Employees Walked Out As Laxman Narasimhan Took Over As Starbucks CEO
April 15, 2023
Last month, on March 22, employees at more than 100 Starbucks stores, in forty U.S. cities, walked out of their jobs, labor union officials told the media. That day, some employees also protested outside the company’s headquarters in Seattle.
The labor protests were held on the eve of Starbucks annual shareholder meeting, to be presided over by the new Chief Executive Laxman Narasimhan.
The protests were organized to urge Narasimhan, 55 years old, to take a more welcoming approach to unionization efforts, organizers with Starbucks Workers United told AP News. They also asked shareholders to vote for an independent entity to assess the company’s commitment to labor rights.
Seattle, United States, based Starbucks mainly sells a variety of coffees, both hot and cold and in several combinations and price points, from more than 36,000 stores in 84 countries, including China, Italy, and India. These include more than 17,000 stores licensed to other operators, including 6,500 in the U.S.
The company, which has more than 450,000 employees worldwide, was founded in 1971. In fiscal year ended October 2022, it earned $4.2 billion in pre-tax income on $32.3 billion in revenues. The company raised prices of its products in 2022. It has a market value of $124 billion.
Starbucks’ 2023 annual shareholder meeting was held three days after Narasimhan took over as the sole CEO of Starbucks. Since October last year, he was in the role of incoming CEO while founder Howard Schultz continued as CEO. “The foundation Howard has laid – building from scratch an iconic global brand…is truly remarkable, and I am honored to have the opportunity to build on this deep heritage,” Narasimhan said in a statement.
He uses the name “Laks” when ordering coffee from Starbucks to avoid misspellings, he told CNBC; his favorite drink is a doppio espresso macchiato with milk on the side.
During his six months as incoming CEO, Narasimhan worked with employees in over 30 stores, coffee roasting plants and in support centers around the world, learning about the company’s brand, operations, culture, as well as future growth and profitability plans. He also finished 30 hours of training to earn a barista certification and thus wear one of the company’s green aprons.
Since 2021, when employees at a Starbuck store in Buffalo, New York voted to unionize, employees at more than 300 stores in forty U.S. cities have passed similar votes. So far, the company has not come to any agreement with the union.
In response, according to news reports, the Starbucks management has actively campaigned against the union drive – employees at 45 stores voted against joining unions; closed some stores where the employees voted to join a union; fired more than 75 pro-union employees; denied new pay and other benefits to employees at pro-union stores; and filed lawsuits, including against the National Labor Relations Board (NLRB), the U.S. Government Agency that handles labor relations.
Also, in September last year, management outlined a plan, starting with its stores in the U.S., that includes offering additional benefits to employees, including the hours employees need; expanded digital tipping; enhanced sick pay; new savings and student loan management benefits; and additional mental health support.
learning to be resilient in India
Earlier, Narasimhan served as the CEO of Reckitt Benckiser, a British vendor of Lysol disinfectant, baby formula and other consumer products around the globe. The stock of Reckitt, which has a market value of $50 billion, has been roughly flat during the three years under Narasimhan as CEO.
From 2012 to 2019, he held various senior roles at PepsiCo, including, Global Chief Commercial Officer, and CEO of the company’s food and beverage businesses in Latin America, Europe and Sub-Saharan Africa. Earlier, from 1993 to 2012, he was at the consulting firm McKinsey & Company, including as a director, focused on its consumer, retail and technology practices in the U.S. and Asia, including India.
Narasimhan grew up in Pune, India, and in 1982 graduated from Loyola High School, a private Catholic school run by the Jesuits. His siblings passed away when they were young and his father’s business of exporting mechanical parts to the U.S. ran into trouble. Speaking of his time in India, Narasimhan told The Sunday Times, London, “You learn resilience, you learn tolerance, you learn to find a way through.” These traits, combined with the career opportunities that the U.S. or Europe provides, he added, enables several Indians to succeed as CEOs of major global companies.
Narasimhan holds a degree in Mechanical Engineering from the College of Engineering, University of Pune. He has an MA in German and International Studies and an MBA from the University of Pennsylvania. He wakes up at 5 am to meditate and exercise, loves writing poetry and listens to Carnatic as well as rock music.
He and his wife, who is originally from Mumbai, have two children and have lived in 24 homes during their 29 years of marriage.
Shareholders support union demand
As Starbucks CEO, Narasimhan will receive an annual salary of $1.3 million and a bonus which could reach $2.6 million. He will also be eligible for stock options.
A majority of Starbucks’ shareholders, 52%, voted in favor of the union proposal for an independent assessment of the company’s commitment to labor rights. The vote though is not binding on the company management, which had opposed the proposal.
In a letter to employees, Narasimhan stated that to keep close “to the culture and our customers, as well as to our challenges and opportunities, I intend to continue working in stores for a half day each month.” He also added that, his management team will focus on the critical task of reinvigorating “our culture around what it means to be a partner (employee) at Starbucks.”
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