Strategic HR Metrics Professor Hausknect Cornell University

Nicholas Born Emma Gutierrez Lin Li Julie Zhou

November 20, 2014

From Barista to BA-rista A Statistical Analysis of Starbucks’ Tuition Reimbursement Program with Arizona State University

01.

Starbucks Stu

Ithaca Starbucks

Stu is a barista working 20 hrs per week at the local Starbucks

01. Background 02. Methodology & Findings 03. Analysis 04. Recommendations 05. Next Steps

02.

Is Starbucks’ investment in the ASU tuition reimbursement

plan wise investment?

STARBUCKS

We have been hired as consultants by Starbucks to answer…

01. Background 02. Methodology & Findings 03. Analysis 04. Recommendations 05. Next Steps

03.

11,563 Locations Across the US

S TA R B U C K S AT A G L A N C E

Top 3 Bottom 3

1.  D.C. 2.  Washington 3.  Nevada

48. Mississippi 49. Vermont 50. Arkansas

What state has the most Starbucks per capita?

Country with the most Starbucks per capita?

Most expensive city to buy a Grande Latte?

Oslo, Norway

$9.83 CEO?

15,000 employees are estimated to enroll in the ASU program in FY15

Howard Schultz

131,000 employees in the US

01. Background 02. Methodology & Findings 03. Analysis 04. Recommendations 05. Next Steps

04.

1 = No Participation in Program Out-of-Program 2 = Part-time Participation

(1-2 courses per semester) In-Program

3 = Full-time Participation (3+ courses per semester)

4 = Graduated from the Program Out-of-Program

(Graduated)

Variables in Dataset Age Tenure Gender Turnover Engagement Work-Life Balance Performance Rating Wage Band Education Level

P R O G R A M P A R T I C P A T I O N L E V E L S

The Dataset

Time Period: 1 year

01. Background 02. Methodology & Findings 03. Analysis 04. Recommendations 05. Next Steps

05.

The Dataset Descriptives

n = 4,727 Baristas

Male, 43.4% Female,

56.6%

Average Age

35.2 Years Old

Education Level Attained HIGH

SCHOOL DIPLOMA

(Mode)

No HS Diploma: 35.4% HS Diploma: 45.4%

Tech College, AA: 11.7% Bachelors: 1.4%

Advanced Degree: 0%

Average Tenure

4.2 Years

Max = 11.9 Years

Min = 0.2 Years

01. Background 02. Methodology & Findings 03. Analysis 04. Recommendations 05. Next Steps

06.

Non-participant

Part-time

Full-time

Graduated

29.3%

40.8%

23.6%

6.3%

64.4% In-Program

Breakdown of Participants in the Tuition Reimbursement Program

n = 4,727

01. Background 02. Methodology & Findings 03. Analysis 04. Recommendations 05. Next Steps

02. Analysis of the ASU Tuition Reimbursement Program

07.

BENEFITS > COSTS

08.

If Stu partakes in the ASU online program full-time

Source: http://www.bloomberg.com/news/2014-06-16/starbucks-to-pay-part-of-college-tab-for-u-s-workers.html

It is estimated that 15,000 Starbucks employees

will participate

Per year Per year

01. Background 02. Methodology & Findings 03. Analysis 04. Recommendations 05. Next Steps

09.

79.2

80.5

81.7 81.4

77.5

78

78.5

79

79.5

80

80.5

81

81.5

82

TRP 1 TRP 2 TRP 3 TRP 4

01. Background 02. Methodology & Findings 03. Analysis 04. Recommendations 05. Next Steps

Perfo

rman

ce L

evel

Level of Participation Level of Participation

Box Plot: Performance & Level of Participation

+ Performance & Program Participation

•  Performance levels incrementally increase with increases in the level of program participation; there is a dip for program graduates

•  The range of performance becomes more narrow with increases in program participation

Mean Performance Scores

10. 01. Background 02. Methodology & Findings 03. Analysis 04. Recommendations 05. Next Steps

3.1

3.2

3.3

3.4

2.95

3

3.05

3.1

3.15

3.2

3.25

3.3

3.35

3.4

3.45

TRP 1 TRP 2 TRP 3 TRP 4

•  Engagement levels incrementally increase with the level of program participation

•  The range of engagement becomes more narrow with increases in program participation

Enga

gem

ent L

evel

Level of Participation Level of Participation

+ Engagement & Program Participation Box Plot: Engagement & Level of Participation Mean Engagement Scores

11.

