Sunday, July 11, 2010

Howard Schultz on Health Insurance

The first obvious question for many will be "Who is Howard Schultz?" He is the founder and CEO of Starbucks. The July-August issue Harvard Business Review has published an interview, most of which is about his return as CEO a couple of years ago in a successful effort to turn the company around.

I'm not a big consumer of Starbucks coffee, but his answer to one question in particular caught my eye:

What's an example of a decision you've made that Wall Street didn't like?

Health care.Our health care costs over the past 12 months were approximately $300 million. [Starbucks offers health care benefits to any eligible employee who works at least 20 hours per week.] The thought that we could cut that benefit -- I couldn't do it. Within the past year I got a call from one of our institutional shareholders. He said, "You've never had more cover to cut health care than you do now. No one will criticize you." And I just said, "I could cut $300 million out of a lot of things, but do you want me to kill the company, and kill the trust in what this company stands for? There is no way I will do it, and if that is what you want us to do, you should sell your stock."

If there were more CEO Howard Schultzes out their, we might still need health care reform, but it might not be such a difficult problem.

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