Introduction
Starbucks is the largest multinational coffeehouse company that focuses on coffee and snacks. The corporation operates globally, with over 23,768 stores located in different countries across the world. About 55% of these stores are owned by the company while the rest are franchised ( Epstein & Buhovac, 2014) . The company was founded on March 31, 1971 by Zev Siegl, Jerry Balwin, and Gordon Bowker. Its headquarters are in Seattle, Washington and currently, United States has over 10,000 stores. Starbucks is known worldwide for serving second wave coffee of the highest quality and taste and providing the best customer services.
Their coffeehouse chains serve coffee beverages, tea, baked goods, smoothies, and sandwiches. The overall management is centralized but the restaurants have decentralized management ( Epstein & Buhovac, 2014) . The president and chief executive officer of Starbucks is called Kevin Johnson and the executive chairman is Howard Schultz. The human resource department refers to Starbucks employees as associates and by 2016 survey, the company had a total of 191,000 associates on full-time employment working at the various worldwide locations. The corporation earned $22.387 billion in revenue in the 2017 fiscal year with an operating income of $4.135 billion and a net income of $2.885 billion. Apart from serving customers at the restaurants, the firm has a website www.starbucks.com that customers can make online orders and get them delivered.
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Starbucks Compensation Strategies
Compensation system of Starbucks Company is aligned with objectives and vision statement. The primary focus in compensation strategies that the firm has put into consideration is a compensation system that offers most favorable employee rewards and benefits that has enabled Starbucks to get and keep the most competent staff ( Schultz, 2012) . Apart from the wages, salaries, equitable treatment, and conducive working conditions, the corporation has flexible and creative compensation packages. New employees become eligible for benefits on the first day of the second month, so long as they have worked for more than 160 hours ( Schultz, 2012) . The existing workers remain eligible to enjoy the company's competitive benefits as long as they are employees of Starbucks Corporation.
The firm offers a comprehensive medical plan that covers for hospitalization, outpatient doctor visits, laboratory and imaging charges, prescription drugs, emergency care, chemical dependence, and mental health care charges ( Schultz, 2012) . Also, vision plan covers eye exams, frames, lenses, and contact while dental plan covers subsidies the cost that workers incur when they visit dentists. Starbucks allows employees to take cover for themselves and their dependents (spouse and children). Reimbursements plans are another plan practiced at the company whereby part of the workers' salary is deducted without taxation to pay for their health and fuel expenses ( Schultz, 2012) . These plans include dependent care reimbursement account (DCRA) that takes care for an individual's daycare expenses, accidental death and dismemberment (AD&D) beneficiaries or close family members enjoy if a worker at Starbucks dies, and health care reimbursement account (HCRA) that covers out-of-pocket health care charges.
Starbucks provides basic life insurance plan that covers both nonretail hourly and eligible salaried employees. The cover extends to dependent children, spouses or domestic partners. In case an associate is unable to work for a period due to an injury or an illness, the company has a disability coverage plan ( Levine, 2014) . It either provides a short-term disability (STD) plan that gives workers partial salaries for up to 26 weeks. If the employee has a medical disability that renders him unable to work after the 26 weeks, there is a long-term disability (LTD) plan that replaces STD. LTD can be purchased by hourly retail partners while nonretail and salaried workers get the cover automatically. Workers and their dependents who develop mental health problems, emotional difficulties, stress-related issues, and other personal concerns, are covered in Starbucks under the employee assistance program ( Schultz, 2012) . Other best practices employed by this firm are sick pay plan that replaces wages and salary when an associate is ill, time off in the form of holidays, personal days, and vacations. Also, tuition reimbursement program covers partners who decide to further their training while still at work.
Compensation-Related Challenges at Starbucks
One of the main problem that most workers at Starbucks are dissatisfied with is the large gap in salaries whereby some employees are paid higher wages while others are paid relatively low wages ( Levine, 2014) . This has been the reason why the company has been experiencing a high rate of employee turnover. The connection between the management and the subordinate has been lost, and therefore most employees feel the company is ignoring their struggles. The managers cannot address the issues affecting workers because they have lost touch with what is going on in the restaurants. An interview conducted by Business Insider on Starbucks Company employees found out that some restaurants are understaffed and therefore do not enjoy the various compensation packages available at the company such as time off programs in the form of holidays and personal time ( Schultz, 2012) . The firm has failed to create time to train its employees, conduct evaluation of employees, and administrative tasks which have made it difficult for the company to avail most of its strategic compensation plans.
