HRM 400 - Business Ethics and Public Policy

Fall 2017-2018

ETHICS IN THE WORKPLACE

Submitted to

Dr. Anca Bocanet

Submitted by

Name: Naseeb Rashed Almansoori

ID: S0000001576
 Table of Contents
Abstract ........................................................................................................................................... 3

Introduction to Starbucks ................................................................................................................ 4

History ......................................................................................................................................... 4

Mission ........................................................................................................................................ 4

Ethics in Starbucks .......................................................................................................................... 5

Social Responsibility ...................................................................................................................... 7

Commitment ................................................................................................................................... 7

Sustainability................................................................................................................................... 8

Criticism and Issues at Starbucks ................................................................................................... 8

Recommendations ......................................................................................................................... 10

Conclusion .................................................................................................................................... 12

Bibliography ................................................................................................................................. 13

Appendices .................................................................................................................................... 14

Appendix (A): Diversity at Starbucks ....................................................................................... 14

Appendix (B): Business Ethics and Compliance ...................................................................... 16

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Abstract
“Ethics are moral guidelines which govern good behavior; therefore, behaving ethically
in business is widely regarded as good business practice. Business ethics is a broad topic which
covers cooperation and social responsibilities. Ethical behavior and corporate social
responsibility can bring significant benefits to a business. They may attract customers to the
firm’s products, thereby boosting sales and profits. They also attract more employees wanting to
work for the business, thereby enable the company to get the most talented employees and
increase productivity.” (ZHIWEI, 2015). “Using Starbucks as an example, Todays, Starbucks is
the largest coffeehouse company in the world, which established 20891 stores in 64 countries. It
provides a comfortable environment for both customers and employees. Because of their good
business ethics, they have a positive image in public eye which helps them becoming the most
successful coffee company in the world. Business ethics is very important because they may lead
to a more productive workplace and promote firm’s economy.” (ZHIWEI, 2015)

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Introduction to Starbucks
“Starbucks is a globally recognized coffee and beverages brand that has rapidly made
strides into all major markets of the world. The company has a lead over its nearest competitors
including Barista and other emerging competitors. Indeed, Starbucks is so well known
throughout the western hemisphere that it has become a household name for coffee.” (Antoshina,
2014)

History
“Starbucks first opened its doors to consumers on March 31, 1971 in Seattle, Washington
as a single store that offered some of the world’s finest fresh-roasted whole bean coffees. In
1981, Howard Schultz chairman, president, and CEO of Starbucks were introduced to Starbucks
and had an immediate attraction to the company that drew him in for years to come. Schultz
traveled to Italy in 1983, and the Italian coffee bars he frequented inspired him to develop a
vision that would bring the Italian coffeehouse tradition to the United States. This vision would
create a place for conversation and a sense of community between work and home – a third
place. In August 1987, Schultz purchased Starbucks with the help of local investors, and in that
same year, Starbucks opened its first location outside of Seattle. By the time Starbucks went
public in 1992, the chain had grown to 165 stores across the country. In just 20 years, Starbucks
has grown to 17,000 stores in 55 countries, and even though it is no longer the single coffee store
that it once was, Starbucks claims still hold true to Schultz’s original vision. Every day, we go to
work hoping to do two things: share great coffee with our friends and help make the world a little
better. It was true when we first opened in 1971, and it’s just as true today .Not only did this
vision lead to phenomenal growth, it led to Starbucks’ dedication to balancing profitably and
social conscience.” (lindseyb033, 2012)

Mission
“The Starbucks' mission statement is pretty simple for such a complex set of principles. It
states: To inspire and nurture the human spirit - one person, one cup, and one neighborhood at a
time. Starbucks is not just a place to get a cup of java. It's a lifestyle.” (Kadian-Baumeyer, 2017)

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Ethics in Starbucks
“Apart from its great coffee and a wonderful customer experience there are several other
things about Starbucks that have helped it outshine the other coffee brands. Employee
empowerment and the power of ethics are also behind its reputation. Particularly when it comes
to ethics, its focus has always been on doing business responsibly. In every aspect of its business,
Starbucks has always tried its best to remain as ethical as possible. At Starbucks, employees are
not workers, they are partners. Ethics and compliance are an important part of the organizational
culture of Starbucks. It has an ethics and compliance program specially dedicated to training and
empowering the employees so they can make ethical decisions at work.” (Pratap, 2016)

