Reigniting the “emotional attachment” with customers or brewing resentment among loyal employees?
This is something Starbucks CEO Howard Schultz has had to grapple with, and he stated his opinions publicly on Thursday. He sent a letter to all employees, a note he called his “most difficult communication to date” but necessary in order to improve the current state of the company and reinvigorate sales.
The gist of his open letter is that Starbucks is cutting about 600 positions, a move that is not surprising in some circles. This includes the elimination of existing positions and open headcount, as well as the reduction of its current workforce. Within this context, Schultz notes that approximately 220 partners have separated from the company, and that nearly all were U.S. partners serving in non-retail support roles.
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In an attempt to “step up to the challenge of being strategic as well as nimble,” Schultz adds that the company will reorganize from two divisions to four (Western/Pacific, Northwest/Mountain, Southeast/Plains, and Northeast/Atlantic). Each division will be led by a senior vice president, reporting directly to the U.S. president. Within each division, partners supporting store development, marketing, partner resources, and finance will report directly to their respective functions while still being accountable for results at the divisional level.
In other Starbucks news, the company is doing away with its lackluster warmed breakfast sandwich idea, and is also offering free Wi-Fi in stores this spring.