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Starbucks As Citizen: CEO Schultz Acts Boldly On Social, Political Issues

By Angel Gonzalez, The Seattle Times (TNS)

SEATTLE — When Starbucks hosted the cream of Wall Street analysts and investors at the coffee giant’s headquarters here in December, the company did not kick off the gathering by highlighting its growing profits or its strategy for global conquest. It chose instead a video about the woes faced by the returning veterans of America’s Middle Eastern wars.

“I realize that the video you just saw and the expression and our involvement in this issue is probably an unconventional way to begin an investor conference,” CEO Howard Schultz told the audience. “But in fact, for all of us at Starbucks, it’s who we are and what we believe in.”

Such displays of social and political concerns are becoming increasingly common at Starbucks. Driving that is Schultz, a registered Democrat whose office is decorated with photographs of Martin Luther King Jr. and Bobby Kennedy.

As one of the largest and most profitable employers in the world of food retail, says Schultz, Starbucks has the heft to make its views carry influence.

“The size and the scale of the company and the platform that we have allows us, I think, to project a voice into the debate, and hopefully that’s for good,” Schultz said in an interview.

“We are leading (Starbucks) to try to redefine the role and responsibility of a public company,” he said.

While many companies talk extensively about issues that directly affect them — some energy companies, for example, like to dwell on the environment and global warming — Starbucks stands out because many of the causes it’s addressing have nothing directly to do with its core business.

In December, amid widespread angst about racial tension in Ferguson, Missouri, and New York, Schultz held an impromptu forum with staffers in Seattle to talk about race relations and followed up with a letter to all employees encouraging similar dialogues across the company. Since then open forums about race have taken place at Starbucks locations in Oakland, California, St. Louis, New York, Chicago, and Los Angeles. On Sunday, the company took out a full-page ad on the back of the front section of The New York Times that asked readers “Shall we overcome?” — a reference to an emblematic song of the civil-rights movement. Schultz is expected to devote a portion of his remarks at the annual shareholders meeting on Wednesday to race relations in the U.S. Similarly, in recent years the company has come out in favor of same-sex marriage and against political gridlock in Congress, and has dipped its toe into the red-hot gun-ownership debate by asking people not to openly carry guns into its stores. It also has sought to attract attention to growing income inequality.

So much for free-market economist Milton Friedman’s maxim, embraced by corporate America in the 1980s, that a company’s sole social responsibility is to make money for its owners without breaking the law.

Schultz acknowledged that the causes he takes on sometimes stress Starbucks staffers.

“I can tell you the organization is not thrilled when I walk into a room and say we’re now going to take on veterans (issues),” just a month after decreeing that “we’re going to do something no company has ever done before, we’re going to create college education for people,” Schultz said.

Of course, many of those political stands are easy to support and hard to oppose, running little risk of alienating most customers.

Republicans and Democrats alike can rally behind veterans, and most people hate political gridlock too. The same can be said for racism.

In many cases, too, Schultz’s pleas — such as asking politicians to set aside their differences, or asking staffers to openly discuss race — fall short of proposing concrete solutions.

“I don’t know where this will go,” Schultz said during the employee forum on race relations in Seattle. “But I don’t feel, candidly, that just staying quiet as a company and staying quiet in this building is who we are and who I want us to be.”

Starbucks’ engagement does draw considerable attention to these issues and helps position the company in the eyes of customers and actual or potential employees.

It also prompts questions about whether Schultz’s ambitions go beyond the corporate sphere. In early February, Schultz was on the cover of Time magazine, which asked whether he intends to run for office. “I don’t think that is a solution,” Schultz told Time.

Devoting considerable CEO time and company resources to societal issues that have no direct bearing on earnings goes against decades of American corporate history and Wall Street’s clamor for ever-improving quarterly earnings.

Schultz, however, says Starbucks can do both. Its size and enormous visibility make it a particularly noticeable player in what experts say is a growing trend. Some even say it may influence others to follow and give American capitalism a new flavor.

“At Whole Foods we call it conscious capitalism,” says Whole Foods co-CEO Walter Robb, a friend of Schultz’s for more than a decade. “Government has shown its limits, and its inability to act in many cases; it’s really incumbent on business to step up to a broader view of responsibility.”

To be sure, Starbucks’ well-developed sense of righteousness is a double-edged sword. It creates expectations that companies can’t always meet, says Nancy Kahn, a Harvard Business School professor who has long studied Starbucks.

