Starbucks to workers: College is on us

Starbucks got high marks last June when it announced the company would provide partial tuition reimbursement for employees enrolled in Arizona State‘s online degree program for their freshman and sophomore years. The coffee chain also said it would fully reimburse employees for successfully completing their last two years in any of 49 undergrad programs offered by the university. Now, the coffee chain has decided it can do better and announced it will make full tuition reimbursement available to more than 140,000 employees in the U.S. as part of the expanded Starbucks College Achievement Plan.

“Everyone deserves a chance at the American dream,” said Howard Schultz, chairman and CEO of Starbucks, in a statement. “The unfortunate reality is that too many Americans can no longer afford a college degree, particularly disadvantaged young people, and others are saddled with burdensome education debt. By giving our partners access to four years of full tuition coverage, we will provide them a critical tool for lifelong opportunity. We’re stronger as a nation when everyone is afforded a pathway to success.”

According to Starbucks, nearly 2,000 employees have enrolled in the ASU program to date. The company is looking for at least 25,000 of its workers to graduate with their bachelor degrees over the next 10 years. Starbucks expects to invest $250 million in the effort.

starbucks asu

Starbucks’ announcement comes in an environment where others in retail and foodservice — including Gap, McDonald’s, Target, T.J. Maxx and Walmart — have sought to burnish their credentials as employers with pay raises and improved benefits.

Recently Gap’s global head of human resources said the company’s announced pay raise was the only action it has taken that resulted in an increase in job applications at the chain. The company expects that having a better pool of candidates to choose from will eventually result in better performance, as well.

BrainTrust

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Adrian Weidmann

Managing Director, StoreStream Metrics, LLC


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Adrian Weidmann

Managing Director, StoreStream Metrics, LLC


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Adrian Weidmann

Managing Director, StoreStream Metrics, LLC


Discussion Questions

How do you think prospective employees view Starbucks as an employer? Will the Starbucks College Achievement Plan provide the chain with a competitive advantage in the marketplace for employees?

Poll

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Max Goldberg
Max Goldberg
8 years ago

With college costs continuing to skyrocket and a college education necessary to unlock higher earning potential, this move by Starbucks is meaningful and a potential game changer. This is not increasing wages a dollar an hour. This is a lifetime investment in an employee, and it will make a difference in attracting and retaining good employees.

David Livingston
David Livingston
8 years ago

I don’t think for most employees it will have much of an impact. Their education program was for “online college” at ASU. That certainly narrows down the pool. Is this really costing ASU much and did they give Starbucks a sweetheart deal? Will lessons done online be swamped with advertisements? It looks like it could be $10,000 ($250 million/25,000) per student but is that retail or wholesale? How much will ASU refund Starbucks for finders fees getting students?

To me $10,000 over four years does not sound like much of an investment in a college degree ($1,250 a semester). Is my math wrong? My guess is ASU is hoping to cash in on the low cost of teaching online or eventually attracting students to attend classes on campus at higher rates. Starbucks benefits by attracting employees who are college material and not destined for a life of mediocrity. Overall, just a PR stunt touting big dollar numbers but then you break it down per student per year and it doesn’t add up to much. I don’t see much of a competitive advantage. Neither will the students after their first semester.

Kevin Graff
Kevin Graff
8 years ago

This gets a massive standing ovation from me! What a tremendous investment in their most important asset. You have to love the leadership they’re showing and can only hope that this more than gently pressures a lot of other retailers to step up their commitment to their staff.

This initiative absolutely gives them a competitive advantage with employees who want to get ahead, the exact type of employee you want working for you. Time for me to run down to my local Starbucks, they’ve earned my loyalty—again!

Gene Detroyer
Gene Detroyer
8 years ago

Bravo, AGAIN, to Howard Schultz. Maybe the most admirable part of this program is that after the employees get their degrees, they don’t have to stay at Starbucks.

