Why did Starbucks triple its paid parental leave benefit?

Starbucks is tripling its paid parental leave policy for store partners, providing up to 18 weeks of paid leave for retail employees welcoming a child.

This policy change is set to take effect in March of 2025, and was in response to employee feedback that their CEO received directly from in-store workers.

After visiting several stores and hearing from partners who expressed the existing policy wasn’t enough time for their families, they made the decision to expand the paid leave benefit - and fast. 

As in, within a week.

In this episode, we’re joined by Sara Kelly, executive vice president and chief partner officer at Starbucks, to discuss their decision to make this change so quickly and how the new policy will impact employees, their families and the business.

A mom-of-3 and executive champion of the Women’s Impact Network at Starbucks, Sara first joined the company in 2001 as a partner resources coordinator and has held several roles in HR for more than two decades.

Allison: Sara, thank you so much for joining me here today. For those who are living under a rock, there was some big news that Starbucks announced. I think it was right before the holidays around your new paid parental leave policy. So I am so excited to dig into all of that with you. But for those who don't know about it, can you share a little bit more about this new policy that you just announced?

Sara: Yes, excellent. Well, Allison, first off, it is so good to be with you today. And I love this topic. I am a mother of three. So certainly this is a topic that's near and dear to my heart and what I am so passionate about. 

And so as you mentioned, starting in March, we did announce this before the holidays, but starting in March, this upcoming March of 2025, Starbucks is more than doubling our paid parental leave for our US partners.

And so these are partners who work on average 20 or more hours per week. That's something that we're proud to offer comprehensive and industry leading benefits, including this new parental leave to our partners that work 20 or more hours per week.

And I think hopefully your listeners will love hearing some of the highlights about how Starbucks made this decision to enhance this benefit and what it means for our current partners and our future partners because certainly for us, we are very proud of it and it really is about our green apron partners are the center of everything we do and it really starts and ends with them.

Allison: I was so excited when I saw this announcement. I am a big, I'm also a mother of three, very passionate about this topic. And what struck me, and I do want to get into the details of how this all came about, but what struck me when I read this is I thought, wait a minute, Starbucks is already so well known for being employee centric, particularly within the benefits space and the policies that you all already provide your partners. And based on my understanding of this space, you were already in line with competition. And yet you increased it. Why?

Sara: Thanks. Yes, and you're right. You're absolutely right, Allison. I would say for us, it's simple. As we work to get back to Starbucks, which you may have heard a little bit about, we are focused on getting back to Starbucks. And within that, we want to be the unrivaled best job in retail. That is our commitment. 

And for us, employee care, it's not new to Starbucks, but it is an anchor or it is core to Starbucks. And we have shared that our success begins and ends with our green apron partners, our employees at Starbucks, so we call them partners. 

And we call them partners because things like our annual beanstalk grants, which is part of our industry leading benefits, each partner gets ownership in the future success of our business, right? They get stock grants. And so that is why we call ourselves partners, but it is a representation of those industry leading benefits that have been core to what it means to be a Starbucks partner.

And for that, it really comes down to, we know that it's our partners that are delivering the moments of connection for our customers each and every day. And so it's so important for us that we continue to invest in our partners, that we continue to prioritize their individual experience as well. 

And so our expanded parental leave policy is part of those investments. It's part of the prioritization.

And so what it is is it provides birth parents with 18 weeks of leave and our non-birth parents with 12 weeks at 100 % of their average pay. For birth parents, as an example, this is triple the previous six week benefit we had. 

Allison: Incredible.

‍Sara: So as you shared, that was already industry-leading when you think about the retail industry. But for us, it was really about what we heard from our partners about the paid leave. What was being offered to them and what was most important to them. And what they shared with us is that more time with family was something that they were seeking. 

And that's been a theme that was made clear directly to our CEO, Brian Nicol. And it was this feedback in mind that the decision to expand our parental leave policy was really an, it was an easy one for us. And it was one that we took action on really quickly. 

Actually, it took us one week to decide, design and then to communicate this decision, that we were putting our partners first. We wanted to focus on supporting their lives, not just inside our stores, but also outside our stores.

Allison: So how does that feedback get all the way up to your CEO?

Sara: Yeah, it's a great question. We stay close to partner feedback. It's crucial and has been crucial from a Starbucks perspective to continuously enhance the experience of our partners. 

It's what has informed and influenced many of the decisions that we've made over the years about how we invest or the prioritization around investments into our partner experience. We seek real-time feedback in a couple of different ways. 