“You’re going to open the door to all kinds of people holding you up to all kinds of different standards,” she said. “Very small things can trigger great rage.”

Starbucks often draws fire for not meeting various critics’ standards: not using organic milk, crowding out independent coffee shops, not paying its baristas enough. (Starbucks recently increased starting pay across the board for store staffers and contends that it offers benefits that are rare in the retail industry, such as health care for part-time employees, 401(k) plans and stock options.)

The company got a real zinger last August when a New York Times story described the stressful life of a Starbucks barista harried by unpredictable work schedules that were created with the help of software.

That story triggered quite a bit of embarrassed soul-searching at Starbucks, Schultz said. “We are better than that, and we care more.”

As the story was hitting the newsstands, the company announced it would change its scheduling system to give workers more advance notice of their hours. “We are not perfect, we have a lot going on, and that was an area of weakness,” Schultz said.

Schultz, whose father held unsteady, poorly paying jobs, has always contended that businesses’ concerns should extend beyond the bottom line.

But Starbucks’ political and social activism intensified after Schultz, who had stepped down as CEO in 2000, retook the helm of the company in 2008 in the midst of the global financial crisis.

In a few cases, the company’s activist initiatives have shown some quantifiable results.

In 2011 the company helped launch an initiative to create and retain jobs threatened by the financial crisis — which yielded $105 million in loans to small businesses that saved 5,000 jobs, according to the company.

That summer, as bipartisan bickering about the federal budget deficit raged in Washington, D.C., Schultz urged his fellow captains of industry to stop campaign donations in order to pressure lawmakers into reaching a debt deal and get the American economy out of “a cycle of fear and uncertainty.”

The move drew the support of more than 100 business leaders, according to Schultz, who listed 25 of them — including the CEOs of AOL and J.C. Penney — in an open letter. It didn’t redraw the political landscape — but it brought attention to the role corporate money plays in politics, and to the frustration of businessmen with the D.C. stalemate.

Some other initiatives undoubtedly generate more press than pressure.

In December 2012, as congressional bickering went on, Starbucks launched another campaign — with baristas writing “come together” on customers’ cups in Washington, D.C.

Sometimes a measure intended to strengthen Starbucks’ own workforce is also a very public broadside on a charged social issue — such as when it decided last year to subsidize college for its U.S. baristas, in a well-publicized deal with Arizona State University.

The move served as a vehicle for Schultz to air concerns about growing inequality of opportunities and what he called the “fracturing of the American dream.”

ASU President Michael Crow said he worked hard to vet Schultz in order to make sure it was not a self-serving scheme.

“In his case it comes from a very, very deep interest in making sure every person has an equal chance of success,” Crow said. “Most corporate leaders, they believe the path to success is the narrowing of their calculus. Howard takes the opposite view.”

Perhaps no issue has been embraced more tightly by Starbucks in the past two years than the well-being of the returning U.S. veterans.

Schultz says he first began thinking about the issue when giving a speech at West Point a few years ago, and his interest grew as former Secretary of Defense Robert Gates joined the Starbucks board.

Last March, Schultz committed $30 million of his personal fortune to research on post-traumatic stress and traumatic brain injury, as well as initiatives to help veterans transition to civilian life, such as Team Rubicon.

Starbucks has vowed to hire 10,000 veterans and military spouses by 2018. So far, it says, it has hired 3,300.

Schultz also wrote “For Love of Country,” a book about veterans with Washington Post journalist Rajiv Chandrasekaran, published last year. Last month Chandrasekaran announced he would quit The Washington Post to found a media company in Seattle that would partner with Starbucks in order to tell stories about social issues, starting with veterans.

“If you can tell me somebody else has done more, I don’t know who they are,” said General Peter Chiarelli, the former Army Vice Chief of Staff, who took Schultz to Walter Reed National Military Medical Center in Bethesda, Maryland, last year.

Schultz is not the only CEO of a huge publicly traded company to dedicate a considerable amount of personal time — and company resources — to social responsibility. Unilever CEO Paul Polman is also an outspoken advocate for corporations standing for something other than profit.

Former Costco CEO Jim Sinegal, who has weighed in on the side of Democrats on issues such as economic inequality, said being a CEO “doesn’t mean you have to abdicate your citizenship. You still have a right to voice your opinion on things. As a matter of fact, you have an obligation to voice your opinion on things.”

