Howard Schultz - People

You state that people will always be your most important assets and Starbucks' competitive advantage. You use the term partners to refer to anyone that works within Starbucks. Why? Well, when we began the company, I think the question that we were trying to answer is, let's put our feet in the shoes of our people and try and ask the question and answer it in the affirmative. Are we doing enough for our people? And what are we doing for our people? And so early on, way before we were a public company, when we were really small, we created an exemption in the U.S. for our ability to give equity in the form of stock options to every single employee, including part-timers. And the way we did that is people got 14% of their base pay and invest evenly over five years. And every year you got a new grant and it rolled over and over and over. And as a result of that benefit, people were partners in the business. And so we took the word employee out and everyone was a partner. That same opportunity was created in the U.K. as well. And if you go back in history, people were getting grants of stock that had a much lower strike price than they do today. And whether you're working 20 hours or 40 hours, we've had thousands of people across the company really be able to do things that they've never been able to do before as a result of that benefit. And again, I was criticized for this early on because the private shareholders at the time were very, very concerned about dilution. And I think the question that has to be asked then and today is, is there a better investment to make than the investment that we're going to make in our people? And I think you then have to demonstrate to outside forces that this is an investment that is going to have a significant return. And what we were able to do early on is show as a result of this plan, which we call Beanstalk, is we had a significant level of very low turnover in terms of attrition, much lower than the national average. Starbucks, probably more than any other consumer brand you could identify quintessentially, was built through the experience. And that experience comes to life every single day in our stores. And the relationship we have with our people built that experience. So in a sense, we inverted the equity of the brand to focus first internally on the culture and values of the company and then create that with our customers. So I would say that I want to find like-minded people. I don't always want to hire for the resume or the experience. And in terms of the kind of people we want to hire in our stores, it sounds trite, but we want to hire happy people. We want to hire people who have a deep sense of working in a small team and knows what that takes and is a great people person. If you're interviewing someone at Starbucks and they tell you they're not a morning person, I think that interview should actually last about five seconds. Or they don't drink coffee. When I meet people who are working at Starbucks and they tell me they love the company but they don't drink coffee, I just want to kill myself. How did this person get hired? But in addition to that, I think I have a good antenna about people and I certainly have tapped people on the shoulder over the last 30 years and asked them to do other things in the company that perhaps they were not qualified in terms of their core capabilities or discipline. But they had such enormous strengths and understanding of the culture of the company that I thought the learning curve was going to be very short. And most of those things have turned out very positively.