We do regular surveys. So we do regular surveys or con joint surveys to understand what our partners would prioritize. So that's important. But we also do collaboration sessions where partners can share ideas and feedback directly with our leaders. Because we want to ensure partners have multiple ways to share their opinions, their experience, and suggest areas for improvement. 

And as we've been working to get back to Starbucks, partners are sharing what's most meaningful to them. And the ways that we both do what we do and what we offer, how we can make those things even better for our partners in really real and tangible ways. 

And as Brian has been busy visiting stores, meeting with hundreds of partners to hear their feedback and suggestions, the importance of time with family was a common theme. It resurfaced time and time again.

In this instance specifically, Brian did get an email from a current partner, one of our store managers, a first time expecting parent. And that partner shared their thoughts around how parental leave could be enhanced. And so that it did help inspire the decision and bring forward that decision to Brian and myself.

‍Allison: I think this is so incredible because in my world, we work with companies to help them actually implement these policies. And so we do programming around this and we have so many employees come to us and ask, how do I make the case to my company? 

And it's actually quite inspirational to hear you talk about this as just people sharing their feedback. They felt comfortable sharing their feedback directly with the CEO.

And I don't know if you would share this even if there was pushback, but I'm wondering, okay, this gets escalated. What were any of the concerns or pushbacks internally as you think?

I mean, you mentioned that it only took you a week to make this decision, but was there any concern or pushback in that process of evaluating? Do we actually do this?

Sara: Yeah, it's a great question. And you're right. There are always choices and you have to prioritize. It was clear for us in this instance that expanding our parental leave policy was an investment that we could and should make as quickly as possible. Like I shared, and like you just restated, it was a decision that we determined and implemented in really a week, right?

We determined, we designed, and we communicated in really one week's time. And we've been thrilled to see the positive response that we've received from our current partners, from our prospective partners, and from the community at large. And so that has been very validating relative to the decision that we made.

I think also, and I know you know this, Allison, so well, we've seen studies that show that paid leave, not just parental, but also bereavement, caregiving, it's reported as being a leading benefit that employees care about. It's coming up in many studies as the number one for Gen Z. 

So this is something that employees care about and that employees at large care about. And as for us at Starbucks, when we think about our mission and values, we are deeply committed to both the flexibility and the support that many are seeking as they decide whether to have or to grow their family. And I'd say simply put, we believe that actions like this do make our business stronger. 

And I think that's the grounding, the kind of grounding factor in the decision-making is we do firmly believe that these actions do make our business stronger because we believe that when our partners or employees feel like they have the opportunities to grow, both at Starbucks or beyond, that they take care of each other and in turn, they take care of our customers. 

And so for us that, you know, it's a bit of a flywheel. If you take care of your employees, or for us partners, they will take care of your customers. And by taking care of your customers, you will take care of your shareholders. And that is something, you know, an equation, if you will, that Starbucks deeply believes in.

Allison: I also, I can't help but have my mind go to also the brand impact here as I sit with my Starbucks coffee right now. I think about these things and yes, this is my world, but I do know which companies provide generous paid parental leave. And I actually like the fact that I am going to those companies and giving them my money. And when I am paying money to get my coffee on, I mean, it's very embarrassing how often I actually do go to Starbucks.

I actually think about this. So I’'m curious if there was some of that discussion as well, yes, we want to do right by our employees. Yes, we want to retain them because that's very difficult in retail overall. But also is this part of the brand where we do believe in this as a business and we want to get some of that sort of halo.

Sara: Yes, Well first off, I can't wait to learn about what your favorite beverage is and where your home store is. 

Allison: Grande vanilla latte. It's been that way for what? 15 years forever. 

Sara: Okay, great choice, solid choice, solid choice. Yes, we are creatures of habit, right? I love that.

I would say, I'll suit your point. Everything we do at Starbucks starts and ends with our green apron partners. And so we're committed to ensuring that we are the unrivaled best job in retail. That's a commitment that we are making and a focus that we have. 

And it goes back to a comment that I made earlier about when our partners feel cared for, they care for our customers. So when our partners feel good about their future at Starbucks or beyond, we know, and we've seen evidence of this, that they take care of our partners.

They create those moments, those moments of connection for our customers in our stores. And so investing in them and prioritizing their experience creates value for everyone, including our shareholders, including our brand, to your point, right? 

It does have the halo of the brand because our partners can then create those moments of connection that we're so deeply connected to for our customers. And that is part of the reason that our customers love Starbucks is for that moment of connection that they have in our stores with our partners. 

