In Search of Higher Ground: The RSA & Starbucks

Higher Ground, a book by Alison Taylor who is a Professor at NYU Stern School of Business, explores “how business can do the right thing in a turbulent world.” It opens with a story about Starbucks, a brand once known for doing the right thing. But recent behaviour has left many with a bad taste in their mouth.

Taylor describes how a statement by the CEO in Spring 2023 delivered inspiring words that “contrasted with sharp criticism of Starbucks’s response to unionization drives.” He emphasised the strengths of the culture at Starbucks, where employees are called “partners,” and cited “a strong partner-first mentality.” But only two months earlier Head Office managers and staff “had taken the risky step of backing baristas in an open letter to the leadership, protesting both the company’s return-to-office mandate and its contentious resistance to unionization,” she notes. And, on the same day the letter was posted publicly, a labour law judge ruled Starbucks was engaging in “egregious and widespread misconduct.”

Taylor then explains that “far from backing the leadership in its efforts against unionization, investors soon voted at the company’s annual meeting for an independent review of its commitment to freedom of association and collective bargaining.”

By its behaviour the company had established “an extraordinary level of connection and unity among key stakeholder groups: workers, managers, customers, and investors. It just wasn’t the kind of “stakeholder capitalism” the company’s leadership had in mind,” she adds.

Taylor quotes Jonas Kron, chief advocacy officer at Trillium Asset Management, a signatory to the letter and leader of shareholder engagement efforts with Starbucks. He said Starbucks “keeps wanting to tell us about all their benefit packages and all they do,” “and we aren’t arguing those things. They are great. But if employees want to organize themselves, that’s a human right that must be respected.” “This is about Starbucks adhering to its public commitments.” “We simply want the company to adhere to commitments it made of its own accord.”

Based on these comments from Kron Taylor observes, “Starbucks’s dilemma tells us that your employees are your most important stakeholders. What they think dramatically affects other stakeholder groups, including investors. Companies don’t interact with stakeholders, but people interact with people, so even your finest programmatic achievements are less important than maintaining good-faith dialogue. This means you should engage only if you are prepared to act.”

There are a large number of parallels between this Starbucks story and a situation in which I am now directly involved in as a Fellow of the Royal Society of Arts, Manufacture and Commerce (The RSA)

Today I am one of a group of Fellows who are very concerned about what is going wrong in the organisation, I see a leadership team repeatedly delivering statements that are inspiring, but in sharp contrast to the growing criticism it is getting.

Newsletters to Fellows from the CEO are frequent and full of good news stories. Nothing negative is ever reported. There is never even any acknowledgement of trustees standing down. No recognition of their service to the organisation is reported. And no mention of the appointment of replacements is made. Most Fellows are oblivious to these important changes. The last Annual General Meeting was also carefully stage managed to avoid any dissenting voices being heard. And again no mention was made of anything that might be considered negative. ??

More recently the Chair, Tim Eyles, announced he is standing down as he comes to the end of his second period in office. His very long resignation message was self-congratulatory in the extreme and there was no mention of the turmoil, bad press, mass resignations, nor an ongoing boycott.

The upbeat nature of all the communications Fellow’s receive is, like the statement of the Starbucks CEO. It is in sharp contrast to the true picture of the current state of the affairs of the RSA.?????

Fellows also read warm words about the value of employees, which contrasts with the fact only a handful of long-serving employees have not yet resigned. And of those who left that I have spoken with all except one felt they had been “pushed out.” The massive spike in staff turnover was no accident. And the wording of the following extract from board notes mistakenly circulated to some members of staff was almost celebratory in reporting the speed with which so many were leaving

The leadership of the RSA has also been doing all it can to resist the union. After seeking voluntary recognition, which was rejected three times, the RSA was forced by UK law to recognise it. And amongst those who left the organisation stories of intimidation to try and prevent them joining are rife.

