Building & Sustaining a Culture of Trust The Starbucks Story Dave Pace EVP, Partner Resources Starbucks Coffee Company October 3, 2006

Building and Sustaining a Culture of Trust October 3, Discussion Framework The Crisis of Trust The Starbucks Story The Evolving Role of HR Q&A / Discussion

Building and Sustaining a Culture of Trust October 3, Overview Institutions are facing a crisis of trust –Business –Government –Sports –Religion

Building and Sustaining a Culture of Trust October 3, Overview However, trust is at the foundation of exceptional performance –Risk-Taking –Accountability –Service –Creativity –Continuity

Building and Sustaining a Culture of Trust October 3, The Challenge How can organizations build and leverage trust as a competitive advantage? What is the role of Human Resources in supporting this movement?

Building and Sustaining a Culture of Trust October 3, The Starbucks Story Founded in 1971 / In current form since 1986 Fiscal year 2005 revenues - $6.4 billion (+20%) 36 countries 11,000+ stores / opening 5 per day Over 130,000 partners / Hiring more than 200 per day Stock has grown 6,500% since going public in 1992

Building and Sustaining a Culture of Trust October 3, The Starbucks Story Our business is multi-faceted Retail – the Starbucks you know Manufacturing – 4 roasting plants around the world Consumer Products –Grocery –Ice Cream –Ready-to-Drink –Liqueurs Entertainment –Music –Film

Building and Sustaining a Culture of Trust October 3, The Starbucks Story Our Work Environment –Fortune Most Admired Companies –Fortune 100 Best Places to Work –World Class engagement as measured by Hewitt & Gallup –Astonishing employee involvement in communications –Broad based support for our partners Healthcare Stock Options 401K Match Tuition Reimbursement ESPP Discounts Partner Connection Clubs CUP Fund

Building and Sustaining a Culture of Trust October 3, The Starbucks Philosophy We don’t do these things for our partners because we are a successful company … We are a successful company because we do these things for our partners

Building and Sustaining a Culture of Trust October 3, How do we bring it to life? Define what you stand for - Our Mission and Guiding Principles Communicate it broadly and often - Leadership Conferences Use it as a decision filter - What you don’t do is as powerful as what you do Allow your organization to hold you accountable - Mission Review Measure your progress - Partner View Surveys

Building and Sustaining a Culture of Trust October 3, Making It Global Trust travels Values travel Defining a Best Place To Work Flex on the tactics, not on the values

Building and Sustaining a Culture of Trust October 3, Fragility Trust is an easily violated relationship Actions must be consistent with words -Labor Hours -Apron Pockets -Facility Maintenance Recovery is not impossible, but it takes a long time

Building and Sustaining a Culture of Trust October 3, The Evolving Role of Human Resources The function is overly fixated on being a “Strategic Partner” Many in the function stop there Must be equally balanced with “Employee Advocate” Once at the table, advocacy is more critical Focus on enabling, not controlling

Building and Sustaining a Culture of Trust October 3, Summary Trust is possible, but it’s hard It requires you to be humble and stay humble The benefits are substantial