Schultz correctly states, “We’re stronger as a nation when everyone is afforded a pathway to success.” That is the sad part. Why don’t we all recognize this? Like healthcare, why does affordable education have to be connected to employment?

J. Peter Deeb
J. Peter Deeb
8 years ago

I think prospective employees will see this latest move as a reason to apply at Starbucks. This is a definite competitive advantage (see Wegmans) that motivated individuals will be attracted to as a means to a better career. From the company’s perspective this is a way to both attract and retain employees who are motivated to better themselves and it should be reflected in even better service levels to Starbucks’ customers. For naysayers who are slow to embrace online education this is the path for more and more working people.

Richard J. George, Ph.D.
Richard J. George, Ph.D.
8 years ago

I think prospective employees view this as a unique benefit. While other retailers are raising wages, the Starbucks initiative is an important differential advantage when attempting to attract and retain the best and brightest talent. I think this will make a real difference.

As a side note, as a professor in private higher education for 40 years, I often lamented that the private colleges and universities had priced themselves out of the market. I counseled prospective students and their parents to consider going to our excellent community colleges for two years and then transfer to Saint Joseph’s to complete their bachelor’s degree. Starbucks will make a college education easier (online option) and more affordable. Amen!

Ed Rosenbaum
Ed Rosenbaum
8 years ago

What a huge investment Starbucks is making in the future. Not only the future of Starbucks, but of the nation. Hats off and applause to Mr. Schultz and the Starbucks team for doing this. They are so far ahead of everyone else when it comes to foreseeing the future and the impact of our youth. This will bring added meaning to the words loyalty and commitment. I sure wish I drank coffee so I could support this endeavor.

Bill Davis
Bill Davis
8 years ago

Congrats to Starbucks for taking this step. Helping better educate its workforce should have benefits for both the workers and Starbucks so chalk this up as a win/win. I would think people more motivated to achieve career success will be drawn to Starbucks as a way to help further their career so yes, I think it will provide Starbucks a hiring advantage.

Mel Kleiman
Mel Kleiman
8 years ago

Employees who want to grow and move ahead should love this program. It is also a great way to position the company as a great place to work.

Now here is the interesting note. Starbucks has some 140,000 employees who are eligible for the program. I have to wonder why only 2,000 of them have taken advantage of it. I don’t think it is because most of them already have a degree. I have to wonder about the drive and desire of most American workers who really want to get ahead.

I would love to add a question to the hiring process at Starbucks. What is the likelihood that you will take advantage of our college degree program?

I would want to hire those that say 90 to 100 percent. Odds are they would stay longer and also they have a strong desire to grow and get better.

Lee Kent
Lee Kent
8 years ago

Hugely successful move on the part of Starbucks. Not only do they offer a very competitive incentive, they also end up with employees who are future-oriented and upwardly mobile. Probably much more reliable and dedicated, too. Exactly who you want in front of your customers. Take an entry-level job without much of a career path and give it an incentive that the employee wants, then watch success happen.

… And that’s my two cents.

Laura Davis-Taylor
Laura Davis-Taylor
8 years ago

As Maya Angelou said, “It’s not what you say, it’s how you make people feel.” This of course is tied to what you do. And Starbucks is hitting all marks with this move to show that they truly, truly care about their employees. This, in turn, will nurture employees’ motivation to care about their jobs, and thus the Starbucks customer. I really applaud them for this. Not many chiefs would approve this “soft” investment and get the big picture. I’d love to see this move spark a trend.

Mike Blackburn
Mike Blackburn
8 years ago

To Mr. Livingston…it’s not much of stretch the institutions involved are getting something from this “PR” move, but it still remains an attractive benefit for employees. Assuming your math is correct, $2,500 a year may not be much for a big shot like you, but for someone making $20k a year, its equivalent to a 12.5% raise.

These are the types of things more companies should be doing: investing in their and this country’s greatest resource. Or should they only focus on the bottom-line (a myth created by some politician/economist back in the 80s) and find a way to outsource the jobs overseas (tongue firmly in cheek)?