What gives Starbucks, Costco Wholesale, and other companies the leeway to be outspoken is above-par results. Starbucks shares have outperformed the S&P 500 index by a factor of six since early 2009.

Schultz calls that performance “the price of admission” to be able to tackle policy issues and to pay for above-average perks.

Wall Street so far seems to accept that a Starbucks investment comes with a dose of political agitation.

“Everyone knows Howard Schultz has a view on a lot of things,” says Andy Barish, an analyst with Jefferies who was present at the investor meeting in Seattle. The company has been doing well, said Barish, and “at the end of the day that’s the most important part.”
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HOWARD SCHULTZ SPEAKS OUT

  • On taking stands:
    “The divide between profitability and doing the right thing is collapsing…I also think there’s a seismic shift in what an employee wants from a company today.”
  • On Rudy Giuliani:
    “I find Rudy Giuliani’s vicious comments about President Obama ‘not loving America’ to be profoundly offensive to both the president and the office, and yet another example of the extreme rhetoric that continues to divide our country.”
  • On gay marriage:
    To a shareholder critical of the company’s support for same-sex marriage: “Sell your shares.”

Photo: Ken Lambert via Seattle Times/TNS

Why I Will Vote For Andrew Cuomo — On The Working Families Line

As Election Day approaches, I want to mention why I plan to cast a ballot that may at first seem contradictory. My aim is to admonish Andrew Cuomo for behavior unbecoming the “progressive” governor that he says he is, so I’m going to vote for him — on the Working Families Party line.

For me, voting the Working Families line is nothing new. I’ve supported the small but scrappy outfit’s “fusion” approach to politics in New York, where it is allowed by law to cross-endorse Democrats, ever since its founding in 1998 by a coalition of union leaders, community organizers, and labor activists.

Over the past decade or so, the party has expanded into other states — including Connecticut, Oregon, New Jersey, Pennsylvania, Wisconsin, and Maryland — and won some important victories on issues such as the minimum wage, drug law reform, and paid sick leave. In New York City, the party has helped elect dozens of progressive Democrats to the City Council and in 2013 vaulted one of its leading candidates, Letitia James, into citywide office as Public Advocate. (For a deeper understanding of the party’s history and strategy, it is worth reading this smart, thoughtful profile in The American Prospect.)

Earlier this year, the party was required to choose between Andrew Cuomo, the incumbent Democratic governor it endorsed in 2010, and Zephyr Teachout, a Fordham law professor challenging him in the Democratic primary. Like every minor party in New York, the Working Families Party must renew its ballot status every four years by winning at least 50,000 votes for its gubernatorial candidate – an outcome that hardly seemed guaranteed with Teachout before her surprisingly strong showing in the primary.

So the WFP nominated Cuomo, despite his various shortcomings, in a deal that obliged him to endorse the party’s program, notably public election financing, a Democratic-led State Senate, and higher minimum wage. Cuomo has since reneged publicly on important aspects of that agreement, which is bad enough, but seems to be attempting something even worse. He has sponsored another entity — the “Women’s Equality Party” — which seems designed mainly to drive the Working Families Party off the ballot by siphoning away its votes. There is no need for a separate women’s party, as feminist legend Gloria Steinem emphasized with her endorsement of the WFP, which she calls “the most important vote this year.”

Now some activists who despise Cuomo — and remain angry with the WFP for endorsing him — are urging progressive voters to support the Green Party candidate. But that is always a political dead end: The only significant consequence of a Green Party vote during the past 20 years was the Bush-Cheney administration.

Nothing quite so awful will happen this time, but the demise of the Working Families Party would mark the premature end of one of the most successful experiments in progressive politics that America has seen in decades – a combination of idealism and pragmatism, growing from the grassroots, that deserves to expand. Its thousands of activists have worked long and hard to build a vital institution with real power. Wrecking the WFP for the sake of a “protest” vote would be the electoral equivalent of a destructive tantrum.

Ironically, the only way to sanction Cuomo, who will win by a large margin on Tuesday, is to vote for him on the WFP line – and by doing so, frustrate his apparent wish to ruin them. I’m not alone in this approach, which has been stated eloquently by Nation magazine editor Katrina vanden Heuvel and former Teachout campaign manager Mike Boland. Mayor Bill de Blasio has endorsed Cuomo on the WFP line, too.

