This paper examines the ethical foundations of two companies operating in very different markets. Starbucks’ is a chain of coffeehouses specializing in gourmet coffee lines. Starbucks is based on sound ethical principals permeated through the central core of its business operations. The result of several probes leads to a conclusion that Starbucks does business in a profitable and morally sound manner. Humana Inc. is a large Health Maintenance Organization (HMO) with operations that place it third among the top players in the field.
In contrast to Starbucks’, research demonstrates that Humana, and arguably all for-profit HMO’s, lacks a sound ethical foundation. The boundaries between generating a healthy return and providing quality medical care produce conflicts of interest, which for all involved lead to bad decisions and moral dilemas. The conclusions reached in this paper are the result of extensive investigation conducted through the Internet, personal interview, literature review, and legal findings.
The consensus drawn from this analysis is that Starbucks is a shining example of corporate social responsibility and Humana is not. Starbucks is the United States number one specialty coffee retailer and a presence known around the world. It has over 2,600 coffee shops from Asia, Canada, the United Kingdom and the United States. Starbucks not only sells coffee but: pastries, food and drinks, mugs, and coffee making accessories. Starbucks sells their beans to restaurants, airlines, hotels, and by mail order.
Starbucks mission statement is …”to establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles as we grow. The following six guiding principles will help us measure the appropriateness of our decisions:” ? Provide a great work environment and treat each other with respect and dignity. ? Embrace diversity as an essential component in the way we do business. ? Apply the highest standards of excellence to the purchasing, roasting, and fresh delivery of our coffee.
Develop enthusiastically satisfied customers all of the time. ? Contribute positively to our communities and our environment. ? Recognize that profitability is essential to our future success. This group believes that Starbucks is an ethical and exhibits moral responsibility by the actions they engage in to support their mission. Their many humanitarian efforts are outlined in this paper. Starbucks is active in several different humanitarian efforts.
Whereas the humanitarian donations of an organization cannot be proven to create an ethical company, there does appear to be merit in these efforts. Starbucks donates its time, money, and effort to promote preserving the environment, literacy, human rights, and AIDS research. With this much humanitarian donations, Starbucks gains the appearance of an ethical and moral position in its industry. Starbucks Environmental Mission provides a framework for decision-making at Starbucks.
Starbucks Environmental Mission statement states that we will fulfill this mission by a commitment to: (1) understanding of environmental issues and sharing information with our partners, (2) developing innovative and flexible solutions to bring about change, (3) striving to buy, sell and use environmentally friendly products, (4) recognizing that fiscal responsibility is essential to our environmental future, (5) instilling environmental responsibility as a corporate value and (6) measuring and monitoring our progress for each project.
Starbucks composts its coffee grounds, recycles its burlap bags, and works with a consulting firm to research new recycling plans for its stores. Starbucks initiative to develop an environmentally friendly cup has not been successful. After a two-market test of the cup it has stopped trying to produce such a cup. The results of the test have not been disclosed. Starbucks is very active in the endeavor of literacy. Promoting literacy has been one of its main objectives. Starbucks has partnered with a number of celebrities to promote literacy.
During the 1999 baseball season the “Read. Dream. Grow. Out of the Park – Into the Books” program partnered Starbucks with Mark McGwire. For each home run that McGwire hit Starbucks donated $5000. 00 to support children’s charities in the community where the game was played. Starbucks guaranteed a minimum of $250,000 for the season. Starbucks has also partnered with Doonsebury cartoonist, Gary Trudeau by selling Doonesbury products at its coffee shops. All proceeds go to local literacy programs.
The first year of this partnership raised over $300,000. In addition to these more glamorous endeavors, Starbucks has also collected books, donated by its customers, for the All Books for Children book drive. The books will be distributed to local organization across America. Starbucks has partnered with CARE, an international relief organization, to promote human rights. In addition to operating coffee shops around the world Starbucks suppliers are located in Latin America, Africa, and Southeast Asia.
