America's Next Great Statesman?
Apr 13th 2012 9:48AM
Updated Apr 13th 2012 9:50AM
When we think of great American statesmen, names like Benjamin Franklin, Thomas Jefferson, and Dr. Martin Luther King Jr. usually come to mind.
But focusing almost uniformly on politicians and activists, we could be missing out on one of today's great leaders. Consider the very definition of "statesman": a leader regarded as a disinterested promoter of the public good. In other words, someone who advocates for the greater good without questionable motives.
With that in mind, a very strong case could be made that Starbucks (NAS: SBUX) CEO Howard Schultz is a new breed of American statesmen.
Before rolling your eyes and ranting about how Starbucks represents all that's evil in corporate America -- with their brand stamped on every city corner -- hear me out; you might be pleasantly surprised.
Thinking big is part of his DNA
In 2011, Fortune magazine named Howard Schultz its CEO of the Year. Part of that honor had to do with Schultz's generous benefits program -- any partner (that's what Starbucks calls their employees) who worked 20 hours per week got health care coverage. During the darkest days of the Great Recession, Schultz refused to cave to Wall Street pressure to scale back the benefits -- even though the company was spending more on health care than on actual coffee!
It'd be easy for the cynic in all of us to question the sincerity of any corporate CEO, but a look at Schultz's past reveals he's different. Back in 1986, when he started a now-defunct coffee business named Il Giornale, an internal memo makes it clear that he was willing to put employees first: "[We want] our employees to have authorship and integrity in their accomplishments as well as sharing in the financial rewards of their ... efforts."
Spreading the message abroad
But one could reasonably argue that being good to your employees is simply smart business, not a sign of statesmanship. Fair enough -- but let's continue playing this out by examining the relationships Schultz has established between his company and the providers of his coffee beans.
After a crisis hit the global market in the 1990s, the price of coffee plummeted, and farmers were left struggling to make ends meet. It was around the same time that Starbucks was rising to its prominence. Instead of exploiting the weakness in the market, however, Schultz seized the opportunity to make a lasting difference.
Starbucks helped create demand for struggling farmers, but the company didn't stop there. Over the past decade, Starbucks has set up Farmer Support Centers in Costa Rica, Rwanda, Tanzania, and China to help educate coffee growers on the benefits of responsibly grown, ethically traded coffee. In addition, the centers provide micro-loans to help coffee growers get off the ground, or get through rough patches.
Some critics argue that the company should be buying more fair-trade coffee than it already does. But since 2005, Starbucks has been the single largest buyer of FTC, and that doesn't include the coffee it buys from smaller farmers who can't afford the costs related to FTC certification. And to top it off, Starbucks routinely pays above market price for its coffee.
Bringing it back home
But while ensuring the well-being of peoples in faraway lands might be nice, it hardly puts the states in statesman. Enter the political scene of the past year. After the debt-ceiling debacle of last summer, Schultz famously called on donors to boycott both Republicans and Democrats until they could work together to solve the nation's fiscal crisis.
While that had a nice ring to it, Schultz quickly realized that its effect would be minimal. That got him thinking about what America really needs: jobs. But short of making millions of unnecessary hires for his coffee chain, how could Schultz ever help put a dent in the unemployment rate?
That's when he remembered how effective his micro-lending for farmers was, and he started to connect the dots. Partnering with the Opportunity Finance Network, Starbucks could act as a pass-through entity: Customers could make donations for micro-loans to kick start the economy, and Starbucks would pass those donations on to reputable micro-lenders. To make the deal even sweeter, the donations could be levered 7 to 1, so a $10 donation would create $70 of lendable money.
Starbucks picked up the tab for marketing of the program -- coined Create Jobs for USA -- and also got things started with a $5 million donation. As of late March, the program had helped create or retain 2,300 jobs.
While that may not sound like a lot on a national level, it means the world to those involved. For example, the 8,500 students attending Alliance public charter schools located in low-income Los Angeles neighborhoods will now have two new schools and 59 new staff members thanks to the program. That's just the tip of the iceberg, but the fact remains -- Create Jobs for USA is making a real difference in real American lives.
No, Howard Schultz isn't fated for sainthood. But there's no doubt that he's using his position of influence for the greater good of our national community. And whether or not you think that makes him a statesman, there's no doubt we'd be a lot better off if his fellow CEOs followed suit.
Motley Fool contributor Brian Stoffel owns shares of Starbucks. You can follow him on Twitter, where he goes by TMFStoffel. Motley Fool newsletter services have recommended buying shares of and writing covered calls on Starbucks. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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