University Tuition Plan Improves Starbucks’ Reputation in the US

A recent addition to the perks that Starbucks offers its US workers has, according to the company, led to increased sales, higher staff retention rates and a record number of applications being made. It already offers both part-time and full-time American employees full healthcare insurance, and in 2015 the organisation announced its College Achievement Plan. This programme provides full university tuition for Starbucks employees who do not already have a bachelor’s degree, regardless of whether they are full-time or part-time employees. It allows participants to enrol on any degree course and reimburses their tuition fees at the end of every semester.

The company revealed that it predicts an amount of $250 million, out of gross revenues of $4.5 billion a year, will need to be spent in order to keep the programme going until 2025. It claims that such investments have benefited the coffee house in other areas too. John Phillips, the Starbucks Vice President of Global Talent Acquisition, confirmed that Starbucks’ retention rates were noticeably higher than the retail average, and that last year saw the company receive more applications than ever before.

The interesting thing to note is that the increase in applications was not just for barista positions, but also for corporate positions. These corporate candidates already had degrees and were therefore not eligible for the College Achievement Plan. This indicates that people are arguably more attracted to the company not because of the benefits it can offer them, but because of the ethics these benefits represent. By introducing this plan, not only was the employer brand strengthened and improved, but sales increased too with an 18% increase in gross revenues in the 2015 fiscal year.

While its reputation seems to be going from strength to strength in the US, the same cannot be said for its reputation in the UK. Since it emerged in 2012 that the company had only paid £8.6 million in UK taxes in its first fourteen years in the country, despite sales in the region of £3 billion. As such, it has joined a high-profile list of tax-dodging American companies in Britain. In the hope of redeeming itself, in 2015 the organisation paid £8.1 million in corporation tax, which is only a little less than it paid between 1998 and 2012.

Contrastingly, the chain’s UK staff are not afforded the same benefits as their American counterparts. They do benefit from some interesting schemes however, like being offered interest-free loans to cover rent deposits. And in response to George Osbourne raising the minimum wage to £7.20, at the end of 2015 the coffee house announced plans to increase its average UK wage to this same amount.

Despite the bad publicity surrounding the company, by appearing to pay its taxes fairly and fully last year and by working towards enhancing the lives of its workers, progress is being made to improve its image in the UK – though there is arguably still some way to go before it can enjoy the same respect it has garnered at home. It also remains to be seen whether its success at recruiting high-calibre corporate graduates will be replicated at the same rate in the UK.

Written by

Cambridge University graduate and professional career sector writer.

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