Industrial-Organizational Psychology: Cultural Diversity

Introduction

For the first 60 years of industrial-organizational psychology there was no connection between psychologist and the legal community, that was until 1964 when the Civil Right Act, a Federal legislation aimed at reducing discrimination, was passed intending to protect the rights of Black men and Women whom where denied access to collages, restaurants, and jobs. Although discrimination is a legal issue and not a psychological concept, I/O psychologist were drawn to Title VII of the Civil Rights Act, which defined employment discrimination. The Government Would then on intervene in employment decisions-and behavior, monitoring the entire procedure to ensure fairness and selection. (Muchinsky & Culbertson, 2016). The Civil Rights Act not only protected the rights of Black men and women but identified protection for race, sex, religion, color, national origin. 

In 1990 the Americans with disabilities act (ADA) was in acted by President George HW Bush and, later amended in 2008. Disability became the seventh protected group, disability is defined by the ADA as a physical or mental impairment that substantially limits one or more of the major life activities; seeing, hearing, walking, learning, breathing, and Working. The act states that an employer must provide persons with disabilities reasonable accommodation and being evaluated for employment and in the conduct of their jobs. The premise behind me act is that individuals with disabilities can effectively contribute to the workforce and they cannot be discriminated against in employment decisions because of their disabilities. (Muchinsky & Culbertson, 2016)

This brings us to diversity, diversity is frequently cited and both popular in large corporations. The word diversity derives from diverse meaning different. Diversity especially becomes important in personal selection, representing one goal of organizational staffing. Diversity is typically measured by calculating the percentage of each of the seven groups protected by federal law in the composition of the organization’s workforce.  The application of workplace diversity creates a fundamental paradox, organizations want employees performing at the same high-level the intent of recruitment, selection, training, and performance management is to achieve equal levels of job performance in all employees across the organization. However, the intent of diversity in the workplace is to achieve that uniform high-performance through different identifiable groups of people found in society. (Muchinsky & Culbertson, 2016)

Organizations are keenly aware That diversity is an index of being a socially responsible employer, but organizations differ in the extent to which they achieve a diverse workforce (reality) and whether they talk actively about their efforts (Rhetoric), (Muchinsky & Culbertson, 2016). It is argued that it is more valuable to focus on inclusion than diversity. Winters offers this distinction; “diversity is the mix. Inclusion is making the mix work,” (Muchinsky & Culbertson, 2016). Diversity is easy to measure, it is computed by dividing the member of a group by the size of the total workforce, resulting in a percentage. Inclusion is more difficult to achieve and measure, inclusion involves people from all groups feeling that they contribute to the whole organization were still retaining their own identities. (Muchinsky & Culbertson, 2016)

Since the civil rights act, and the Americans with disabilities act were passed the American for force has increased significantly, and intern increasing in diversity. In June 2012 people of color made up 36% of the workforce, women accounted for 47%, and people with disabilities contributed to 21% of the American workforce. (Burns, Barton, & Kerby, 2012)

EEOC guidelines took diversity once step further with the affirmative action policy, an effort to reduce prior workforce discrimination. The act advocates for members of the seven protected groups to be actively recruited and considered for employment selection. There are four goals interpreted from the policy, and those are to correct present inequities, compensate past inequities, provide role models and promote diversity. (Muchinsky & Culbertson, 2016)

The following analysis will determine the reality, and rhetoric, of a world-renowned organization known for their missions in diversity, Starbucks. Analyzing diversity will show no immediate or tangible benefits, rather overtime can provide a company increased ability to obtain goals for better innovation, reputation, profits, and global impact.