“Whether in terms of flavor or customer service the brand is relentless in its pursuit of
perfection. The customer is always a top priority. However, apart from the customer, ethics and
organizational values are also important for Starbucks. As a part of its ethics and compliance
program the brand distributes awareness material that facilitates training in ethical behavior and
legal compliance. Sensitive issues inside the organization are also investigated as a part of this
program. It has set its standards of business conduct which is provided to all the partners in the
form of a booklet. These standards guide the conduct of the partners throughout the business.
Through it, the brand provides its employees with guidance on how to voice their concerns by
using the appropriate channels of communication. It has also set an anti-retaliation policy for the
protection of its partners from any kind of retaliation against their raising concerns.” (Pratap,
2016)

“The first important focus area in its set of standards for business conduct is the
workplace environment. Starbucks makes it mandatory that everyone treats everyone with
respect and dignity at the workplace. No kind of harassment, discrimination or bullying is
permissible. The workplace environment always has an important impact on the business. By
maintaining a harmonious workplace environment, Starbucks ensures that its employees are able
to perform without any fear of hostility. Apart from it another top priority is legendary customer
service. In this regard Starbucks is much more customer oriented than the other coffee brands.
Employees treat the customers just the way they treat each other, with respect and dignity.
Another key focus area for Starbucks is diversity. It does just encourage but maintains and
ensures an inclusive environment that nurtures diversity to achieve strategic benefits. The other

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key focus areas include health and safety of all the employees as well as the quality of services
and protection of the customers. Starbucks is also very clear regarding its wage and hour rules
and compensates its workers better than the industry average.” (Pratap, 2016)

“Compliance is another important area of focus for Starbucks. Starbucks remains

committed to full compliance with laws and applicable regulations. The employees are
encouraged to ask their managers whenever they find there to be a conflict of interests happening
in any particular area. In terms of International business, it complies with the laws of its home
country as well the nation where it is doing business. It strives to remain hundred percent ethical
in all its business transactions. In terms of its interactions with the government too it strives to
follow the highest standards of ethics. It remains committed to the local laws and regulations and
encourages its employees to be truthful and straightforward in its conduct with the government
officials. Even in marketing, Starbucks strives to be fair and accurate while communicating
about its products to the customers. It competes on the basis of quality and therefore claims only
what it really makes happen. Nothing less, nothing more…. While several business try to
exaggerate their products’ benefits to attract sales, Starbucks always strives to promise only what
it delivers and deliver more than it promises. With regard to competition also Starbucks remains
fair and honest to encourage free and fair competition. It is against its values to indulge in unfair
competition with the other brands. It encourages its partners to avoid conflicts of interest as well
as any kind of gift or entertainment if that can give rise to an obligation or interfere with the
person’s duties. Apart from these things Starbucks has also set rules related to confidentiality and
any kind of inside information that is classified is not to be sold or disclosed. As a part of its
standards of business conduct the brand has also shared with its employees a model of ethical
decision making that can help them make ethical decisions.” (Pratap, 2016)

“Thus, it can be seen that ethics and compliance are important concerns for Starbucks. It
strives to act ethically and project a responsible image before the entire community. In this
regard it focuses on both empowerment and training. Empowerment is essential if you want your
employees to make responsible decisions. Simultaneously, training is also essential so that they
can remain updated on every aspect of their task and how it affects the others. Another important
thing that Starbucks tries to accomplish is community involvement which is an important part of
its CSR initiative. The foundation of Starbucks lies in ethical and fair business that is good for

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the community. It works on instilling these values in its employee’s right from the day they join.
These endeavors have also been fruitful and have helped Starbucks gain an edge over its
competitors through consistent performance.” (Pratap, 2016)

Social Responsibility
“We continue to believe that the ultimate way to scale the power of our brand is to share
the good we do so that Starbucks and everyone we touch – can endure and thrive. Starbucks has
had a commitment to social responsibility since its first year in 1971, and Schultz has attributed
much of its success today to this relationship. Likewise, analysts agree as Starbucks has appeared
on the list of the Most Admired Companies in the U.S., the list of 100 Best Companies to Work
For, and the list of 100 Best Corporate Citizens in recent year’s .Starbucks earned its reputation
through its obligation to its mission statement and values. According to its mission statement,
Starbucks aims to inspire and nurture the human spirit – one person, one cup, and one
neighborhood at a time. Starbucks has defined principles that explain how it fulfills its mission
every day. These principles are exemplified through Starbucks’ coffee, partners, customers,
stores, neighborhood, and shareholders.” (lindseyb033, 2012)