Martin Mehalchin
Martin Mehalchin
8 years ago

Starbucks is making a serious effort to lead by example in showing what modern corporate responsibility should look like. Although not all of their initiatives garner the universal praise that this one does, I really admire what they are doing overall. And yes, this will make their already strong employment and career strategy even stronger.

Hy Louis
Hy Louis
8 years ago

This should get a student’s attention, however, being limited to online classes at one college seems highly restrictive. Perhaps this is a good way to retain employees. Is this really any more lucrative than Walmart’s profit sharing plan over the same time period? This doesn’t begin to touch the tuition reimbursement plans which many companies offer employees to get degrees or pay off student loan debt. Check out what retail pharmacies are willing to do for their prospective pharmacists.

Then again these types of programs are way beyond the the scope of online classes. I also recall the president is talking about making community college free and to me, this would be on par with taking online classes.

Mark Burr
Mark Burr
8 years ago

At the small independent grocer where I grew up, they offered a program of reimbursing students with a 2.5 grade point average or higher up to $2,000 per year. The program was available to all associates, both part-time and full-time equally. They were at the time the most coveted place to work for and beloved by their customers.

Now, granted, you might say $2k per year is not a big deal, but at that time it was a very BIG deal! Employees were loyal, their families were loyal, their extended families were loyal, as were many friends.

Major retailers are way behind in doing what independent retailers have been doing at their grass roots—way behind. Sure, it makes Starbucks an even more coveted place to work and definitely gives them a competitive advantage.

It is one of the largest missing links for major retailers in generating true loyalty.

Craig Sundstrom
Craig Sundstrom
8 years ago

When I was watching Mr. Selfridge last week, there came a scene where wild-eyed Harry presents another of his do-gooder schemes to the board and attempts to force it thru with the claim that it would enhance the store’s prestige and thus—ultimately—their share values, etc. etc. Finally (sensible) Mr. Crabbe steps in and asks: “We’re a retailer…what’s (really) in this for us?”

With that in mind, what’s (really) in this for Starbucks (other than the nebulous claim it will enhance the prestige, etc. etc.)? Companies, of course have long had tuition reimbursement plans, but they are narrowly focused to the companies’ management/training needs. What such need does this fill? If it’s the need for higher quality employees, then is this the best way to find (or retain) them? If the need is for Mr. Schulz to continue to act as America’s conscience, then “you’re a retailer….”

Robert DiPietro
Robert DiPietro
8 years ago

This is a great benefit and should not only help the kids/adults taking advantage of it, but will definitely help Starbucks.

Last time I checked, the cost of college is more than the $1/hr raises being given out—that’s equates to about $1,200/yr vs a college course at $3k per course.

David Livingston
David Livingston
8 years ago

In other words, this is Starbuck’s version of giving up to $1 an hour raise to employees. It’s just a way to make for a good press release.

Shep Hyken
Shep Hyken
8 years ago

College tuition reimbursement is a huge benefit. Money is important, but fulfillment and perks can make salary less relevant. Sure, there is a need for a certain amount of salary, but no doubt the benefit of college tuition can make people want to work hard, stay long and be the best they can be for the company and the customer. And, there will be an influx of good people who want to work there. Starbucks will have their pick of some of the best candidates because of the HUGE benefit/perk.

Joan Treistman
Joan Treistman
8 years ago

Starbucks is telling their employees and prospective employees that they are interested in their future and have confidence in their ability to be successful. I think this has a broad appeal, not only to employees, but also to the public. And it makes a statement about what employers can do to enhance the work force and the population overall. Other retailers will be asked about what they are doing for their staff. It’s a great conversation.

Diana McHenry
Diana McHenry
8 years ago

This is a wonderful investment in people to make a difference in the world. This is an outstanding benefit that I believe will attract employees that have desirable attributes. These employees will also have an increased loyalty to the company and this is a brand-enhancer in the marketplace.