Taking on Temporary CEO Role from Next Month... Second Comeback
Tasked with Union Formation Response and Successor Search This Time
[Asia Economy Reporter Jeong Hyunjin] "When you love something, you deeply feel a sense of responsibility to help when called upon."
Howard Schultz, the honorary chairman who built the 'Starbucks empire,' has made a comeback. Having appeared during moments of crisis, he is now facing the unionization movement that has struck Starbucks, tasked with stabilizing the situation, searching for a new CEO, and laying the groundwork for change.
According to Bloomberg and others on the 16th (local time), Starbucks announced in a statement that Kevin Johnson, who has led Starbucks since 2017, will step down on July 4th, and Schultz will serve as interim CEO. Johnson explained the background of this personnel change by saying, "I informed the board a year ago that I was considering retirement around the end of the COVID-19 pandemic."
Schultz, returning temporarily to the front lines of management, is the figure who made Starbucks a global company. This is his second return. Now 68 years old, he joined Starbucks in the 1980s and led its growth through the 1980s and 1990s, expanding the number of Starbucks stores from just 11 to over 28,000 across 77 countries. He stepped down as CEO in 2000 but returned eight years later in 2017 to save Starbucks, which was suffering from weakened competitiveness in the coffee market, leading the company again until handing over the position to Johnson. He also ran as an independent candidate in the 2020 U.S. presidential election but withdrew midway.
Schultz will also rejoin the Starbucks board this time to help find Johnson’s official successor. The company said it has been working on CEO replacement since last year and expects to appoint a permanent CEO by this fall. Schultz will receive a salary of $1. He commented, "I had no plans to return to Starbucks, but I understand well that the company must change once again toward a new and exciting future."
The immediate issue Schultz must address is the response to the unionization movement. Following the birth of the first union at a Starbucks store in Buffalo, New York, at the end of last year, over 100 stores nationwide are currently pushing for union formation. Reports have continued that the company is obstructing unionization efforts through lawsuits and other means, raising investor concerns about potential reputational damage.
This is not the first time Schultz has dealt with union issues. In 1987, during the early stages of management, employees attempted to form a union. Schultz acknowledged in his book that he was not very welcoming of the situation. He wrote, "Under my leadership, I believed I could listen well to employees' concerns and resolve them, and if there was trust in me, I thought a union was unnecessary." Last year, before the first union was formed, as a major shareholder, he personally visited Buffalo and gave a speech about Starbucks’ founding and current operations to employees pushing for unionization.
The New York Times (NYT) reported, "It is unclear whether Schultz’s return signals a softening of the company’s fight against unions or if it means deeper conflicts are ahead."
The market has welcomed Schultz’s return for now. Starbucks’ stock closed at $87.41, up 5.16% from the previous day. However, Bloomberg also reported a statement from Christopher Bingham, a professor at the University of North Carolina, saying, "Research shows that so-called ‘boomerang CEOs’ who return perform over 10% worse than first-time CEOs," suggesting that Schultz’s approach, which emphasizes fundamentals, may no longer be effective.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