How Starbucks applies its Compensation Practice in determining both the Negative and Positive Impacts on the Company and the Stakeholders
The company has endeavored to come up with strategic compensation programs that produce both social and economic benefits to its business and the community in which it operates ( Levine, 2014) . However, the business has established that adhering to the legislative laws that protect its stakeholders in various countries has a negative impact on the firm because it incurs a lot of losses. For instance, Starbucks ensures that coffee farmers have a sustainable livelihood by providing them with good negotiated prices, helping them to access affordable credit plans, and conducting coffee farmers training and health projects ( Epstein & Buhovac, 2014) . As a result, the farmers can concentrate on producing high-quality coffee which in turn enable Starbucks to serve its customers with the best coffee than its competitors thus making more profits by attracting more consumers. Apart from helping individual coffee farmers, the company is working in line with its mission statement to contribute positively to the communities that provide them with coffee. Starbucks has been able to address the environmental and social issues by building health centers, schools, and coffee processing factories near the coffee farms to reduce the cost of transportation ( Epstein & Buhovac, 2014) . The firm rewards its stakeholders according to the attitudes they employ in their services towards the success of Starbucks Company.
According to a recent environmental survey study conducted by world health organization (WHO), Starbucks has been ranked among the top consumer companies that are trying to employ measures that minimize environmental pollution. For example, the research team financed by Starbucks Company have come up with fertilizers and pesticides that are environmentally friendly ( Schultz, 2012) . The firm is encouraging its suppliers to use alternative commuting services other than fossil fuels, such as, biking, public transit, and carpooling by providing them with subsidies. In recent times, Starbucks have responded to stakeholders concerns about the presence of genetically modified foods in their stores. The firm has assured them that it has no intention to buy or sell products that are considered genetically modified and that they are ready to address customer's needs by coming up with feasible alternatives.
Ways in which Laws, Labor Unions, and Market Factors Impact Starbucks Compensation Practices
There are many laws in the labor and market industry that can affect Starbucks' compensation practices, such as safety laws, discrimination laws, employment laws, environmental laws, etc. For a multinational corporation like Starbucks, both local laws in various countries and international laws set by trade unions regulate their business practices ( Schultz, 2012) . Therefore, the management is forced to strike a balance between the company's objectives and the external forces. Examples of laws that impact Starbucks include employment protection laws, minimum wage policies that differ from country to country, overtime pay provisions, and forced labor laws that protect farmers from being underpaid by Starbucks and children from being forced to work in coffee farms or processing plants.
Apparently, market factors have a devastating impact on the Starbucks Corporation due to the stiff competition in the field of consumer goods ( Levine, 2014) . There are numerous restaurants dealing with high-quality food products such as five-star hotels that the firm has to compete with. Therefore, the company has ensured that it recruits the most skilled workforce by providing competitive wages and salaries, attractive benefit packages, and a working environment that keeps their employees satisfied ( Epstein & Buhovac, 2014) . Through such practices, the company has been able to attract the most competent workforce thus providing the best services that ensure customer satisfaction. On the other hand, labor unions have had an enormous impact on the compensation practices of the company. For instance, the dissatisfaction of Starbucks associates in New York forced them to form a union that enabled them to fight for employees' rights ( Epstein & Buhovac, 2014) . As a result, the employees across the world were able to get luxury amenities and more benefits that have made the company to be ranked among the companies with the best workers' compensation schemes.
Effectiveness of Traditional Bases for Pay at Starbucks Company
The traditional pay system that is applicable in the labor market of any state is based on employee's longevity and seniority at the workplace ( Levine, 2014) . The conventional system assumed that an employee acquired experience and skills with time and therefore such employees were considered to be more valuable to the company than new hires. For a firm like Starbucks that deal in serving consumers directly with food, it requires a high-performing workforce which cannot be obtained by the traditional bases of pay ( Levine, 2014) . However, the system can work well at Starbucks because it will be able to eradicate dissatisfaction among employees due to discrepancies in wages and salaries thus achieving a steady workforce with little turnover.
Conclusion
Starbucks has been on the market since 1971, and its consistency despite stiff competition can be attributed to its transformational leadership and business policies that attract the best skills in the labor market ( Schultz, 2012) . The company is incorporating technology and addressing ethical issues that have become the main contributing factors to the success of any business. Starbucks possesses the needed creativity to survive in the stiff competition experienced in the market today.
References
Epstein, M. J., & Buhovac, A. R. (2014). Making sustainability work: Best practices in managing and measuring corporate social, environmental, and economic impacts . Berrett-Koehler Publishers.
Levine, D. (2014). The New" Managerial Misclassification" Challenge to Old Wage and Hour Law; or, What Is Managerial Work? Members-only Library .
Schultz, H. (2012). Pour your heart into it: How Starbucks built a company one cup at a time . Hachette UK.