And so with competitive pay, with industry leading benefits, like our parental leave benefit, but also development opportunities, a culture of belonging, and what we're focused on, we're making it clear that when we put our green apron partners first, anything can be possible.

So it's key to us that we create opportunities, not just jobs, but opportunities. We recently shared our commitment to internally filling 90% of our retail roles over the next three years with our partners, right? So we wanna create careers at Starbucks.

Starbucks is not just a job, but it's a career where you can grow your career, you can go to college, you can expand your family in whatever way you choose. You can do that at Starbucks.

And studies have shown benefits like these do play a really big role in retention, particularly those that support championing employee well-being and employees' well-being at work. And in fact, I would say we've seen some of our lowest turnover rates in our history, certainly lowest turnover rates in retail industry and some of the highest retention that we've seen since the pandemic. And so I do truly believe that

We're experiencing all of this due to those competitive pay comprehensive benefits and the supportive culture that actively promotes, that advocates growth opportunities. And the longer our partners stay with us, the more we're able to develop them, the more we're able to support them with time with their family and support them in a longer term career within Starbucks.

Allison: I almost hate to ask this question because I am so on board with everything you're saying, but I know a lot of people who listen to this want to make this change, but don't necessarily have the executive buy-in. How will you know that this change is giving you what you want? What are you going to be tracking and looking for to prove that?

Sara: Mm-hmm.

Sara: Yes, so we do keep close to our partner feedback, ongoing pulse partner feedback. And that's one of the ways that we're going to continue to evaluate our benefits and leave policies to ensure that they're meeting the needs of our partners, that they are a priority for our partners and meeting their needs. And additionally, we do watch retention. And we look at our retention data of those who take paid leave specifically. So we look at for those who take paid leave,

And how is the retention of those partners to look at overall effectiveness? And so again, it's core to our business that our partners do feel like they have opportunities to achieve aspirations both inside and outside of work. Again, these are not just jobs. We do want them to be careers. And so we find that our benefits from, and the benefits from paid leave, from things like upfront tuition costs and covering that investment offerings, so much more.

These are one of the leading reasons why partners not just join Starbucks, but by why partners stay with Starbucks. Again, like I said, we often say it's about career, it's about college, and it's about family at Starbucks. And when we support career, college, and family, our partners, they stay with us, right? They're joining not just for a job, but they're joining for a career. 

And that we know many of our partners will come to Starbucks for those benefits, specifically partner family planning, growing and bonding with their families. They also join us for family expansion benefits, for IVF benefits specifically, and we're very proud of that. And we do believe when they join us, they stay longer because of it.

Allison: Are you able to share what else came out of these feedback sessions? Are there other things that it sounds like parental leave was very clearly asked for and then actioned against? Are there other things that were asked for that maybe are coming soon, things you're thinking about?

Sara: I say we are always looking at our benefits to make sure that they meet our partners' needs. And throughout the years, we have many examples of which we've expanded upon our benefits or added new benefits very specifically because of the feedback that our partners have provided us.

And that's true for how we've expanded our IVF for family expansion benefits that came directly from partner feedback, enhancements that we've made to our partnership with ASU or Starbucks College Achievement Plan and how we've continued to enhance that, of course, with parental leave. So while I cannot share today what might be coming next…

Allison: I know you're dodging the question. No, I didn't think you could, but I wanted to try and push you on it.

Sara: But I think the important thing, Allison, that you bring up is you always have to be listening and you have to find those mechanisms to continue to solicit feedback from your partners to understand how the benefits are meeting their needs.

And in some instances, existing benefits may no longer be as relevant and new benefits may be more relevant. And so constantly listening gives you the ability to prioritize, make trade-off decisions and make sure that you're investing in the benefits that will be most meaningful for your employees and for us, for our partners.

So that constant listening is so critical for us. And so that's why we have multiple times throughout the year where we are doing surveys, we do a conjoint analysis or a discrete choice analysis. So we understand from our partners, if they have choice, what are the benefits that they would choose that would matter most to them so that we can prioritize and make those types of investment decisions as you're describing and innovate and continuously innovate on those benefits.

Allison: I'm curious what your perspective is on something that I hear often, which is, yes, we really care about parental leave, but it really only impacts five to 10% of the employee base per year. So it's a little niche. Is it worth our time to focus on this?

Sara: Yeah, well, I mean, here's maybe one thing that I would say in response to that. And a lot of people will say, how do you see this impacting also things like candidate population or how many candidates that you see coming to your recruitment site as an example, right?

To your point, it may be in each population or it may be a smaller percentage of your population. What I would say is, it's not just certainly parental leave for us. It's the changes that we're making more broadly. 

