Private companies will be called on to shoulder greater social responsibility as governments shred the social safety net to meet their financial obligations, Starbucks CEO Howard Schultz said at a luncheon held in his honor by the UA.
Schultz was at the Tucson Marriott University Park, 880 E. Second St., Friday afternoon to accept the 2011 University of Arizona Executive of the Year Award. The award is given annually by the UA Eller College of Management National Board of Advisors to executives who distinguish themselves in both private enterprise and public service.
Schultz spoke about how he guided his company through the Great Recession - and from punishing layoffs to record profitability - by getting back to Starbucks' roots: serving people. "We're not in the coffee business serving people, we're in the people business serving coffee," he said.
He said that by the time the recession and over-expansion forced Starbucks to close hundreds of stores, he and company leaders had become obsessed with the bottom line, forgetting about Starbucks' socially conscious, service-focused heritage.
Schultz described how he gambled by closing all Starbucks for retraining in 2008, followed by a gathering of store managers later that year in New Orleans to discuss the company's future. The conference included about 50,000 hours of community service in the city's flood-ravaged Ninth Ward.
"Is there a better investment to make than in our own people?" he asked the audience.
Schultz described what he called "seismic changes" in consumer behavior, among them the lasting effects of the recession, the dominance of social media and the Internet giving customers more information.
Successful companies will show worth to consumers that goes beyond their products, he said: "People want to support companies whose values match their own."
Adding to that thought, Schultz said budget crises at every level of government will force businesses and corporations to serve their communities in unprecedented ways as social services are blotted out by cuts.
To that end, Starbucks provides comprehensive health benefits for full- and part-time employees, as well as stock options, he said.
"Success and getting wealthy is very, very shallow if that is your (business') primary goal," he said. "The great enduring businesses, the really great businesses stand for much, much more than making a profit."
Did You Know
Ex-U.S. Defense Secretary Donald Rumsfeld received the first UA Executive of the Year Award in 1983. Rumsfeld was then CEO of the pharmaceutical-maker G.D. Searle & Co., now part of Pfizer.