Sessions with System & Soul

Hot Takes: What Starbucks Just Taught Us About Lazy Leadership

• Benj Miller, McKenzie Decker • Season 1 • Episode 29

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Starbucks scrapped merit-based raises for a flat 2% bump—and high performers are furious. Benj and McKenzie unpack why this “fair” move backfires, plus a hot take on when assigning KPIs actually hurts your team. If you're leading culture, systems, or performance, this one’s for you. 

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Benj Miller:

Good morning, Mackenzie. Good

McKenzie Decker:

morning. How are you? Good morning,

Benj Miller:

listener. We're back with another episode of Sessions and it's one of our favorites and one of your favorites. We're doing some hot takes today. So this is sessions with systems and soul and sometimes we just like to have a little fun and react to something that's got us thinking or maybe lowercase triggered in that we saw. I don't know, but we're gonna react to it. So, Mackenzie, you're up first. What do you got this morning?

McKenzie Decker:

So I think I saw this on LinkedIn and it caught my eye. So I'm gonna read you, um, the short post. Okay. And then I wanna get your thoughts. In recent news, Starbucks is replacing merit-based raises with a uniform 2% bump for everyone. It might sound fair, but they just angered every high performer on their team. And so here's some quotes from some supposed high performers. The company obviously doesn't care, so why should you put forth minimum effort? Yeah, I'm locking into doing the bare minimum mode. I am gonna do my part, but I'm not overextending myself and I'm leaving on time. All caps, the best raise you can do and it becomes increasingly true, is to jump jobs for better offers. Thoughts?

Benj Miller:

Woo. You're pressing my buttons this morning, so you're gonna get me to get us all canceled, but here's what's happening.

McKenzie Decker:

I love this idea. No, I'm just kidding.

Benj Miller:

This, this absolutely worries me. Um, it's also super lazy from a managerial standpoint. Like, think about why, why would you actually do this?

McKenzie Decker:

Right? And,

Benj Miller:

and period. Uh, that's lower than the rate of inflation, 2% like,

McKenzie Decker:

right? So even

Benj Miller:

everybody getting a pay deduction every single year.

McKenzie Decker:

Yeah, it's like, oh, here's a Starbucks gift card.

Benj Miller:

I mean, you see it, you see the response in the comments, right? Mm-hmm. There's now no incentive to, I mean, may maybe promotion, you get a promotion, work your way up. I, I don't know. But there's other ways maybe within Starbucks to, to be compensated. But, um, coming out with a policy like that and being proud of it just boggles my mind.

McKenzie Decker:

Yeah, I mean, even what you just said about, so politics aside and the implications there, a 2% increase doesn't give incentive to anyone of any, you know, whether you socialist, non socialist liberal or not. It's like, I can't imagine that anybody, even if you believe in kind of the. Equality of all. Like I can't imagine that 2% is gonna be motivating on a personal level. Um, and I'm, I'm guessing like, is this, do you think it has something to do with them protecting, like their bottom line in some way? Or protecting, uh, internal process in some way? Like why would a company move to kind of a. An overarching like, stamp of reward for everyone.

Benj Miller:

I, I, I really can't tell you. This boggles my mind. It feels, it feels lazy, is the nicest thing that I can think about it. Because, uh, and what often happens in bureaucracies is we make a policy because one person screwed something up. Hmm. So somewhere in one store in the middle of America, some manager gave a 10% raise to one employee that was killing it, and everybody else got mad, and then they filed a lawsuit and then it got to corporate. And so now we just have to make this air quotes fair for everybody.

McKenzie Decker:

That's a good point. It's like we've joked before about, it's like the person that wears flip flops to the office and it's like we don't deal with that one person wearing, violating the dress code. We just set a really strict dress code and it's like if we deal with every problem that way, we, we really end up removing incentive for everybody or just kind of, kind of punishing everyone for the, for the mistakes of one.

Benj Miller:

Well, and we also don't go have the conversation with Bob to say, Hey Bob, when you show up in flip flops. It feels like you don't care'cause you couldn't take the time to put on socks and shoes.

McKenzie Decker:

What I think is, um, unfortunate about this is I think we know for a fact whether it's, you know, a Starbucks barista or it's somebody who works in accounting, like everybody is engaged differently. They need a different thing out of the work that they do, whether it's they need learning opportunities or they need financial incentive, or they need social, uh, social type of community. Like there are different ways that people are incentivized to do their best at work. And it, it does feel like it doesn't meet any requirement there, it doesn't even meet the financial. Um, requirement. And so I think it stands out, especially for to be such a global brand, being in, in that kind of position, it makes, it does make a statement that does concern me for how we, how we think about incentivizing and engaging our employees.'cause there's just so many ways that. As we do small work, uh, as we do work with small businesses, we are constantly encouraging them to make the conversations they have and the, and the performance plans. We want those things to be individual. Yeah. Um, and I, I personally think like human dignity. Happens in a one-to-one sense. Um, it, you can't really, I, as I say that, I'm like, I'm sure there's, I'm sure that's not a hundred percent true. There are people that can do human dignity at scale, but I do think it starts one-to-one. Right.

