Starbucks (NASDAQ: SBUX) Addresses Low Wages Issue

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By Thomas Copeland on October 18, 2014 Consumer Staples

A while ago, when Starbucks (NASDAQ: SBUX) introduced its e-tipping formula; the issue of less wages for its employees came up in debates. E-tipping was a way to make tipping easier and convenient for the customers. But the facility was available at limited stores, and this solution just wasn’t good enough to tackle the low wages problem. Past figures have revealed that StarBucks (NASDAQ: SBUX) is one of those firms which are known to pay minimum wages to their employees, regardless of the fact that Howard Schulz, the CEO and founder of StarBucks (NASDAQ: SBUX) is a billionaire. But this issue has now reached a point where it can’t be ignored anymore and the top management has finally taken firm measures to handle the situation. There was also added pressure from external sources. The public corporation addressed the workers and told them that from the beginning of next year, the company plans on improving and enhancing three important areas: performance and pay, recognition and benefits.

Starbucks (NASDAQ: SBUX) plans on adopting an easy and simple strategy to increase pay rates. It aims at attracting new partners or employees, by incrementing its start rates throughout the US market. This will help increase the pay rates and give the company an edge when it comes to attracting new employees.

The baristas and shift supervisors will also be given competitive market salary and will be eligible for lump sum increase, as their tenure progresses. Regardless of the time period, their pays will be reviewed annually. The company will also create individual packages for each employee, giving them initiatives regarding promotion and increments.

Even though these changes aren’t effective immediately but the company will make sure it’s worth the wait. Other benefits include:

- Development & Recognition – this comes in an attempt to motivate employees to work hard by giving them recognition. Other recognition and promotional programs are also underway. Furthermore, employees will be given the opportunity to discuss their job, work related problems, personal goals and aims with the manager. A “Partners of the Quarter” bonus will be given to those who exceed expectations, either on their own or through the Barista Trainer premium.

- In addition, partners will also be given food benefits. Through this, they will be able to enjoy the privilege of free meals while on the shift. Employees will be able to choose one free food item per shift, ranging from the pastry to any ready-to-eat pack. Partners will also be given registered partner cards, through which they can enjoy the StarBucks (NASDAQ: SBUX) experience, both on and off the work shift; at discounted prices.

These latest moves by StarBucks (NASDAQ: SBUX) will also put pressure on McDonald (NYSE:MCD) and Wal-mart (NYSE:WMT) to make changes and bring about decisions that address their low wage problem. The surprising fact here is that all of these companies are huge names in the market and it’s expected of them to not only pay their employees well but also provide healthy work experience.