While I'm here in Tokyo this week, I've been intrigued by what's happening back home in Massaschusetts. A massive employee revolt is occurring at a supermarket chain called Market Basket. This family-owned regional chain competes as an effective low cost player and has a devoted customer following. The CEO has just been fired by the Board. Here's the interesting part. He's been fired by his cousin, who took control of the Board last year, and with whom he has feuded for years. The Board hired two non-family members to run the company. What happened next is fascinating. The employees (non-union by the way, and incredibly loyal) revolted! They have protested publicly. Store shelves are bare in some instances. Politicians are supporting the workers. The employees object for three reasons. They know the company is profitable, and thus do not understand the firing. In addition, the fired CEO treated them well in terms of pay and benefits. Finally, they have great personal admiration for the fired CEO. The company has responded by dismissing managers who have led the protests.
What do I take away from this rare situation? First, every CEO should wish that his or her employees would stand up so forcefully for them even at great personal risk. What a statement about the leadership provided by the fired CEO, as well as his treatment of the employees! Second, the Board has badly miscalculated by firing managers who objected to the CEO's dismissal. It only added fuel to the fire. Third, it really demonstrates the value of culture as a source of competitive advantage. One of the greatest assets a firm can have is devoted and highly productive employees who share common values. That culture has enabled Market Basket to outperform much larger players such as Shaw's in the marketplace. The Board has failed to understand the true "gold" that they have here. Fourth, employee loyalty is so rare in retail, yet these employees rarely left. Turnover was quite low compared to other supermarkets. The cost of turnover in retail can be incredibly high. Again, the Board failed to see the key source of competitive advantage here. Finally, this case shows how social media can fuel a raid and massive backlash. It has enabled customers to show their support and to spread the employees' message. The Board is losing the PR battle because it has no counter to this wave of support via social media.