Benj Miller:

Right, right. There's a, there'd be a really interesting case study on this right now. If you looked at the performance and growth of Starbucks versus Dutch Brothers. Um, we are, unfortunately we don't have them. We're in Atlanta. I don't know that there's any in the state of Georgia, but out west, they're, they're growing like mad and their interview process is rigorous. Their training process is rigorous. Every employee actually has a quota of what they have to give away every single day. Um, in terms of, but it's all like based on, you can't just have your mom come through the drive through you, like you'll get in trouble. But like when you see somebody that's. You know, got a car full of kids and they look like they're struggling, you're gonna give 'em whatever, and they have a quota for that as part of, so there's this, there's this autonomy that comes because you've trained your people so well. There's this culture and the number of resumes they get for every job is astronomical. And they're growing. Like Matt Starbucks is like, Hey, we, we've. We've stalled our growth, we've stalled our stock price, we've gotta figure something out. Okay? We can add protein into the shakes. Uh, but that's minimal, right? So what are we gonna do? Well, we're gonna squeeze our employees like it's the exact opposite of what Dutch Brothers is doing. And I, I think just compare the two. And, and it tells, it tells the story of what culture and brand and leadership, um, all bring to the story. And when you get to that bureaucracy where we're pinching pennies, um. It all end up always ends up affecting the customer, and that's what they're not thinking about.

McKenzie Decker:

The culture has a very long tail. Um, yeah, and it, and it will continue to, it'll affect it. It not only, we'll see, you'll probably see a massive, and maybe it's already happening. You already see a massive amount of unhappy employees, disengaged employees, people quit, people just. Clock out on time or five minutes before, whatever it is. But they're gonna see a sharp decline. I would, I would imagine in the quality of person that comes their way.

Benj Miller:

It'll be fun to watch. We should do a, uh, we'll, we'll circle back in a year and do like a year in review what happened. Um, yeah, on this one. Alright, before I jump into my hot take, gotta give the shout out to fist bumps. They make the show possible, they make it fun to do and they help it get out to. Everyone like you, so I hope you're getting massive value out of it. A lot of it's a big thanks to them. And if you like working on yourself and you want to invest in your leadership and culture and all the things we've just been riffing on, we're actually gonna do, uh, public workshops and we've got five workshop. Coming over the next couple months, you can sign up for one or you can get a deal and sign up for all five. Uh, the links in the show notes, uh, in the banner if you're watching YouTube. So join us for those. It's gonna be really, really awesome. Mackenzie will be there. I'm gonna be there. Our very good special friend John Ott. Who's been on the show before is gonna be there, so tons and tons of value. And maybe you'll meet somebody new and cool. So here's my hot take. It's coming out of a conversation that I had and I found myself saying something I've never said. So I'm super curious your reaction. So I've gotta give the context and the context was. Um, A COO who really wants everybody in the organization to have their number. Okay. We, we know that's a good thing, like we teach that. The more I had this conversation, I realized that it was his way of avoiding leadership and people didn't have, it was obvious he didn't have the right structure in his organization. It was obvious that people didn't have the clarity of their role. And so I told him, this is my hot take, that if you give everybody in your organization a number, it's going to backfire. And I equate that to like, my explanation there is like, if you go all system with no soul, then people are going to feel one, they're gonna, they're gonna feel a certain way, which is not gonna be good. Number two, it could backfire.'cause if you don't have the, the clarity of the structure and the role, and you give them a number, how in the world do you know it's the right number? Could end up be, you know, everything's a game and if you incentivize a certain outcome, you're gonna get that outcome. And if you're not absolutely sure that's the right outcome, that number's not only pointless, it could actually be very, very damaging. So I'm curious what you thought about that. I've never told somebody you need to wait on giving people a number.'cause you didn't have the culture, the, the relational, uh, uh, he, it was very transactional. The way he wanted to go about it. What do you think?

McKenzie Decker:

Well, here's my political point of view. No, I'm just kidding. I'm just kidding. I, you kind of answered it for me, I think, in a way, but I wanna, I wanna draw it out some more. I do think that would backfire because imagine so. I. In this situation, it always makes me think back to like, has that happened to me and how did I feel about it? Or have I seen that in, have I seen that on the ground floor before and Yes. Yeah, I think, I think imagine the people that are working day in and day out in your business, the executive assistant or the marketing manager or whoever, the sales rep, and arbitrarily they get an email from you or they go into a meeting. You roll out, these are the numbers that we are gonna pursue. And from an executive point of view, you're like, I just created a bunch of clarity. We just set a standard in place. Mm-hmm. Mm-hmm. All those people are walking in that room and they're like, WTF, like I, where is this coming from? I wasn't a part of this conversation. My job half the time is something that I didn't sign up for. So how am I supposed to hit that number? Plus all the other stuff we already signed up for this year, and I'm not even doing that job half the time, I'm doing a bunch of other random stuff. Or at least it's not clear to me because I'm just given a of tasks to manage and we're an organization that wears many hats or whatever we say.