Commitment
“Starbucks commitment to ethical practices in the workplace environment is reflected in
its setting up of a Standard of Conducts for its partners. The main ethical issues addressed in the
code of conduct can be broadly categories as commitment of partners to provide quality service
to customers, conducive workplace environment for the partners and emphasis on integrity and
fairness on all dealings.” (Essays, UK, 2016)

“Commitment to provide quality service: Partners should be committed not to harass or

discriminate against customers, protect customers’ health and safety by following all proper
procedure relating to storage, handling, preparation and providing service for Starbucks
products.” (Essays, UK, 2016)

“Conducive working environment: Consistent with global human rights standard,

Starbucks promote equal opportunity in its hiring and promotion practices make decision solely
on job related criteria. Employment of partners under age of 18 will take into consideration legal

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requirement of age, hour task and ensure the partners’ education, health, safety and mental or
physical development is not affected.” (Essays, UK, 2016)

“Starbucks partners should respect each other’s dignity. All partners are entitled to work
in an environment that is free of harassment, bullying or discrimination. Officers are assigned to
enforce the rules and practices pertaining to workplace health, safety and security to safeguard
the partners.” (Essays, UK, 2016)

“Starbucks is committed to comply with laws and regulation applicable to wages. It

emphasizes that work performed should be compensated accordingly. Thus partners
compensated on basis of hours must report accurately” (Essays, UK, 2016)

Sustainability
“In 1990, Starbucks started contributing positively to the community and environment and
had included this as one of the guiding principles in conducting its business. In 1992, the
company also framed its Environmental Mission statement, in which it pledged that, Starbucks is
committed to a role of environmental leadership in all facets of our business. Since then, it had
integrated environmental policies and programs in all its operations, and held its partners
accountable for the cause.” (ICMR, 2017)

“The company fulfilled this environmental commitment by understanding the prevailing

environmental issues and sharing the information with its partners and then developing
innovative and flexible solutions to bring about change. It bought, sold, and used
environmentally friendly products and encouraged its partners to share its mission.” (ICMR,
2017)

Criticism and Issues at Starbucks

“The actions and procedures by Starbucks are very unethical according to the Utilitarian,
Kantian, and virtue theories. The only theory Starbucks would be considered ethical under would
be the individualism theory. According to the individualism theory Starbucks would be
considered ethical because everything that they are doing and the actions that are taking out are
to maximize their profits. Individualism would consider Starbucks to be ethical in every way
because they are substantially gaining profits by expanding their business and making more and
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more Starbucks' around the world. They are gaining and not losing any profit in doing what they
are doing; therefore this is ethical under this theory. If you look at this from a Utilitarianism
point of view Starbucks' actions would be unethical due to the fact that small coffee stores give
more to the people of the towns they are located than a Starbucks does. Many people love the
idea of a small local coffee shop in their towns with reasonably priced coffee. Some people
would be happy with a Starbucks instead of their small coffee shop but the majority of people
enjoy their local coffee shops. I believe that even as a person who loves Starbucks you wouldn't
want to see a coffee shop that has been in the town for years goes out of business. Small coffee
shops bring more happiness to more people than Starbucks does. Starbucks' high and overpriced
coffee is also another ethical issue under the utilitarianism theory. Starbucks can charge such
high prices because most people will still buy their coffee anyways, especially if they run all of
the other coffee shops out of the neighborhood. The stakeholders of this issue are the Starbuck's
stockholders, Starbucks coffee drinkers, and especially small coffee businesses. All of these
people are affecting by the actions that Starbucks is acting out.” (Eckert, 2013)

