Kimmel: We Need More People Like Howard Schultz

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Starbucks CEO Howard Schultz speaks at the Commonwelth Club of California on April 4, 2011 in San Francisco, California.  Schultz discussed his tenure as Starbucks CEO and promoted his new book "Onward. - How Starbucks Fought For Its Life Without Losing its Soul"

I recently asked a colleague about great companies and their leaders, and she brought up Howard Schultz. “Why?” I asked. “Howard Schultz is a mensch, “she said, “It’s just that simple.” “Mensch” is Yiddish for a person of integrity and honor. And while you may not agree with him; Schultz’s recent messages to Washingtonand to employers should come as no surprise.

Here’s why.

Howard has built Starbucks into the success story that it is today by embracing a culture of trustworthy business behavior. Trust Across Americahas spent the past three years studying this behavior in public companies. What does it mean to be a trustworthy company? As part of our research, we have polled hundreds of experts and identified the most important drivers of trust- both financial and nonfinancial. Using these drivers as a framework, we can quantitatively rank and rate the holistic behavior of almost 3000 of the largest US based public companies through a model we call FACTS™.We update our data quarterly. It did not surprise us to see Starbucks at the top of the list this quarter. That doesn’t mean that the company is perfect. None are, but Starbucks is clearly one that comes far closer than most.

In a recent article I wrote for Triple Pundit, I asked Charles H. Green, founder of Trusted Advisor Associates, to address the correlation between trust and sustainable business. He described it this way:

“A sustainable business has an expanded view of both time and stakeholders; it’s about more than quarterly earnings for shareholders. Reliance solely on economic and market-based tools works for mono-focus and short-terms; by contrast, trust scales as a management tool. More deeply, trust itself is also built on extensive relationships over time. It is a natural way of doing business.”

Trust Across America is carefully monitoring a select group of public companies, 59 that met our minimum benchmarks for trustworthy behavior almost a year ago. We are relatively sure that they are giving back to all their stakeholders, including shareholders, in ways unmatched by their competitors.

They are trustworthy. But, you might ask: How’s that working for them? The following chart provides a striking answer.

Since we first identified them in October 2010, the “Gold 59” has dramatically outperformed the S&P- by about 30% as of the creation of this chart. And if you had been prescient enough to have invested in these highly trustworthy companies back in 1999, you’d now have roughly a 500% return over the S&P.

How do companies build this kind of high trustworthiness and sustained performance? Surely it is no accident. There are a million and one temptations every day to misdirect attention on what Green identified: mono-focus on economics and markets in the short term. The organizations that transcend those temptations require one thing above all—leadership based on integrity and honor. Mensch-like, if you will.

We need more Howard Schultz’s. It’s too bad he can’t figure out a way to bottle his “menschiness” and sell it. If he could, we might not have the trust crisis we presently face in America. Howard has the ability to delineate between partisanship and citizenship—acting for the great good, instead of solely from a position of self-interest. Not only has he embedded trustworthy business behavior into the DNA of Starbucks, but he appreciates how business should relate to government—not as purely adversarial.

Barbara Kimmel is a communications executive and the Executive Director of Trust Across America, a program founded by her and her husband Jordan. Barbara can be reached by email at [e-mail]