Lessons from Starbucks: Being a good corporate citizen can help weather the storm when controversy arises

Every day we continue to read about organizations whose actions appear to conflict with their pledged support of diversity and inclusion. In the case of Starbucks, this came in the form of video footage capturing the arrest of two African-American men in a Philadelphia location for failing to make a purchase as they waited for a friend to arrive.

While many people were surprised to learn that Starbucks has such a policy, it was statements from white customers who said they have never been questioned under similar circumstances that raised doubts about whether the company truly lived its values.

In today’s polarized environment, Starbucks knew it had to take swift and meaningful action or risk damaging its hard-earned reputation. In the following seven days: (1) the company issued a public apology to the two men, their customers and employees, (2) CEO Kevin Johnson personally took responsibility for the crisis and met with the two men, (3) senior management sought advice of community leaders to help assess the situation and develop a plan of action, and (4) they announced 8,000 stores will be closed for half a day to conduct unconscious bias training with staff.

So far, experts like crisis communications adviser Mike Paul are encouraged by what they see. “When you have a highly flammable emotional situation like a racial crisis you must match it with a highly emotional solution in the opposite direction.” Which is good news for Starbucks, as data shows maintaining their brand loyalty may depend on it.

According to a 2017 Cone Communications CSR Report, consumers prefer brands that share their values and beliefs. 94% of consumers consider being a good employer an important responsible business practice, which includes “ensuring the personal well-being and welfare of employees, consumers and the global community as a whole.”

Why it matters

Being a CEO in the year 2018 requires the ability to not only focus on balance sheets, but also to be more mission-oriented by taking positions on social issues. A recent report from InMoment showed “58% of millennials, 55% of GenXers and 51% of baby boomers think it’s important that brands they support invest in causes they care about. 87% of consumers stated they would purchase a product based on values – because the company advocated for an issue they cared about — and 76% would boycott a brand if it supported an issue contrary to their beliefs.”

However, legislative gridlock since the election has increased pressure on corporate America to fill the leadership void and help shape public policy regarding issues like racial inequality, sexual harassment, transgender rights and immigration protections. Complicating matters is the rise in social impact investing, where money managers are being asked by clients to identify companies who are good corporate citizens.

As a result, investors are factoring in a company’s record on environmental sustainability as well as its employee relations - known as its environmental, social and governance (ESG) footprint - when assessing its value. According to Investment News, “instead of looking at ESG factors as a soft and vague measurement of what kind of corporate citizen a company is, the mounting data related to environmental impacts and social issues are increasingly being measured right alongside such things as cash flow and earnings on the balance sheet.”

Being a good corporate citizen matters

In the spirit of full disclosure, I am not a coffee drinker (it’s a taste issue not a health choice). I am not saying that Starbucks does not warrant scrutiny or has been faultless, the picture I want to paint has to do with why certain companies are capable of weathering storms like this and others are not.

While it is too soon to know if the recent incidents at Starbucks will impact its long-term success, early indications are that a crisis has been averted as stakeholders are taking a wait and see attitude based on the actions taken by the company. One reason often cited by critics as to why activists have taken this approach is that Starbucks has a solid track record for approaching some of the most vexing social issues head on when is comes to running its business internally and externally for more than 17 years.

Let’s take a look at some of its value statements and actions Starbucks has taken that demonstrate it takes the issue of racial inequality in the US seriously:

  • Inclusive Workplace: Diversity representation is higher than the industry average at Starbucks. At the end of 2016, 43% of its U.S. partners (employees) were minorities; 66% were women. Of our U.S. vice presidents, 19% were minorities and 48% were women. Among our top 60 leaders in the U.S., defined as senior vice president or higher, 18% were minorities and 32% were women.
  • Creating a culture of warmth and belonging, where everyone is welcome: In 2015, Starbucks launched the Race Together campaign which was designed to encourage customers to engage with employees and baristas about race while waiting for their coffee. While some were critical of its execution, the effort showed its customers that Starbucks cares about this issue.
  • Strengthening Communities: Starbucks partners with Feeding America, the largest domestic hunger-relief and food-rescue nonprofit network in the U.S., to redistribute unsold food to families and individuals struggling with food insecurity. As of March 2017, it has donated 1 million meals, and expects to increase its donations exponentially to 50 million meals annually at scale.

These are just a few examples of what Starbucks is doing to be a good corporate citizen, all part of an effort to be more transparent about its role in addressing this and other issues like environmental sustainability and ethically-sourced coffee.

Living your values is not just a requirement...it is a differentiator

Earning a reputation for being an ethical company takes hard work, whether you are the size of Starbucks or a small business. But, when it comes right down to it, knowing these five rules can help you better navigate the marketplace’s constantly shifting seas:

  • Be the standard: Live your values in every part of your business and hold yourself accountable when mistakes occur. If you make governance a priority, stakeholders are more likely to support you when you it most.
  • Get educated: Understand who your stakeholders are, what issues are important to them, and what role they see you playing. Focusing efforts where it matters most will help to mitigate risks down the road.
  • Be prepared: Use your values as a guide to form positions on key issues and create an action plan when crisis occurs. Remember, it’s more important to say something quickly before social media amplifies the wrong message.
  • Be bold: Don’t be afraid to take a leadership position on a social issue especially if it impacts the well-being of your employees and customers. While some may not agree, being seen as a company with a conscience has its rewards.
  • Be collaborative: Create two-way channels of communication with various stakeholders to leverage their input on complicated social topics. A willingness to better understand the issue will lead to partnerships capable of making a measurable difference in the communities you serve.