Department of shooting yourself in the foot: This is the Starbucks experience?

12/06/2012 5:23 pm EST


Jim Jubak

Founder and Editor,

Maybe you don’t care that Starbucks (SBUX) didn't pay any taxes in the United Kingdom over the last three years. Maybe you even think it’s the duty of companies to do everything they can to keep their tax bills as low as possible.

But you’ve got to wonder about any company’s management that can be so ham-handed in its handling of a crisis.

The whole mess started with a Reuters story that showed that Starbucks hadn’t paid any taxes over the last three years and that it had, in fact, paid just 8.6 million pounds in taxes since starting operations in the United Kingdom 14 years ago. In that time the company has recorded sales of 3 billion pounds.

That didn’t go over especially well in a country deep into recession and where deep budget cuts are leading to reductions in government services. That has produced boycotts and actions where protestors turned Starbucks stores into daycare centers and shelters.

Today, December 6, Starbucks said that it will pay 10 million pounds in taxes over the next two years and end the bookkeeping practices that have resulted in a profitable operation showing no profits on its books. (Those practices include a premium paid by Starbucks UK to Starbucks Netherlands for roasting coffee beans and a 20% premium paid to Starbucks Switzerland for buying the beans.) That doesn’t seem likely to make protestors happy: They point out that this 10 million pound payment is likely to be 5 million pounds less than what’s paid by competitor Costa Coffee.

But while the company was negotiating this “end” to its tax problems, it proceeded to shoot itself in the other foot with some Scrooge-like treatment of its employees.

For example, the company has told baristas arriving at work to sign revised employment terms that end their paid 30-minute lunch breaks.   Employees who win manager or partner of the year contests will no longer get a cash payment but will instead receive a plaque. Female employees returning from work after having a child will no longer receive a bonus. New mothers will also no longer receive a gift basket—the new bonus will be a card and a Starbucks bib. No more birthday cards or congratulatory cards after completing four years of work. (But workers will receive a coupon for a free in-store birthday treat. And workers who make it to five years will get a pen and the right to take four weeks off—without pay.)

So here you’ve got a company dealing with a crowd of protestors—some of whom you’d have to assume are customers—and now they’re nickel and diming their employees into resentment just when they need their help handling the protest and its fallout?

Is this any way to run a company that is selling not so much coffee but the Starbucks experience?
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