On June 16th Howard Schultz, Starbucks CEO,
told a meeting in New York of hundreds of top-performing employees—and their
families—that the firm will pay for their university education. From later this
year, it will cover all the tuition fees in the final two years of college for
staff who work at least 20 hours a week, and may also contribute to the cost of
their first two years. The only conditions are that they must get their degree
online from Arizona State University, and achieve a certain number of course
credits.
This is highly
caffeinated PR, at a time when cheaper rivals in the fast-food industry are
under attack for low wages from disgruntled workers and unions. Starbucks
already offers good health-care benefits and employee share ownership. However,
Mr Schultz says that, “When we talked to our people, help with college was the
thing they wanted most.” Of the firm’s 135,000 retail employees in America, 28%
are graduates, 32% are undergraduates and 42% (including some graduates) are
not currently studying but would like to be. Mr Schwartz says he plans to spend
“tens of millions” on the scheme; 15,000 staff may benefit in the first year.
Starbucks is hardly the first firm to
pay college fees for some staff, though other employers typically do so only to
give them specific skills needed by the firm, and require them to remain on the
payroll for some period after completing the course. Starbucks employees will
have no such obligation, though Mr Schultz says he hopes they will see enough
career potential with the company to want to do so.
He thinks shareholders will benefit
because employees will be more motivated and loyal. Although the attrition rate
at Starbucks is well below the fast-food industry’s average of around 110% a
year, it is still said to turn over two-thirds of its workforce annually.
Reducing that, and thus the cost of recruiting, training and integrating new
workers, could save a fortune. Mr Schultz says he hopes eventually to offer
similar help with higher-education costs to employees outside America.
Since Mr Schultz returned to run
Starbucks in 2008 when it was in deep trouble, almost everything he has tried
has paid off, from selling healthier food to developing instant versions of its
coffee..
Investors reacted well to Mr
Schultz’s College Achievement Plan. Starbucks shares rose slightly on the news,
to just over $75, up from $18 when he began his rescue mission. Perhaps other
bosses should drink what he’s drinking.
