude, open communication, mutual reliance is the key
ingredient of making healthy relation recipe.
 It is interactive process in nature where conflict, dispute, disagreement are resolved
between management and employee(Tansel. and Gazîoğlu, 2014.)
9

Theoretical perceptive of employee relation
Based on interpretation and analysis, employee relation are categorized into three major
perception i.e. unitary, pluralist and radical. Difference among these there concept are outlined
on the basis of role of union, job regulation and workplace conflict.
Unitary Perspective
Unitary perspective assume that employee and employer works together to attain the
shared and common goal. It sees whole organization as a team. It also presumed that both the
parties have similar understanding and intention, so any conflict is result of miss communication
and poor employee management only. It perceives third party( trade union and government) as
evil, which tries to divide the team. Very positive approach is suggested by Unitarists to remove
conflict between worker and management I.e. management should make rules policies in favor
of employee and employee should obey these rules. Conflict is considered as big threat(Tapia,
Ibsen. and Kochan, 2015)
Pluralist Perspective
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Illustration 4: Dimension of employee relation
Sources:(dimension of industrial relation,2014)