Like Starbucks the RSA has also lost an employment related legal case. On the 12th of October 2023, at the Central London employment tribunal, Judge Codd found the RSA guilty of the unfair dismissal of former employee Ruth Hannan, the case being linked to trade union activities.

Despite losing the case, the RSA are yet to acknowledge any wrongdoing and apologise. It has also criticised people bringing this up as an example of wrongdoing. And, after Judge Codd gave his verdict, the lawyers representing the RSA attempted to argue that Ruth should receive a reduced compensation payout. That request was very quickly dismissed by Judge Codd.

Just as the bad behaviour by the management of Starbucks led to “an extraordinary level of connection and unity among key stakeholder groups: workers, managers, customers, and investors,” this dynamic is also playing out. All the RSA’s stakeholder groups are now uniting in order to address the problem.

The group of Fellows of which I am a part have been calling for an independent inquiry. After several months that was rejected, recently. So, we are now calling for a Special General Meeting at which we will submit resolutions for an inquiry into the growing number of concerns being raised.

The RSA was founded in 1754 and is regarded as one of the institutions closely associated with what came to be called the Enlightenment. Throughout its long history its values have been clear and focused on the pursuit of progress. Like many organisations, the values are stated on the website. But the rhetoric does not seem to match the reality of what has been going on recently. And the issues are well documented in a number of recent bad press stories from the BBC, SKY, Times, Observer and Guardian.

It is hard to establish all the facts, and to understand when things started to go wrong, or what caused them. That is why we need an inquiry.

As Fellows we also wish to establish how true or exaggerated many of the claims of wrong doing are. And we are concerned to hear the culture of the organisation is toxic and people fear speaking up.

The current CEO should recognise the problems a toxic culture cause, and a fear of speaking up can cause. His former employer, the Bank of England, has a long history of trying, and failing, to overcome such problems.

As long ago as November 2012 the Financial Times published a story with the title, “Bank of England’s Culture Attacked,” It began, “excessive deference and hierarchy are damaging the Bank of England’s effectiveness, according to three independent reviews.” And, in the last week or so it was reported the National Audit Office found only 59% of the bank’s staff felt they were free to speak up without fear of negative consequences. That represented a slight improvement on the 51% surveyed in 2021 who felt that any concerns they raised would be addressed. That figure compared with 76% in central government bodies who answered a similar question in the Civil Service People Survey the same year.

It is to be hoped the 32 years the RSA’s CEO spent at the Bank of England are not reflected in Andy Haldane's style of leadership, and that that is not the cause of the recent problems, but the anti-union stance, and the way the recent pay dispute has been managed, provide reason to be concerned.

In a paper on work and wages for the Bank of England in 2017 he expressed views on the impact of a period of “divide and conquer” to diminish union power and the impact of that on their wage bargaining strength. He was not advocating for such a strategy, but if he is resisting the pay rise the union at the RSA is asking for there is no doubting he understands what tactics could be employed. And what other reason could there be for the anti-union stance?

In conclusion, it is to be hoped the leadership at the RSA will not repeat the mistakes made by Starbucks. That it will instead take the wise words of the Starbucks investor, “your employees are your most important stakeholders.” Because “what they think dramatically affects other stakeholder groups,” as Taylor correctly points out. ??

Finally, let me be clear, in this article I am not making any accusations about the behaviour of any individuals, nor am I blaming anyone for any of the problems there may be. I merely wish to explain why I and a growing number of Fellows are so disappointed that, after several months of correspondence, our request for an inquiry was rejected. All we seek is the truth about the issues that concern us. But the fact our request for an independent inquiry was rejected is in itself cause for concern.

If you are an RSA Fellow and would like add your support to our call for a Special General Meeting to demand an independent inquiry.

VISIT THE WEBSITE

On the website www.RSAinquiry.com you can:

• Get links to some of the media stories
• Read our correspondence with the RSA
• Read the resolutions we plan to put to an SGM
• Subscribe for news and updates

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