“Starbucks' actions are also unethical under the Kantianism theory because they are
disregarding small businesses to gain their own profits and being completely selfish. They are
destroying these small coffee businesses and running them out of business just so they gain more
customers and profits, which is unethical according to this theory and the formula of humanity.
Starbucks is treating people as a way to make profit and not as valuable people. Their expansion
techniques are not coming from goodwill and they are not rightfully motivated. Another aspect
of the Kantianism theory that is unethical about Starbucks' actions is regarding the formula of
autonomy. This formula states that the company must follow the legislation that they have set for
themselves. Starbucks' does not do this because their motto is about treating each other with
respect and dignity. They clearly do not follow this model because they don't show respect or
dignity to the people of the community and the owners and customers of the local coffee shops
that they are continuing to put out of business.” (Eckert, 2013)

“Under the virtue theory Starbucks is once again considered unethical because they
opened many of their stores too quickly so that the smaller businesses would go out sooner.
However, this plan failed and they ended up having to close their stores because they were
prematurely opened. Starbucks also did not act virtuous for other reasons such as them paying

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way more than the market value of certain leases to kick competitors out. This is not ethical at all
especially under this theory.” (Eckert, 2013)

“Starbucks is unethical under every theory except for the individualism theory, where
their only concern and goal is to make profit, which is exactly what they do. Starbucks is
purposely and selfishly putting small coffee shops out of business to gain more profit
disregarding many of the stakeholders including the customers and owners of these small coffee
businesses that are losing business and having to close. Many of their actions are extremely
unethical and unjust.” (Eckert, 2013)

Recommendations
“After studying about the topic that we chose that is ethics at workplace, we found that
there are many ethical practices practiced by employers as well as employees in Starbucks which
is the company that we chose. We have some suggestions on how they can further improve
practicing ethics in Starbucks.” (Essays, UK, 2016)

“First of all, we suggest Starbucks to use ethical screening for job applicants during
interview. Ethical screening is the process of checking these job applicants against certain moral
standards and removing those who do not conform. This can be done by checking the resumes of
those applicants which contain the behavioral information that reflects the attitude of the
applicants. The interviewers should also interview them about how they managed the ethical
issues faced by them at their previous workplace and how they are going to solve the ethical
problems cases when they face them in the future. Besides, they should also make sure the
applicants share the same ethical values with the company and will maintain them on the job.
This can prevent one unethical employee to have a bad influence on others in the company that
may ruin the good image of an ethical company.” (Essays, UK, 2016)

“Moreover, Starbucks can expose new employees to the company’s code of ethics, code
of conducts and ethical decision making process during the orientation to improve the ethics in
the company. The company’s codes of ethics and conducts act as its conscience and provide a
common ethical reference point for employees. By reviewing these conducts, employees will
know about what they should do and what they should not do in the company. They also know
whether the issues appear in the future are considered ethical or not ethical according to the

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company’s code of ethics and code of conducts and solve it with the best and necessary
solution.” (Essays, UK, 2016)

“Furthermore, Starbucks can improve ethics in the company by providing ethics training
workshops for all employees annually to supplement ethics codes. The managers that organize
these training workshops should provide some real cases with ethical violations of Starbucks’
ethics code and let them think carefully and discuss among themselves about what they should
do for those scenarios. After that, the managers should teach them the correct and best solutions
to solve these kinds of ethical problems. Through these workshops, the employees will know
what to do when they face these kinds of ethical issues in the future and the relationship between
employees will also be enhanced through the interaction in the workshop as well as build trust
between each other.” (Essays, UK, 2016)

“We also recommend Starbucks to strengthen the ethics which are individual rights and
distributive justice of the work unit by rewarding those employees with ethical behaviors equally
and punish those with unethical behaviors through work goals and performance appraisals. The
managers should praise those employees that achieve the goals in an ethical way or even give
them a certificate for being an ethical employee to encourage them. This will also act as a
motivation for other employees. At the same time, they should give the same punishment to
those employees with unethical behavior by giving them a warning letter so that they will not do
it again in the future. This can also act as an example for other employees so that they will not
make the same mistake as these unethical employees. By doing this can avoid developing moral
confusion in the company.” (Essays, UK, 2016)

“The next suggestion for Starbucks is the managers or the direct supervisors of the
employees should model appropriate behaviors in themselves as they are actually the most
important ethics reference point for the employees. Ethical behaviors in a company start at top
management because the employees tend to follow the behavior and action of their managers
towards an ethical issue. It has a greater influence on employees compared to the stated policies
of the company. Therefore, the words and actions of the managers should always be aligned with
the company’s code of ethics and code of conducts. They should act with integrity all the time in
order to maintain an ethical workplace.” (Essays, UK, 2016)