Benj Miller:

Right, right. Especially if you don't have clear structure.

McKenzie Decker:

Exactly. So I think it's, that feels like good instinct to think. Good instinct on the part of the executive. You wanna give them credit on something that we need KPIs, we need metrics that tell us what we're headed towards.'cause that's the other thing is I think oftentimes when you've got the multiple hats organization or you've got the flexible role description organization, UN or undefined. Um, those organizations are often running at multiple goals and multiple numbers, and everybody's like just trying to, they're, it's a reactive state. Yeah. And so having everybody having a number helps us move into a proactive state. It helps us move into a focus state. And so that's a great instinct. But there is, I think there's, there's definitely like, we're skipping some steps here. You know, that's not a cake that's gonna bake correctly. So that's,

Benj Miller:

that's exactly, I didn't use that analogy, but that's what I said. You're, what you're trying to do is the right thing. It's just out of order.

McKenzie Decker:

Yeah. Yeah. So in our world, and what, what I've seen and experience myself is like, the more we can define clearly for somebody what their responsibilities are, what at the end of the day, what's, what their priorities should be. Um. And what their level of autonomy is in that role. Yeah. Then when we, then I think setting KPIs is, first off it, it comes after all that, but it also needs to be a conversation, not like an edict. Of course, as the executive, you're gonna have way more insight into what your targets should be. And maybe even what those KPIs should be, but I would, I would turn it into a conversation with the, with every team member. Yeah. These are the three to five numbers that are important for your department or for the role that you play. What do you think is a, based on what you've seen over the last 12 months or 18 months, what's a realistic target? What do you think is 10%? You know, what would be 10% growth or 20%, however aggressive, but I would turn it into a conversation. Um. To, to really invite them into that instead of it feeling like straight up, you know, authoritarian.

Benj Miller:

Well, I do think he was willing to bring people into the conversation. I just think it, it, it would've been getting at the most transactional part of the relationship without any of the, the relational credits or, you know, the structure. The vision, all that clarity that goes first. So it was, it was a little weird. So, all right, so it's not such a big hot take 'cause you're basically agreeing with me, but when I, when I said it out loud, I'm like, Ooh, am I allowed to

McKenzie Decker:

say that?

Benj Miller:

But it felt, it felt like the right thing.

McKenzie Decker:

Did you think I would disagree in any way?

Benj Miller:

Um, I don't know. We've never talked about it. I just, I, I don't know about disagree. I wondered if there was a piece that you might think maybe it would, uh, well, to use our order analogy, maybe. Maybe you would think the order wouldn't matter as much as I did. Like, no, go ahead and give 'em that and then, you know, build the other stuff, but it just felt,

McKenzie Decker:

I think the one thing, if there was a caveat in all this. I think the organization should start setting K KPIs. Like at the executive level. If they, yeah, if they struggle with that, go. I think the organization at the highest level should start deciding what do we measure as a leadership team on a regular basis. And get clear on that, even if you're still in the process of defining I would my one caveat, yeah.

Benj Miller:

I think they actually have 'em at the leadership level. It was wanting 'em at every level and every person. And look, the story I gave was like, Hey, you gotta be really careful because I just made something up. You've got an administrator whose main job is filling out accurate TPS reports, so it's really easy to give 'em a KPI. That's How many accurate TPS reports did you fill out this week, but. Then you don't realize that it's also their job to answer the phone and clean the dishes in the office and take out the trash. And so she's winning these numbers, but nobody's answering the phone. Nobody's taking out the trash and nobody's doing the dishes. Like remember, like we're, we're creating the game. The incentive for people to know if they're winning and we could literally create the wrong game and it could be a problem.

McKenzie Decker:

So, yeah. That's alright. Not

Benj Miller:

a hot take. Dang it. I'll get you next time.

McKenzie Decker:

Well, I, I'm glad we got to talk through it. It's interesting 'cause I think both conversations though, they're unknowingly, we, they're sort of similar in terms of like. How do you, how do you create incentive and engagement and you know, the right, like how do you balance all this in a way that it, it keeps people interested and it, and it invites them into the business rather than. Here's your 2%. Go have fun with that. So thanks for, that's gonna be our new comment, just like you guys, thanks for joining us today. Um, if you have a hot take you want us to talk through, send us something. It'd be, that'd be fun. Um, well, we'd be happy to talk through anything that's related to. Any kind of business. Um, and we'll be back again next week with a whole new topic and we hope you see you there again, thanks to fist bumps for helping us bring this to you. Um, and we will see you next week.

Benj Miller:

I hope this made you 2% better.

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Benj Miller

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McKenzie Decker

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