Human Capital

Starbucks to Tie Executive Pay to Diversity Goals

Anti-bias content will be included in all hiring, development, and performance assessment processes.
Lauren MuskettDecember 3, 2020

Starbucks said it will tie executive pay to the success of its initiatives to increase diversity throughout the company.

The company has said it is aiming to increase the percentage of Black, Indigenous, and People of Color (BIPOC) to 30% at the corporate level by 2025. Within retail and manufacturing, it is aiming for 40% BIPOC representation. Currently, BIPOC employees are about 18.5% of executives at the level of senior vice president or higher.

It will also start a mentorship program that will connect employees of color with senior leadership and include anti-bias materials into hiring, development, and performance assessment processes.

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Starbucks said its initiative to link executive pay to inclusion will begin next year, though the company did not specify how compensation would be changed.

The coffee chain has previously announced it was rolling out an analytics tool that would give executives transparency over diversity representation and said it would give annual updates on progress.

In April 2018, two black men were arrested at a Starbucks in Rittenhouse Square in Philadelphia while waiting for a friend, prompting the company to close about 8,000 company-owned locations for an about an hour for mandatory anti-bias training. It also commissioned an assessment of its civil rights, diversity, and inclusion commitment.

Starbucks’ announcement comes as a number of companies from Adidas to Microsoft to Wells Fargo have made public commitments to increasing diversity in their ranks.

In letters sent to Microsoft and Wells Fargo, Craig Leen, the director of the Office of Federal Contract Compliance Programs at the Department of Labor, requested the companies prove their diversity initiatives did not constitute illegal decisions based on race.

“Although contractors must establish affirmative action programs to set workforce utilization goals for minorities and women based on availability, contractors must not engage in discriminatory practices in meeting these goals,” Leen said in both letters, adding that commitments made by the company “appear to imply that employment action” is being or may be “taken based on race.”

Both companies said they were confident their actions to become more diverse and inclusive would comply with U.S. employment law.

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