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Conclusion
“Starbucks is one of the most ethical companies in the world. Starbucks was proud of it
ethical ways such as community, sourcing, environment, diversity and wellness in doing their
business. It has openly display its commitment to being social responsibility. The program of
Business Ethics and Compliance is to support their mission and help to protect their culture and
reputation. Starbucks has emphasis their employees into three sectors which is global human
rights, equal employment opportunity and health care.” (Essays, UK, 2016)

“In Starbucks, they are using three principles in workplace ethics. First is utilitarianism, it
can divide into two types which are act-utilitarianism and rule-utilitarianism. Second is
distributive justice who means sharing of the benefits and burdens of our lives among people.
Third are rights, rights played a central role in ethics and it is important to ensure that the
freedom and well-being of each individual will be protected when others threaten that freedom or
well-being. There are 3 key principles in Starbucks. (1) Ethical sourcing of coffee, (2) our
partner and (3) Ethical environmental resources” (Essays, UK, 2016)

“The main ethical issues addressed in Starbucks’s code of conduct for its partners can be
categories as commitment of partners to provide quality service to customers, create a workplace
environment which is conducive for the partners and emphasis on integrity and fairness on all
dealings.” (Essays, UK, 2016)

“After study, we found that there are many ethical practices practiced by employers as
well as employees in Starbucks. Starbucks should use ethical screening for job applicants during
interview. Starbucks also can expose new employees to the company’s code of ethics, code of
conducts and ethical decision making process during the orientation to improve the ethics in the
company. Besides that, Starbucks can improve ethics in the company by providing ethics
training workshops for all employees annually to supplement ethics codes. Moreover, Starbucks
also need to strengthen the ethics which are individual rights and distributive justice of the work
unit by rewarding those employees with ethical behaviors equally and punish those with
unethical behaviors through work goals and performance appraisals. Last but not lease,
Starbucks should model appropriate behaviors in themselves as they are actually the most
important ethics reference point for the employees.” (Essays, UK, 2016)

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Antoshina, L. (2014). Business Ethics (Starbucks). Retrieved November 24, 2017, from
https://www.academia.edu:
https://www.academia.edu/6908260/Business_Ethics_Starbucks_

Eckert, K. (2013, February 17). Starbucks Scolded for Stifling Competition (2006). Retrieved
November 24, 2017, from http://businessethicscases.blogspot.ae:
http://businessethicscases.blogspot.ae/2013/02/exchange-inc-v_3188.html

Essays, UK. (2016, October 30). Workplace Ethics - Starbucks Case Study. Retrieved November
23, 2017, from https://www.ukessays.com:
https://www.ukessays.com/essays/business/workplace-ethics-starbucks-case-study.php

ICMR. (2017). Coffee Cup Woes: Starbucks’ Environmental Sustainability Challenge. Retrieved
November 23, 2017, from http://www.icmrindia.org:
http://www.icmrindia.org/casestudies/catalogue/Business%20Ethics/Coffee%20Cup%20
Woes%20Starbucks%20Environmental%20Sustainability%20Challenge-
Excerpts.htm#Starbucks And Sustainability

Kadian-Baumeyer, K. (2017). Case Study: Business Ethics at Starbucks. Retrieved November

23, 2017, from https://study.com: https://study.com/academy/lesson/case-study-business-
ethics-at-starbucks.html

lindseyb033. (2012, November 20). PAPER 2- BEYOND THE COFFEE: THE ETHICS OF
STARBUCKS. Retrieved November 23, 2017, from https://bizgovsocfive.wordpress.com:
https://bizgovsocfive.wordpress.com/2012/11/20/paper-2-beyond-the-coffee-the-ethics-
of-starbucks/

Pratap, A. (2016, December 2). Ethics and Compliance at Starbucks. Retrieved November 23,
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compliance-starbucks/

ZHIWEI. (2015, September 17). Importance of Business Ethics: STARBUCKS case study.
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case-study/

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Appendices

Appendix (A): Diversity at Starbucks

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Appendix (B): Business Ethics and Compliance

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