The 2 myths Starbucks’s new CEO needs to ignore, according to a Columbia business school professor 

Starbucks’s new CEO, Brian Niccol, has several challenges ahead of him. 

Niccol has already faced criticism for urging corporate employees to work from a Stabucks office while he enjoys a hybrid schedule working from his home in Newport Beach, California and super commuting using Stabucks’s corporate jet. Fast Company estimates that this commute would emit 1,000 tons of CO2 annually.  

He also has inherited a years-long standoff with the company’s unionizing workforce. But last week, Niccol signaled a new era of cooperation.

“I deeply respect the right of partners to choose, through a fair and democratic process, to be represented by a union,” Niccol wrote in a letter to the Starbucks Workers United bargaining delegation. “If our partners choose to be represented, I am committed to making sure we engage constructively and in good faith with the union and the partners it represents.”

By doing this, he has taken the first step toward turning the company around and reinstating a healthier work environment. But this doesn’t come without its difficulties. I am a professor of business strategy at Columbia Business School and the chair of the Management Division. Here what Niccol should keep in mind.

Leadership myths

According to reports, many Starbucks workers are overworked, overwhelmed, fatigued, and anxious to be treated better. Far too often, leaders in Niccol’s position trap themselves in the “either-or” mindset—that is, that either shareholders or employees can be prioritized, but never both. However, this misstep can prove costly. Instead, leaders ought to shift their mindset to retain their talent, instill a motivating culture, and thus, drive up customer satisfaction. This begins with debunking two common myths: First, that prioritizing employee needs compromises profit, and second, that employees work only for a paycheck.

Take the case of Best Buy: Upon taking over the struggling electronics retailer, former CEO Hubert Joly ignored suggestions to cut his workforce and squeeze out more from his employees. Instead, Joly provided more autonomy to workers, increased investment in employees’ development, and expanded employee benefits. Now, experts credit him with improving BestBuy’s employees’ experience—and the company’s bottom line.

Prioritizing employees can create wins for employees and wins for companies. Companies that put workers and employee experience first will, in return, see higher overall productivity, more innovation, and an improved customer experience. And this isn’t just pure speculation. Study after study has shown that an employee-centric culture positively impacts firm performance. 

Best Buy isn’t alone, either. CostCo has become known for being an employee-friendly organization, providing much better pay, benefits, and career opportunities to its employees than many of its competitors. CostCo’s better treatment towards employees has resulted in a better customer experience, lower turnover, higher sales per square foot, and more opportunity to add private labels with higher margins. 

In a business in which customer experience is critical, like Starbucks, you need happy employees to deliver that experience. As of now, Niccol and the Starbucks executive team seem to be internalizing this mindset, and need to convince their investors about the promise of an employee-centric turnaround.

How to implement an employee-centric turnaround

This turnaround is impossible for companies that assume that their employees only or mainly care about a paycheck, no matter the mental, physical, or emotional toll it may take. Leaders need to shift their mindset away from using only monetary compensation to motivate employees. Creating an atmosphere that is engaging can often motivate workers better than the promise of their next paycheck. Insights from behavioral science on human motivation provide us with two guiding principles that could shift a firm’s focus toward its employees and help to achieve greater employee-centricity.             

The first principle is that values are valuable. This is why companies such as Unilever have refocused their entire strategy around creating “brands with a purpose.” The importance of a purpose extends further than just the product or service, too. Meaning and purpose are valuable for employees, too. As former CEO of Unilever, Paul Polman said in his book: “Purpose-driven companies run by purpose-driven leaders are better for society, outperform their peers, and attract the best people like moths to a flame, both Patagonia and Unilever are among the most in-demand employers in the world.” Firms such as Starbucks must be clear about their purpose beyond returning a profit. When their employees feel that they make a real impact on a daily basis higher engagement will follow.

The second principal is to treat every employee as an individual, not a number. As stated by a worker at an Amazon fulfillment center: “It is very important that area managers understand that associates are more than just numbers. We are human beings.” Employees need to be treated as such. 

Many companies have latched on to the customer customization and feedback aspects of business which are core to a customer-centric strategy. When it comes to employees, though, we rarely tailor to individual needs or even ask for feedback. Instead, companies conduct annual employee surveys (which everybody hates to fill, knowing they are unlikely to ever be read, no less make a difference). That must change.

Now, there is more data than ever on employees, which can allow executives and team leaders to tailor their company to those wants and needs. Applying this approach, that both means listening to employees and understanding what a typical “employee journey” is.

For example, Eli Lilly, in its effort to promote more women and people of color, created an “employee journey” tool, similar to their “customer journey” tool, to understand pain points for underrepresented minorities. As a result, Eli Lilly saw a 6% jump in the number of women of color in vice president-level positions between 2016 to 2019. Being focused on every individual’s unique experience helped Eli Lilly to get closer to its diversity goal, providing further evidence towards the value of a personal company-employee relationship. 

Niccol has a tall order in front of him but by engaging with one of his most-important stakeholders—his employees—I believe he can turn the company around. Not only does prioritizing employees not compromise with profits but by addressing their needs, which are more than just a paycheck, companies can increase productivity, and gain a competitive edge for long-term business success.