Data sources

Starbucks Coffee Company is currently a leading example for dedication to a diverse, inclusive, and equitable environment. Founded in 1971 in Seattle Washington, today the Company operates more than 28,000 locations in 76 countries worldwide, with over 300,000 employees, and one mission in mind, “to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.” Starbucks values one fundamental principal behind that mission, and that is everyone is welcome. (About Us, 2018)

The coffee company’s business strategy is based on four pillars, offering a ‘third-place’, selling coffee of the highest quality, international market expansion, and technological integration. (Dudovskiy, 2017). Starbucks has positioned their company in light of being a “third-place” away from home and work, where people are always welcome to spend time, relax with friends or alone. Recently, Starbucks released their third-place policy, stating that they want their stores “to be the third place, a warm and welcoming environment where customers can gather and connect. Any customer is welcome to use Starbucks spaces, including our restrooms, cafes and patios, regardless of whether they make a purchase.” (Use if the Third Place Policy, 2018). The third-place policy welcomes diversity not only in employment opportunities, but in customer demographics as well. The second pillar to the company’s business strategy is another important aspect to the diversity and inclusion at Starbucks, International market expansion.

The company is also committed to ethical leadership and conducting business integrity by providing resources that help employees make ethical decisions at work. Furthermore, Starbucks is striving to manage the environmental impact of their company through recycling, reducing waste, conserving water and energy, and focusing on advancing renewable energy sources.

Information on how the Starbucks Coffee Company hires for diversity was found available on the company website, all pages were updated within the last year. Since 2013, Starbucks has hired over 21,000 veterans and military spouses, and are committed to hiring 25,000 by 2025. Starbucks has opened 52 Starbucks Military Family Stores across the United States, and plan to dedicate 80 more by 2022. In 2015, Starbucks committed to hiring 10,000 Opportunity Youth by 2018, these are 16 to 24-year-olds who are not working or in school, meeting their initial commitment early Starbucks expanded the goal to hire 100,000 Opportunity youth by 2020, as of January 2019 they have hired 65,000 Opportunity youth. Starbucks opened a ‘Signing store’ in Washington D.C led by a diverse team of twenty-five employees who are all fluent in American Sign Language, the Company previously opened there first ‘signing store’ in Malaysia. Female representation of Starbucks employees has reached 68 percent, while minority representation is at 46 percent. In the United States Starbucks has achieved 100 percent pay equality amongst employees conducting similar job tasks.

Understanding the consumers’ needs can maximize the value an organization can deliver to them. Starbucks isn’t just a place to buy a cup of coffee, it is a place to experience a welcoming atmosphere, a culture of warmth and belonging, and a place where everyone is welcome. Of course, it is important for the company to understand the demographics of their consumers to determine affective marketing efforts so what does the average Starbucks consumer look like? 

49% of the revenue that Starbucks receives every year comes from customers in the 25 to 40 age demographics. Young adults in the 18 to 24 age demographic makeup another 40% of the revenues Starbucks receives. Four out of five Starbucks consumers have an active social networking presence on Facebook, Twitter, Pinterest, or LinkedIn. More than half, 52%, if Starbucks consumers are not parents or grandparents one in three Starbucks consumers live in an apartment or rented home. One in for Starbucks customer saying that purchasing organic foods, coffee, and other groceries is important to them. Three out of five Starbucks consumers owns at least an entry-level smart phone about 30% of Starbucks Consumers say that they get up after 8 AM, 22% say that they get up before 6 AM. Three out of four Starbucks customers say that they try to exercise at least several times per month 51% of Starbucks customer say that they are willing to embrace creative solutions for the problems the United States faces instead of practical solutions

