CEO and President of Starbucks, Kevin Johnson announced that all employees will be paid for 30 days regardless of whether they turn up for work or not. He wrote on their website “I believe it is the responsibility of every business to care for its employees during this time of uncertainty, shared sacrifice, and common cause,” he added. “I hope to see many business leaders across this country doing all they can to retain jobs, pay employees, continue benefits, and demonstrate compassion as they make critical decisions. Not every decision is a financial one.”
As the industry struggles to get to grips with the coronavirus, pivoting business models to drive-thu, takeaway and home delivery, the question of how to pay their workforce is a priority. Small companies are relying on government assistance, while big brands are conscious of protecting their brand reputation, while in the case of Starbucks, also doing the right thing by their shareholders.
It’s no doubt a good thing and a relief to their employees that they took this stance, however while Johnson pitches it as a non-financial decision, we’re sure brand protection has a part to play.
Starbucks in the past faced public backlashes over their perceived tax avoidance measures in the UK in 2012 after it emerged the company had paid corporation tax only once since arriving in the UK in 1998. Despite sales of £3 billion. With a market that has more competition than ever before, Starbucks can afford to make the payout to employees, but it cannot afford to lose the value tied to their brand.