No Longer at Starbucks Helm, Howard Schultz Is the Focus at Labor Hearing

When Howard Schultz of Starbucks testifies before a Senate committee on Wednesday about the company’s labor policies, he will no longer be its chief executive. But his presence will underscore his continuing sway over a company he has run on and off since the 1980s.

The Capitol Hill appearance, which Mr. Schultz had resisted until faced with the possibility of a subpoena, comes the week after he handed the top job to an outside recruit, Laxman Narasimhan. How much control will actually be yielded by Mr. Schultz — who is still a board member and a major shareholder — is unclear.

He bowed out as chief executive twice before, only to reclaim the position when he felt the company had lost its way. In his most recent stint, lasting almost a year, he was outspoken in trying to blunt the progress of Workers United, which has won union elections at nearly 300 of roughly 9,300 corporate-owned Starbucks locations nationwide since fall 2021.

Organizers assert that the company’s reluctance to bargain and its retaliation against labor supporters have slowed the union’s momentum. Mr. Schultz faces tough questioning on that point from Democrats on the Committee on Health, Education, Labor and Pensions, along with its chairman, Senator Bernie Sanders, who has accused Starbucks of acting illegally to suppress the union campaign.

“I look forward to hearing from Mr. Schultz as to when he intends to end his illegal anti-union activities and begin signing fair first contracts with the unions,” Mr. Sanders, independent of Vermont, said this month.

Starbucks said it had tried to bargain in good faith and denied that it had violated labor law. The company said that it had fired or disciplined workers only in response to violations of its rules and that it had not singled out union supporters.

Some in Congress are more sympathetic to the company. A spokesman for Senator Bill Cassidy of Louisiana, the highest-ranking Republican on the committee, said he would express concern on Wednesday about “the blatant prejudicial nature of these C.E.O. hearings.” And the House Committee on Education and the Workforce has demanded documents that the panel’s Republican majority said would show misconduct in the National Labor Relations Board’s handling of Starbucks’ union issues.

Labor Organizing and Union Drives

Since early 2022, the board has issued dozens of complaints accusing the company of violating labor law, and an administrative law judge recently found that the company had engaged in “egregious and widespread misconduct.” Starbucks has disputed the accusations and is appealing the ruling to the labor board in Washington.

Although Mr. Schultz will be in the spotlight in Washington, he has officially ceded the stage at Starbucks headquarters to the new chief executive.

Mr. Narasimhan spent nearly two decades at the consulting giant McKinsey before stepping into senior roles at PepsiCo and was most recently the chief executive of Reckitt, a health and cleaning product company based in England. He spent much of the past several months shadowing Mr. Schultz and immersing himself in the company’s operations — including training and working as a barista — and has indicated that he is at times willing to part ways with his predecessor.

“One of the things we’ve talked about is that I may not always agree with him, and so we’re going to privately obviously spend a lot of time talking about how we essentially come to a common point of view,” Mr. Narasimhan said of Mr. Schultz at a forum for corporate employees in February, a recording of which was obtained by The New York Times.

For his part, Mr. Schultz declared at the same event, “There has to be one C.E.O., one person — that’s him.”

The union has sounded a note of optimism. “We are hopeful that Laxman Narasimhan will chart a new path with the union and work with us to make Starbucks the company we know it can be,” Michelle Eisen, a worker and an organizer at a Buffalo store that was the first to unionize in recent years, said in a statement.

But the new chief executive may have little room to operate independently of Mr. Schultz on union organizing, which Mr. Schultz has implied is partly a result of employees “colluding with outside union forces.” In an interview with The Wall Street Journal, Mr. Narasimhan indicated that he agreed with the existing approach.

During Mr. Schultz’s recent stint as chief executive, the company also began to experience labor tensions among its white-collar employees, particularly after Mr. Schultz told them in January to start spending at least three days a week in the office. The order prompted many to complain on an internal communications platform, according to screenshots shared by one corporate employee.

In the past month, Starbucks’ white-collar employees posted a petition that called for reversing the policy and asked that the company remained neutral in its response to union organizing and “respect federal labor laws.”

A company spokesman did not respond to a question about the petition but pointed to remarks that Mr. Narasimhan made at last week’s annual investor meeting in which he said employees “must have authentic and deep human connection everywhere we work” and cited the importance of informal office interactions.

Even beyond labor issues, Mr. Schultz appears to have set much of the company’s strategy for the next few years. That includes a so-called reinvention plan in which Starbucks invested hundreds of millions of dollars in upgrading store equipment, training workers and offering new benefits like a better sick leave policy. The company has said it plans to open thousands of new stores around the globe, including roughly 3,000 more in China alone by 2025.

The recent period of change under Mr. Schultz coincided with a significant increase in the company’s share price even as the broader stock market had declined.

Mr. Narasimhan has suggested that he will not deviate much from the broad contours set by Mr. Schultz. Even if Mr. Narasimhan were tempted to do so, Mr. Schultz might act as a significant obstacle. He has filled top positions in recent months, including the chief reinvention officer, and has been known to reach out directly to executives even when he has had no formal role at the company.

Mr. Narasimhan appeared to allude to this at the forum in February, telling employees that “Howard’s been in this company 40-plus years, and so the idea that someone wouldn’t call him, or the idea that he wouldn’t call someone, is, I think, laughable.”

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