Some initiatives that it is involved in are education and literacy programs, rural community development and preservation of national parklands. Starbucks is the first US agricultural commodity company to adopt a corporate statement regarding human rights. The statement is called Starbucks Coffee Company’s Framework for a Code of Conduct. Starbucks was awarded the National Leadership Award by AIDS Action. AIDS Action is the national voice on AIDS, representing Americans affected with HIV/AIDS and 2,400 community-based organizations that serve them.
Starbucks received this award for the efforts of thousands of Starbucks employees who have supported AIDS causes by fund raising and volunteerism and for marketing the Red Ribbon Sampler, a product designed to raise money for AIDS service providers. In 1997 three Starbucks employees were murdered in a Washington D. C. store. Starbucks responded by creating the Starbucks Memorial Fund. All proceeds from that store are now donated to D. C. charities that promote violence prevention and victim assistance. In June of 1999 $75,000 was given to eight organizations.
Starbucks calls its employees partners. It offers stock option programs. It encourages its employees to be actively involved it the community by giving financial support and product donations to organizations where its employees donate their time. There have been a few unsatisfied customers with Starbucks, as is generally the case with any large consumer focused company. A few of the disgruntled customers established a web site, www. starbucked. com, to allow other customers to vent their frustrations.
Humana is the third largest managed healthcare company in the United States. The relative size of the organization coupled with inherent conflicts of interest has led Humana, among other HMO’s, to become involved in decisions of questionable ethical substance. Humana espouses the vision, “To improve the health of our members, and provide value to our customers, partners and shareholders. ” An underlying question is how well are they pursuing their vision? This group believes that Humana is an example of a company with ethical integrity problems.
No discussion of one HMO could possibly be complete without looking at the industry as a whole. There is a fine line that HMO’s tread when determining what is in the patient’s best interest. Some would argue that bureaucracy in managed care programs, despite best intentions, leads to compromises in patient care. Conversely, the HMO’s would argue that stretching limited resources in a regulated manner produces the greatest good for greatest number of patients. One is left with many questions about which priorities are greatest, profit or patient care?
In fact, a recent national class action suit filed on behalf of 32 million plan participants by the REPAIR legal team has challenged the five largest HMO’s with just this issue. In addition, REPAIR exposes and attacks several non-disclosed HMO practices of questionable morality: ? Gag orders, which are arrangements that HMO’s make with participating physicians that to penalize them for advising certain treatment alternatives. ? HMO determination of “medical necessity” in conflict with physician decision, driven by profit consideration. ? Limiting patient access to specialists.
HMO’s by nature are prone to lawsuits as decisions over coverage frequently disagree with patient / physician decisions. However, this team believes that lawsuits against Humana undermine its devious backbone. Comparison has not led us to believe that Humana is any worse than the other major HMO players are, so perhaps we should group the entire lot of HMO’s as suspect in social responsibility. Forsyth v. Humana. Although still in appeal, Humana was found guilty under ERISA of racketeering charges that in essence allowed the company to receive kickbacks from hospitals in excess of patient costs.
Price v. Humana. A RICO (Racketeering Influenced and Corrupt Organizations Act) claim that Humana influenced decisions concerning “medical necessity,” by providing incentives to physicians to deny coverage. Chipps v. Humana. Humana accused of discontinuing coverage for family’s four-year old daughter, Caitlyn, whom was receiving extensive therapy treatment for cerebral palsy. Humana was found guilty on several counts for withholding information related to the case. Texas Attorney General.
Sued Humana and five other HMO’s for allegedly “penalizing doctors who do not limit patients’ medical care and illegally compensating those who did. ” As further indication of Humana’s lack of interest in patient’s needs, the company decided to divest non-profitable Medicare operations, due to “government reimbursement inadequacies for the Medicare+Choice HMO product. ” While one would struggle to argue that any for profit entity would survive not covering its costs, dropping patients in lieu of profits may lack ethical standing.
While denying coverage to patients, like Caitlyn, and engaging in price reduction schemes that are not only unethical, but quite possibly illegal, Humana finds no problem paying its Chairman of the Board $4. 5 million and its President and CEO, $3 Million. The charitable wing of the Humana organization was founded to “support charitable organizations and institutions that promote education, health and human services, community development and the arts. ” While the group believes that these endeavors are indeed noble, Humana can not make up for a poor ethical foundation by throwing money at the problem.
