US Economy

Howard and Sheri Schultz on Values-Based Leadership

August 9, 2016  • Catherine Lutz

Key Points

  • Business works best when success is shared and when there’s social impact.
  • "Responsibility to build a better social contract must be felt outside of Washington." -Howard Schultz, CEO of Starbucks
  • With more transparency than ever before, and more consciousness among consumers of a company’s values, companies whose moral compasses don’t measure up stand to get rejected.

Howard and Sheri Schultz on Philanthropy and the Private Sector

Schultz Family Foundation  Co-founder and President Sheri Schultz and Starbucks Chairman and CEO and Foundation co-Founder Howard Schultz see a yawning void in leadership and social values in the United States — particularly with the national political culture — and is calling on the private sector to be a part of helping things get back on the right track.

At a public conversation on values-based leadership preceding the Aspen Institute’s 23rd annual Summer Celebration Dinner, Howard and his wife Sheri discussed the role of their Schultz Family Foundation, which works with people facing barriers to success, including opportunity youth and veterans, in a quest to improve and inspire an American social contract based on compassion, trust, and responsibility for one another.

“Sometimes motivation comes from experiencing success for the first time.”
— -Sheri Schultz, co-founder, Schultz Family Foundation

The Schultz Family Foundation started out with responsive giving, explained Sheri, who has stayed on the front lines of the foundation’s work since its founding in 1996. Struck by the gratitude expressed by a homeless boy to whom she’d given warm clothes and a meal, the Schultzes began their foundation’s work as a response to the needs they saw in their community, but with a long-term goal of identifying greater needs where they have the capacity to make a difference.

One of the foundation’s main programs is a cooperative initiative aimed at hiring 100,000 “opportunity youth.” (Formerly known as at-risk youth, the Schultzes prefer this term that recognizes this population’s positive potential.) Based on the sobering statistic that the fastest-growing population is young people between the ages of 16 and 22 who are not in school and not working, the foundation partnered with other companies to launch a series of job fairs. Besides hiring opportunities, the fairs offer mock interviews for kids to practice for the real world, help with expungement of minor criminal records, and other services to ensure the nation’s young talent is not wasted.

“It was electric, better than anything I’d ever experienced,” said Sheri of the first job fair at Chicago’s McCormick Place, where 5,000 youth showed up by 8:45 am. “It was all about hope; they knew they were going to be seen.”

It’s very difficult for many of those youth to take that first step toward success, Sheri explained, because they’ve never experienced a structure around them that made them feel they have the capacity to succeed. And it’s what those who are not in the same position don’t even think about — like how to tie a tie or the inherent disadvantages of being born black or Latino — that often inhibit success.

But job fairs are just the beginning the foundation’s work with opportunity youth, Howard added. Recognizing that they’re expensive and take an army of people to produce and staff, plans are in the works to take the efforts online. There are also discussions with retired Gen. Stan McChrystal and the Service Year Alliance, an effort aimed at launching and funding a national service year program for youth.

It’s that kind of adaptation and attunement to people’s needs that Howard has honed during his time leading Starbucks — which employs more than 300,000 people worldwide — over the past 30 years. From the beginning, he said, Starbucks followed a different kind of business model, one that strikes a balance between profits and conscience. The vast majority of employees — or partners — are offered stock options; other benefits include comprehensive health insurance and paid tuition toward an online four-year college degree. Starbucks’s veterans’ hiring initiative aims to employ 10,000 military veterans and their spouses by 2018, and its CUP (Caring Unites Partners) Fund provides emergency financial assistance to employees during times of hardship. In China, where Starbucks has been present for 17 years, partners have the same ownership program, a housing allowance, and even an annual meeting for employees’ parents, in recognition of the importance of family support in that country.

Howard Schultz calls Starbucks a “performance-driven company” that operates “through the lens of humanity.”

“It’s the understanding that business can be best when success is shared and when there’s social impact,” he said, explaining why he chose to show a video at the 2016 annual shareholders meeting that highlighted American divisiveness and called for renewed civility, compassion, and shared responsibility.

“I think this country is in need of both an economic and moral transformation, and on a parallel track corporate America needs its own transformation,” he said. “Chasing profits as a primary goal is a pretty shallow objective.”

With more transparency than ever before, and more consciousness among consumers of a company’s values, companies whose moral compasses don’t measure up stand to get rejected, he said.

In a country in which people are disgusted with their elected leaders, where they long for authenticity and “truth with a capital T,” according to Howard, responsibility to build a better social contract must be felt outside of Washington, too.

His message to the private sector? “You can’t build a company that’s great and enduring if people at the lowest levels don’t have a voice. Everyone has to feel they have a shot at succeeding, not because of education or the color of their skin — everyone must have the same opportunity. The humanity of a company is the reason we are successful.”