Parental leave is an important component, but for us, it's more about how we support our partners and how we demonstrate partner care for all of our partners. And we're making a lot of changes that work in support of that, from bringing back the coffee house vibe to making sure our partners have the tools, the opportunities they need. 

These are all things that are helping Starbucks get back to what's always made us special and also putting our partner at the center of it. Because we want Starbucks to be a great place to work for all of our partners.

And we also have a deep tradition of being a leader in retail and by focusing on economic opportunities, clear pathways, more meaningful career opportunities for all of our partners. But what I would say is following the announcement that we made in December, our career site saw a really significant increase in traffic from new users.

That data tells us that we reached new and potential candidates that maybe had not previously considered Starbucks and could now be interested. And so we think that this is another indication that this is the right move, not only the right thing to do for our current partners, but it's the right thing to do in the sense of attracting new talent into the organization that may not have been thinking about Starbucks previously. 

So that's another data point that we believe demonstrates why this is an important benefit to invest in. And I also would say we hope to influence more broadly. I think we made these changes as a correlation to what our partners were asking for and putting our partners first. And like I said before, we do aim to be the best job in retail.

And we understand that parental leave can be life changing. It can be a life changing benefit for our partners and for their families. And we do hope to inspire other companies who may be asking those same questions, Allison, that you're asking, which is what's the return on that investment? This may be a smaller percentage of our employee population. They may be asking those same questions.

So we hope to inspire other companies in the industry to support their employees by listening to what their life goals are by listening to what are the benefits that they would prioritize or that would meet their needs.

And potentially offering extended leave can really have a profound impact on their employees' lives. We believe that, obviously, that's why we're making the investment that we're making.

Allison: And I do think that it is a very bold statement. I think people are listening and I think it matters to see a company not just slightly increase paid leave, but really meaningfully increase it.

We're running out of time, but I wanna ask one question to wrap us up. You mentioned you're a mother yourself. What does this mean on a personal level to be able to spearhead such a generous and needed change on such a huge scale for so many people?

‍Sara:  I love that question. I have been a Starbucks partner for over 23 years. So I joined Starbucks to be part of something special. I joined because Starbucks was a company that I saw live its mission and values, truly live the mission and values. And what's kept me here for 23 years is the focus on supporting our partners so that they can support our customers. And the focus on career, on college, and on family is something that I deeply connect with.

Having a 23 year career at Starbucks, I started as a coordinator in our retail organization in California. And it's because of the training, the development, the mentorship, that's why I'm here where I am today. 

That's what made Starbucks a career, not a job for me. And it's our commitment to filling 90% of our retail leadership roles internally over the next three years that continues to provide the same career opportunities that I've been given to our partners at scale and I'm so committed to that. 

And our partnership with ASU, so the college component, our partnership with ASU and the Starbucks College Achievement Program that provides full tuition coverage for a college degree is also something that I wish I had the opportunity to take advantage of. Because when I joined Starbucks, I joined with significant student debt that took me many years to pay off. 

And then for family, as you shared, I have three small children and I've had my three children while working at Starbucks. And as I reflect on the time that I had with my family and what is most important and what is important in those moments, the ability to continue to look at how we support our partners and invest in them in ways that support them in career, in college, in family is so critical for them to not just make Starbucks a job, but make Starbucks a career. 

So a place that they can grow and that is there for them in the moments that matter most in life. And paid leave is a moment that matters most in life. And I'm passionate, certainly, about that.

Allison: Well, thank you so much for coming here today. I was so excited when we connected and talked about having you come on because I do think that this is really important. And I think hearing the why and the how also really matters because there are so many people, employees, HR leaders who want to experience this outcome, but don't maybe necessarily know how to get there or how to make the case.

And so I think that every time we have someone like you talking about why it's important, how you got it done, why this matters, it just has such a ripple effect. So thank you very much for joining me here today. And this has been a lovely and very helpful conversation.

Sara: Love it. Thank you, Allison. And I still look forward to hearing where your home store is. So we can get that latte every single day made with a moment of connection for you. And for any HR leader out there who wants to talk more about parental leave, certainly tell them to give me a call, because this is certainly a topic I'm passionate about and would love to talk more about what we've learned as well.

Allison: Now you have to be careful saying that because people will reach out to you. I'm telling you, I'm going to send all those HR leaders that I get to you and say, she can answer this better than I can. 

Sara: I'm open! I'm open! Thank you all and it's been a pleasure.

Allison: Thank you so much. Likewise.