Case Study #4 The CEO of Starbucks and the Practice of Ethical Leadership
Background
One year after becoming CEO of Starbucks, Kevin Johnson faced a leadership test when two black
men were arrested in a Philadelphia Starbucks. The men were waiting to meet a business associate,
but they didn’t purchase anything while they were waiting. The store manager asked them to leave,
and they refused, explaining that they were there to meet someone. The manager called the police
because the men refused to leave, and the police arrested them.
Another patron at Starbucks recorded the arrest on her cell phone, and it quickly went viral. In an
interview after the arrest, the woman who took the video mentions that she had been sitting there for
a while, and she wasn’t asked to leave even though she didn’t order anything. Additionally, the video
shows the business associate of the black men show up during the arrest, and he asks the manager
and the police what the men had done wrong. The general public and those who witnessed the
arrest labeled it as discriminatory and racist.
This happened on a Thursday and the following Monday, Johnson said that the manager no longer
worked at the store. The arrests led to protests and sit ins at the Philadelphia Starbucks the days
following the event.
In his apology statement and follow up video release shortly after the arrests, Johnson said, “The
video shot by customers is very hard to watch and the actions in it are not representative of our
Starbucks Mission and Values. Creating an environment that is both safe and welcoming for
everyone is paramount for every store. Regretfully, our practices and training led to a bad
outcome—the basis for the call to the Philadelphia police department was wrong.”
Before the incident, Starbucks had no companywide policy about asking customers to leave, and the
decision was left to the discretion of each store manager. Because of this flexible policy, Starbucks
had become a community hub–a place where anyone could sit without being required to spend
money. Johnson mentioned this community in his apology when he said Starbucks works to create
an environment that is “both safe and welcoming for everyone.”
Also in his apology, Johnson outlined the investigation he and the company would undertake. The
apology detailed actionable steps Starbucks leadership would follow to learn from the situation,
including meeting with community stakeholders to learn what they could have done better. Johnson
took full responsibility for the actions of his employees, and he acknowledged that Starbucks
customers were hurt by the arrests. Johnson acknowledged that employees needed more training,
including about when to call authorities, and that the company needed to conduct a thorough
analysis of the practices that lead to this incident.
After issuing his apology, Johnson went to Philadelphia and met with the two men face to face to
involve them in dialogue on what Starbucks needed to do differently.
The week following the arrests, Starbucks announced it would temporarily close 8,000 stores to
conduct unconscious bias training, which they did on May 29, 2018. A month after the arrests,
Starbucks released a new “Use of Third Place Policy,” which states that anyone can use Starbucks
and its facilities without making a purchase; it also explains what managers should do if a customer
becomes disruptive. Additionally, the policy says that Starbucks seeks to create “a culture of warmth
and belonging where everyone is welcome. This policy is intended to help maintain the third place
environment in alignment with our mission ‘to inspire and nurture the human spirit – one person, one
cup and one neighborhood at a time.’”
Practice of Ethical Leadership
Ann Skeet, senior director of Leadership Ethics at the Markkula Center for Applied Ethics, has
created a Practice of Ethical Leadership. Using this model, we can ask the overall question: How is
Johnson practicing ethical leadership? Additionally, we can consider what we learn about his
character through his actions and his impact.
Along with character as a cornerstone for anyone’s practice of ethical leadership, we can look at the
five additional ethical leadership practices Skeet identifies as a way to explore whether Johnson’s
actions are enhancing his impact as an ethical leader in his role as Starbucks CEO.
1. Creating Community: Did Johnson use Starbucks’ shared values as the cornerstone of his
decision making after the arrests? Did his decision to close all Starbucks stores for
unconscious bias training and to create a new “Third Space Policy” align with Starbucks’
mission and goals? Did his handling of the incident promote positive relationships between
employees and customers? Did it encourage a sense of connectedness and shared values?
2. Encouraging Ethical Conduct: Did Johnson openly acknowledge that his decision was
based in ethics and morality? Did his apology and actions promote awareness of an ethical
issue? Did it create a positive or negative difference in the communities Starbucks serves?
Did it make a positive or negative difference for Starbucks employees and customers?
3. Showing Discipline in One’s Role: Does Johnson explicitly accept responsibility for the
incident and provide direction for a course correction? Does he identify ways to collaborate
with others when necessary? Does he show he understands what his role is in fixing this
problem?
4. Clarifying Culture: Did Johnson clarify his values and the company’s values in his apology
and with his subsequent actions? Did Johnson’s apology and follow-up actions uphold
Starbucks’ mission and core values? Did he identify gaps between stated and actual values?
Did Johnson’s apology help Starbucks employees figure out if their personal values align
with the company’s?
5. Designing Ethical Systems: Did Johnson’s actions have impact beyond Starbucks? Did
they sent a precedent for other companies to follow? Did his apology create a conversation
about unconscious bias in the workplace? How do his apology and the subsequent follow-up
actions compare to other companies and CEOs that have faced similar problems?
