Starbucks and Policy Management Perils

Compliance officers live for policy and procedure most days. So as we study the regrettable incident of Starbucks and the Philadelphia police rousting two black men for sitting in one of the company’s coffee shops, compliance professionals should consider this point: at large organizations, a little bit of procedure can brew up lots of trouble.

By now most people know the facts of the incident. Last week two black men, Rashon Nelson and Donte Robinson, entered a Starbucks in downtown Philadelphia to meet an acquaintance for a business appointment. Nelson first asked the manager to use the bathroom; the manager declined and said the bathroom is reserved for paying customers only.

The men then sat at a table without ordering anything, waiting for their acquaintance to arrive. The manager, who is white, came to their table and asked if they wanted to order anything. They said no. Two minutes later, the manager called the police to evict Nelson and Robinson from the store. The police arrived and arrested them for suspicion of trespassing.

You know all this already because the arrest was captured on video by other customers and plastered all over the internet. Those customers said the manager had let others use the bathroom without buying anything, and that others were lounging around the Starbucks, too. Those other people were white. Starbucks called the police only for the black men. The cries of racism have been loud and swift ever since.

Now, did racist impulses on the part of the manager cause this incident? The manager has made questionable comments about race and ethnicity before. She is no longer employed by Starbucks, although it’s unclear whether she quit or got fired.

Then again, this Starbucks was in a major urban city. The homeless and mentally ill visit coffee shops and restaurants all the time to use bathrooms or simply kill time. Drug addicts use the bathrooms to shoot up. Anyone who spends time in coffee shops — and I do; I’m writing this post from a Starbucks now — knows this.

So the manager’s past experiences may well have attuned her to watch for people with no legitimate business in her store. She may have used race as a mental shortcut to decide who is a legitimate visitor and who isn’t. If you believe “race + ignorance = racism” then this seems like racism in action to me.

But those are all points about one specific incident, with one specific manager. Compliance officers at large organizations need to develop policies and procedures for many people who encounter many incidents, and the goal is to prevent unwanted outcomes from happening at all.

Policy vs. Judgment

The lessons for compliance officers are really about the challenges of policy and procedure at large organizations.

For example, Starbucks and the Philadelphia police need policies and procedures for employees to interact with the public. On one hand, those policies and procedures must be consistent enough so the public generally knows what to expect from the organizations. On the other, the policies and procedures must also give employees enough flexibility to address whatever specific circumstances arise.

The gap between those two requirements is filled by employee judgment — and if companies don’t want to trip over that gap, they need some way to guide employee judgment. That’s where things went amiss here.

I’ve discussed this concept before through the lens of military strategy. In the 1960s and 1970s, Pentagon strategists came to realize that the best armies aren’t necessarily the largest; the best are the most nimble and responsive to changing conditions.

This is true in business, too. After all, what worries your board more: a competitor that’s larger than you, or one that can respond to changing business conditions more quickly?

On a practical basis, that means senior officers (or executives) set broad objectives and define organizational culture and standards. Junior officers then have discretion to achieve those objectives in whatever environment they face, so long as they stay within the culture and standards the senior officers dictate.

That arrangement requires senior executives to place enormous trust in junior executives on the front lines. In a large retail organization like Starbucks (175,000 employees in the United States), that means lots of training to wean employees off bad habits — like, say, implicit racial bias coloring your thinking about who can stay in the store.

The good news is that Starbucks gets this. The company will close its 8,000 U.S. stores on the afternoon of May 29 to train its employees on racial discrimination issues.

The gap between clear policy and flexible policy is filled by employee judgment — and if companies don’t want to trip over that gap, they need some way to guide employee judgment.

Autopilot Risk

The peril for large organizations is that they might lurch for simple policy solutions that create more problems than they solve. For example, Starbucks could enact a nationwide policy: all seats and bathrooms are reserved for patrons who have already purchased a product.

A policy like that would clearly put Nelson and Robinson in the wrong, regardless of race. It’s simple and effective, but it also undercuts the culture and spirit Starbucks wants to achieve: being the friendly, leisurely “third place” between home and work where people can relax over food and coffee. It would also, inevitably, lead to some other store denying the bathroom to some ill person, or a mother with small children, or lord knows what.

Inflexible, sweeping policies lead to employees enforcing them on autopilot. They aren’t a solution. They contradict the very idea of a flexible, responsive organization.

The solution is a corps of junior managers who know when following a policy makes sense, and when circumstances suggest that you should deviate from policy. Urban areas often do require a policy of reserving bathrooms for customers only; they also require managers to know when it’s OK to allow someone to use the bathroom anyway because he or she is ill, pregnant, a child, or otherwise deserving.

The challenge is about judgment: guiding employees to make the right decisions under circumstances that you, there in corporate headquarters, can’t always anticipate. It takes clear policies, plus lots of discussion about overall culture and objectives and training — with the understanding that sometimes employees might need to deviate from policy in the name of serving those higher objectives.

I know that compliance officers aren’t comfortable with that idea. But as Ralph Waldo Emerson said, a foolish consistency is the hobgoblin of little minds.

In our social media age, it’s the hobgoblin of large organizations, too.