Starbucks’ Productivity Secrets: More to It Than Caffeine

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Everybody knows Starbucks- it’s one of the leading daily caffeine providers to Americans, nay the world, with over 19,000 stores worldwide and $14.9 billion in revenue last year. One doesn’t become the largest coffeehouse company in the world simply by serving a good hot cup o’ joe, instead employee productivity is a huge component of Starbucks’ continued success. So how does this Seattle giant get the most from its employees? We’ll explore that below.starbucks-coffee-drink-facts-59004229-aug-27-2012-1-600x400

One strategy that Starbucks employs to increase productivity is what is known as lean manufacturing or lean production. The essence of lean production is maximizing customer value while eliminating waste, which means cutting out any part of the process that does not directly provide value to the customer. When the recession hit and Starbucks was forced to close over 900 stores executives were forced to reevaluate Starbucks’ practices and determine how they could improve them. They found that it was simply taking too long for employees to make drinks, reducing the time baristas had to interact with customers and improve their Starbucks experience. So in 2009 Starbucks formed a 10-person “lean team”, led by Scott Heydon, to go into stores to help reduce waste. Heydon learned about lean manufacturing directly from Toyota, the company that invented the process in the first place. Many of the measures Heydon and his team implemented are simple but effective- commonly used flavors and syrups were moved to be more easily accessible, toppings like whipped cream and chocolate drizzle were moved closer to where the beverage is handed to the customer, freeing up the work station for the next beverage to be made, and baristas no longer have to bend over to scoop coffee from below the counter. The theory is that by shaving off a little bit of the time it took to complete each part of the process customers would receive their orders quicker and have a more positive overall experience.

Although immediate gains may have been hard to see, by November 2013 Starbucks was selling 46% more items per hour than it was five years prior. One of the ways Starbucks measures its productivity is through “transactions per labor hour”, which in 2008 was at eight but by 2013 had grown to 11.7, clearly an indicator that its lean techniques had made a difference.

Baristas

Starbucks Baristas

Implementing lean techniques wasn’t the only change that Starbucks made in an effort to increase their employees’ productivity. Studies have shown that a happy employee is a more productive employee, and Starbucks has known this for some time. When a Starbucks executive observed good employees having difficulty with agitated customers, instead of admonishing the employees a new training program was developed to help alleviate the stress from these types of situations. This is just one example where Starbucks identified an area of unhappiness and gave its workers the tools to succeed, contributing to higher overall satisfaction. Another change Starbucks recently made was how it implements its scheduling, which includes limiting “clopening” shifts, where employees would close the store one day and open the next, and post shifts a week in advance.

Starbucks is also known for taking care of its employees in areas that matter to them most, offering one of the nation’s most generous benefits packages. This includes healthcare and stock options for part-time workers as well as providing training through online education and even offering tuition reimbursement so employees can work towards receiving a bachelor’s degree. In an industry where the employee turnover rate is 200 percent Starbucks is able to maintain a 9 percent voluntary turnover rate.

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Streamlined processes and employee satisfaction are paramount in running a company where you are able to get the most out of what you have. For starters take a look at your workplace. How is the layout? Is space being utilized effectively? Look around during your busiest hours and see what’s going on. Are employees constantly bumping into each other or waiting around while a particular machine is being used? Are some items being used constantly while others not at all? These are all indicators that you can “lean” out your process. If you’re unsure how best to go about doing this there are professionals you can hire to help maximize the efficiency of your space usage.

Employee satisfaction is the next component you need to analyze. How is morale in the workplace? Are your employees happy to be there or do they count the milliseconds left until they can hit the road? While it’s impossible to please everyone there are some definite steps that can be taken to improve many of your employees overall happiness, many of which will come from putting your ear to the ground and listening. Although your business may not be able to provide tuition reimbursement like Starbucks does there are many smaller things that you can do that will mean the world to the people you employ.

One quick fix is to provide coffee and other hot beverages if you don’t do that already. One study showed that 83 percent of employees feel that offering hot beverages is one of the most visible daily expressions of employee benefits and 86 percent believe that companies that value their employees would most likely offer a high-quality beverage system. Of course there are other, more substantial ways that you as the employer can show appreciation for your employees. If you say you are going to give them a raise then make sure you do it, even if it isn’t that much. Celebrate your company’s accomplishments and find ways to inject fun into the workplace. Also offer employees some time off to pursue passion projects, which can provide and stimulating break from their normal work. When one Starbucks employee was asked whether they thought Starbucks takes better care of its employees or its customers, the employee couldn’t give them an answer. With a few positive changes your employees will give the same response when this question is posed to them.

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