Results

According to Starbucks, “Embracing diversity not only enhances our work culture, it also drives our business success. It is the inclusion of these diverse experiences and perspectives that create a culture of empowerment, one that fosters innovation, economic growth and new ideas.” (Diversity and Inclusion, 2018). The numbers don’t lie, in china alone the number of stores has grown from 800 to 3,200 in the past five years. (Starbucks ceo Kevin Johnson Unveils Innovative Growth Strategy at 2018 Annual Meeting, 2018). Between 2010 and 2018 the number of total stores worldwide increased from 16,858 to over 28,000. Starbucks announced the launch of Starbucks Delivers with Uber Eats beginning 2019 and plans to roll out Nitro Cold Brew in all U.S operated stores. (Starbucks ceo Kevin Johnson Unveils Innovative Growth Strategy at 2018 Annual Meeting, 2018). The economic growth continues to increase profits for Starbucks, in 2018 Starbucks reported earnings of 4.52 billion US dollars, that is nearly double what Starbucks reported Last year, 2.88 billion. Profit isn’t the only area of interest, Diversity has been seen to increase the Coffee Companies reputability as well. Starbucks has outstanding reputation for customer service. Starbucks has been recognized with a 100% rating on the corporate Equality index and 100% rating on the Disability equality index by the Human Rights Campaign Foundation in 2015, named one for the “worlds most admired companies” by Fortune in 2009-2017, and one of the “Most admired companies in America” by Fortune in 2003-2015 (Starbucks Company Recognition, 2018)

One of the biggest weaknesses found for diversity is the cost of training, promoting programs, and lectures designed to promote cultural diversity. On May 29, 2018 Starbucks shut down more than 8000 stores simultaneously for a training session in racial bias. The training was meant to help Starbucks navigate challenges of being the third place that its leaders have spoken about. That machine came under scrutiny in April when two men have been refused access to the bathroom at the Philadelphia Starbucks location. The men refused to leave, and the manager called 911, the men were held for hours. Starbucks apologized for the incident which sparked protests and rage from their consumers earlier this month the men who are arrested reached a settlement with Starbucks for an undisclosed sum. The training required employees to use a team guy book to follow the sequence of videos, employee discussion, and a film by Stanley Nelson whom directed the film freedom riders. For employees unable to attend the training, materials were shared. (Starbucks Closes More Than 8,000 Stores Today For Racial Bias Training, 2018)

Logically analyzing the data gathered above, to determine if diversity a weakness or challenge, the strong and identifiable cultural diversity has created a sense of community amongst employees and consumers for Starbucks, created opportunities for growth and innovation, as well as brought additional profit. Despite the drawbacks of increased training cost and time, seen in 2018 when 8,000 stores were shut down during work hours for a racial discrimination training, at the years end Starbucks is continually out shining their competitors with less culturally diverse methods of marketing.

Conclusion

Cultural diversity and business model at Starbucks have made them one of the most successful companies in the world today. With effort, Starbucks has been able to improve market share, brand recognition, and profit at national and international level. To ensure continued success in the future Changes in training practices I recommended. Such changes would remedy the number one weakness found in the cultural diversity research, the increased cost of training, promoting programs, and lectures designed for diversity. It will be through continued effort that Starbucks remain at the top of the coffee industry.

References

1. About Us. (2018). Retrieved from Starbucks: https://www.starbucks.com/about-us/company-information
2. Burns, C., Barton, K., & Kerby, S. (2012). The State of Diversity in Todays Workforce. Retrieved from Center for American Progress: https://www.americanprogress.org/issues/economy/reports/2012/07/12/11938/the-state-of-diversity-in-todays-workforce/
3. Diversity and Inclusion. (2018). Retrieved from Starbucks: https://www.starbucks.com/responsibility/community/diversity-and-inclusion
4. Dudovskiy, J. (2017). Research Methodology. Retrieved from Starbucks Bussiness Strategy and Competitive Advantage: https://research-methodology.net/starbucks-coffee-business-strategy-2/
5. Muchinsky, P. M., & Culbertson, S. S. (2016). Psychology Applied to Work. Summerfield, NC: Hypergraphic Press.
6. Starbucks ceo Kevin Johnson Unveils Innovative Growth Strategy at 2018 Annual Meeting. (2018). Retrieved from Starbucks: https://stories.starbucks.com/press/2018/starbucks-unveils-innovative-growth-strategy-at-2018-annual-meeting/
7. Starbucks Company Recognition. (2018). Retrieved from Starbucks: https://www.starbucks.com/about-us/company-information/starbucks-company-recognition
8. Use if the Third Place Policy. (2018). Retrieved from Starbucks: https://stories.starbucks.com/press/2018/use-of-the-third-place-policy/

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