35.2%

50.8%

68.2%

74.9%

0%

10%

20%

30%

40%

50%

60%

70%

80%

1 2 3 4 Program Participation Level

•  Barista turnover increases with participation level

•  Graduates of the program have the highest turnover levels (74.9%)

•  Non-participants have the lowest turnover levels (35.2%)

Turn

over

- Turnover & Program Participation

01. Background 02. Methodology & Findings 03. Analysis 04. Recommendations 05. Next Steps

12.

NOT A G O O D I D E A

01. Background 02. Methodology & Findings 03. Analysis 04. Recommendations 05. Next Steps

13.

Does higher turnover matter?

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

40-49.99 50-59.99 60-69.99 70-79.99 80-89.99 90-99.99

Turn

over

Performance

•  Higher performers are more likely to leave Starbucks

•  Performance is positively related to turnover (β = 0.138)

•  Controlled factors: Age, Tenure, Gender, Engagement, Worklife_balance, Tuition_program, Wage_band, Education

01. Background 02. Methodology & Findings 03. Analysis 04. Recommendations 05. Next Steps

14.

Profile of a High-Performing Barista

Age (β = -0.165)

Tenure (β = 0.125)

Education (β = 0.125)

Engagement (β = 0.118)

* For all employees in the dataset (n = 4727)

01. Background 02. Methodology & Findings 03. Analysis 04. Recommendations 05. Next Steps

15.

N O N - PA RT I C I PA N T S 1. Education (β = 0.327)

2. Engagement (β = -0.283)

3. Gender (β = 0.245)

4. Tenure (β = -0.223)

I N - P R O G R A M * 1. Education (β = 0.251)

2. Tenure (β = -0.245)

3. Gender (β = 0.211)

4. Engagement (β = -0.206)

G R A D U AT E S 1. Gender (β = 0.338)

2. Tenure (β = -0.314)

3. Education (β = 0.257)

4. Engagement (β = -0.240)

* Includes Part-time and Full-time Participants

Factors Influencing Turnover by Participation Level

01. Background 02. Methodology & Findings 03. Analysis 04. Recommendations 05. Next Steps

03. Recommendations & Next Steps

16.

17.

RECOMMENDATION #1 Starbucks should scrap the ASU tuition reimbursement program

•  The high cost with only marginal gains in performance and engagement

•  Participants and graduates have higher turnover than non-participants

01. Background 02. Methodology & Findings 03. Analysis 04. Recommendations 05. Next Steps

18.

RECOMMENDATION #2 If Starbucks chooses to go ahead with the tuition reimbursement program, they should focus on HR interventions to address Engagement and Tenure amongst high performers

Engagement Tenure •  Promote employee empowerment

§  Give authority over store operations

•  Create opportunities for baristas to apply learnings to stretch tasks and projects

•  Create a culture where baristas’ degrees are valued

•  Reward and recognize employees for longer tenure

§  Celebrate Starbucks birthdays §  Reward with milestone bonuses

Link career development to progression in tuition reimbursement program

01. Background 02. Methodology & Findings 03. Analysis 04. Recommendations 05. Next Steps

19.

NEXT STEPS •  We do not have data on branch profitability or business

performance. We would love explore which factors drive business performance.

•  Analyze external effects such as improved customer perceptions, boosts to employer brand, and increased applications for open positions.

•  Conduct a longitudinal study to analyze effects of the tuition reimbursement program over time.

01. Background 02. Methodology & Findings 03. Analysis 04. Recommendations 05. Next Steps

Drink up! Nicholas Born

Emma Gutierrez Lin Li

Julie Zhou