Case Study: Starbucks Pay Package

Starbucks total pay package, called ‘Your Special Blend’, which we will compare against the benefits of Tim Horton’s benefits program is called ‘Team Tim Hortons’. “Tim Horton’s employees require six months of continued employment to be eligible to be on Team Tim Horton’s and receive benefits, which is also contingent on hours worked (Tim Horton’s, 2015) Tim Hortons considers employee’s benefits a voluntary contribution by the company to its employees and it is subject and conditional to ongoing profitability. The program will be reviewed and evaluated every year and the company reserves the right to change or terminate indirect benefits depending the company’s fiscal results for the year. To be eligible for benefits at Starbuck’s partners receive benefits after 90 days of service as long as they maintain 20 or more hours a week. Starbucks also offers their employees more stability with their

indirect benefits as they are not subject to change based on the company’s profitability.

Tim Horton’s benefits include giving employees the choice to receive one of three following options:
1. Subsidized Medical & Dental Benefits (80% drug & dental)
2. Registered Retirement Savings Program
3. Scholarship Fund.
Tim Horton’s employees only receive one of these benefits after finalizing three months of employment with the company. However, Starbucks offers employees more health care coverage amongst many more benefits. Your Special Blend might include bonuses, retirement savings matching and discounted stock purchase options. The plan offers adoption assistance and health coverage for the employee and her/his dependents, including domestic partners. Starbucks also offers its partners tuition reimbursement program designed to provide financial support for professional development. “This program reimburses eligible employees up to $1,000 per year that they are enrolled in an eligible program at any approve Canadian College or University (Starbucks, 2015). Partners also enjoy recognition programs, career sabbaticals and other time-off programs, plus other perks including 30% in-store discounts and one free pound of coffee, box of K-Cup® Packs or tea a week.
Comparing the two companies’ health coverage plans, Starbuck’s has the more comprehensive plan. Starbucks health coverage includes vision, dental, and prescription drugs. Extended health for medical services not included in the provincial basic medical plan like Dental, Physiotherapy or Psychological services. With the extended health plan, the employee pays $45 individual or $90 family deductible, and then the plan pays 100% for hospitalization and 90% for most other services. Prescription drug benefits provide immediate prescription drug coverage through the use of a prescription drug card. Also, included a comprehensive dental coverage assists with medically necessary dental expenses. Preventive care is covered at 100%. Other services are covered at 80% or 50% after the employee pays a $45 individual or $90 family deductible. Lastly, the vision plan pays up to $150 for biennial eye exams, eyeglass lenses and frames, and contact lenses. On the other hand, Tim Horton’s offers only drug and dental, no vision, with only 50% coverage during the first year of employment. It’s only after five years on continues service that the company will cover 100% of Medical & Dental expenses.

As well, Starbucks offers excellent employee services which are available to all active Starbucks partners and their eligible dependents 24x7.

These services cover: emotional concerns, financial concerns, legal concerns, and work-life concerns. Furthermore, in terms RRSP contributions and financial benefits Tim Horton’s offers automatic payroll deductions to contribute on RRSP without any extra benefit or additional contribution made by the company. Starbucks offers many financial benefits including the ‘Bean Stock Plan’, this benefit is designed to give a broad base of partners the opportunity to own shares of Starbucks stock. Their Stock Investment Plan (SIP) is an easy way to acquire Starbucks stocks at a 5 percent discount. Eligible partners can contribute 1 percent to 10 percent of their base pay each pay period. Finally, annual contributions to RRSP can be made through automatic payroll deductions. Starbucks will match every employee’s contribution dollar for dollar (to a maximum of 2% of her/his salary) directly into a Deferred Profit Sharing Plan

(DPSP).
“Starbucks’s turnover rate for employees is very low for the industry — but the industry’s turnover rate is notoriously high. (Sullivan, 2014)” which proves that Starbucks “Your Special Blend” is superior to be the highly competitive in attracting and retaining employees in the coffee market in Canada.
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