If the state’s most powerful politician is scheming to get rid of the Working Families Party, then that may be the single strongest argument for keeping them on the ballot. But it is by no means the only one.

Photo: Pat Arnow via Flickr

WATCH: Elizabeth Warren Rallies Fight For Progressive Values

Senator Elizabeth Warren (D-MA) laid out an unabashedly liberal economic vision on Thursday, calling for a higher minimum wage, tougher Wall Street regulations, and other liberal crowd-pleasers during her speech to the Campaign for America’s Future’s New Populism Conference.

Addressing an enthusiastic crowd at the Capitol Hill gathering, Warren decried the “powerful interests” that “have tried to capture Washington and rig the system in their favor,” before laying out her progressive economic platform.

“It’s a simple idea,” Senator Warren said. “We all do better when we work together and invest in our future.”

“We believe that Wall Street needs stronger rules and tougher enforcement, and we’re willing to fight for it. We believe no one should work full-time and live in poverty, and that means raising the minimum wage – and we’re willing to fight for it,” she continued. “We believe that a kid should have a chance to go to college without getting crushed by debt – and we’re willing to fight for it. We believe workers have a right to come together, to bargain together and to rebuild America’s middle class – and we’re willing to fight for it.”

Warren’s speech clearly fired up the liberal crowd at the conference. Those who hoped that the freshman senator’s vision would lead her into a presidential campaign went home disappointed, however; during a question and answer session after her speech, Warren shot down the latest in a long series of 2016 questions.

I’m not running for president,” she insisted.

Photo: Senate Democrats via Flickr

‘They’re Going To Kill You’: Why Norman Lear Founded People For the American Way

This week marks the 30th anniversary of the founding of People for the American Way by Norman Lear, the legendary “All in the Family” producer, who still bristles when anyone insists on “progressive” instead of liberal. In a conversation with The National Memo, Lear recalled how he became increasingly furious watching TV evangelists like Pat Robertson and the late Jerry Falwell. What could he do?

“I started to write a film, titled ‘Religion,’ a satire, like Paddy Chayefsky’s ‘Network.’ But then I heard Jimmy Swaggart one morning, calling on his listeners to pray for the ‘removal’ of a Supreme Court Justice — and it scared the shit out of me.” He wanted to do something more, and fast.

“I’ve got to find my replacement,” Lear soon told associates at his production company, because he intended to focus all his creative energy on the threat to freedom represented by the religious right. “I’m going to do some commercials.” Somebody warned him, “Norman, you’re a Jew from Hollywood. They’re going to kill you if you go after the religious right.” Perhaps that spurred him to go ahead and make the original TV spot featuring “a middle-aged guy,” a forklift operator who is troubled because “here come these ministers telling him he’s a good Christian and his wife is a bad Christian, based on political criteria…and he says, ‘That’s not the American way.'” The commercial ran only on a local Washington, D.C. station, but as Lear anticipated, it was swiftly featured on all of the network evening news programs, and CBS ran the entire spot.

For all the achievements of People For, as his group has come to be known, including the defeat of Supreme Court nominee Robert Bork and the defense of Sonia Sotomayor, Lear understands that the nation faces an even more implacable brand of conservatism than when Reagan was president. “The chief contender for the Republican nomination is Mitt Romney,” he says, “and there is Romney on a stage with Bryan Fischer,” currently a powerful figure on the religious right, who has said, among other outrageous remarks, that gays were “responsible for the Holocaust…he’s a lunatic!” And of course the Romney campaign has brought Bork on board, to benefit from his dubious wisdom on the judiciary.

Back in those days, Lear believes, decency was more likely to prevail between political opponents. He was quite friendly with the Reagans, despite political clashes during his presidency, and flew up to the recent debate at the Reagan Library with the late president’s widow Nancy. “The fact is, I had some very positive dealings with him,” said Lear, something he can scarcely imagine with today’s aggressive Republican leaders.

Now working on a personal memoir and other projects, Lear is no longer at the helm of People For, which is led by president Michael Keegan and a board that includes Alec Baldwin, Kathleen Turner, and “Family Guy” creator Seth MacFarlane. But the exceptionally vital 89 year-old seems proud, if mildly astonished, that the group he founded in fear and frustration has grown into a preeminent liberal presence, spanning three decades. “I would never wake up any morning in my life thinking that this is what I would be doing,” he said. Today Americans who cherish liberty can be thankful he did.