Monday, July 21, 2014

Employee Revolt at Market Basket

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. 

31 comments:

Just say no to drugs said...

Thank you, thank you, thank you Professor Michael Roberto of Bryant University!

napdog said...

You summed it all up perfectly

Bob Rogers said...

Beautifully stated. Sadly, this family feud won't respond to logic and reason, and the Board has chosen a path of self-destruction.

Christine Lajewski said...

We all see the writing on the wall. If the new board has its way, employees will be laid off and lose benefits and/or wages. We consumers will watch MB's prices creep slowly but surely higher.

Donna Acquaviva said...

You have said so concisely, exactly what 25,000 employees who work with, not for Arthur T. DeMoulas feel. Thank you for being such a positive voice. Perhaps people , such as you , with vision can show the board of directors and new unwelcome CEOs the light.

Denise Clark said...

If the Board of Directors have any intelligence and a controlling interest they will immediately restore Arthur T. DeMoulas position. The feuding cousins EGO deflated and order & profitability will be ensured. The other option has to many negatives to outline in a small comment box.

Michael Lease said...

I used to be a customer. I won't be again, until and unless they reverse this terrible decision.

Brookside said...

On the surface the Board is providing to the shareholders what the majority of the shareholders say they want, dividends. What the majority of the shareholders really want is revenge ... at any cost. In the words of Confucius ... "When embarking on a journey of revenge, dig two graves." Market Basket, have a nice life, however short. Wegman's, here I come.

Claudia Dupuis said...

They had no chicken and no produce today. Shaw's and Hanniford are just down the street. But we are loyal. To a certain extent we'll stick it out.

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Mary said...

LOVE this article. Could not have worded this better. I am going to sit and write a letter to the board as a loyal customer of Market Basket and to support all of the Market Basket employees. I will remain loyal and not step a foot in Market Basket unless it is turned back over to the one who truly cares...Arthur T DeMoulas. Continue the fight it is well worth it.

THE BUGLER said...

We customers DO have a lot to lose if greed and avarice prevail. The low prices that meant so much to so many will be gone forever. The super service that is a hallmark of MB will be gone too. Google Albertsons and Felicia Thornton to see what the greedy ones haven't hired her to do to Market Basket. Help the employees in their noble effort. BOYCOTT MARKET-BASKET. If we don't stay away now, WE LOSE!. FOREVER!

THE BUGLER said...

A couple friends have asked why I used the word "haven't" instead of "have" in my first post. It was so somebody would ask and I could list what they HAVE NOT hired her to do.
NOT to continue the "Artie culture" throughout the company.

NOT to continue low prices which force even the competing stores to go as low as they can.

NOT to grow and protect the Profit sharing plan that many retired MB employees depend on for their income (Another ENRON in the making here??) and in which many other employees are "vestd".
They get vested after just 7 years of at least half-time (1000 hours a year)service.

The new CEO and Directors already replaced the Trustees of that profit sharing trust fund. Mr. Marsden (fired along with "Artie" Demoulas) and Mr.Hamilton.

The vested employees and the retired former employees should form legal entity associations and ask the courts to protect their interests. And they should do it SOON. The foxes are IN the hen-coop!!

clover said...

Perfect!
It's basic Business 101, Econ. 101,
Common Sense 101., Community 101.,
Civility 101..
Be nice to others, they are nice to you.
I love when common sense trumps
(excuse the bad pun) greed.
I'm so proud of the Market Basket
employees protesting, the workers that are still there, and all of
us that respect both.
We Are Market Basket.

Gil Perham said...

I cant even begin to put into words and keep it without using language that's inappropriate towards a Board that has no idea what they are doing and they are not acting as a board but rather as puppets, although by now they must realize that if they don't make this right they could loose the company all together....I have not entered one of the Market Basket stores since the protest began and wont until its over and if they wait too long they will loose me as a customer for ever...wake up you puppets and smell the coffee burning....and good luck finding a job on another board...I would not let you manage my bathroom time....

Jane Hughes said...

This epitomizes the great revolt of the diminishing middle class. Shame on Arthur S. and his greedy cronies. Bad Arthur has given us a cause we can support and participate in. I was a loyal Market Basket customer. Notice the verb is in the past tense.

Adolf said...

Store shelves are bare in some instances. ... bookshelveswithbaskets.blogspot.com

sweeneymary said...

August 27th, VICTORY. Please update. So nice to have good news. We are ALL smiling in New England and look forward to the speedy departure of Felicia Thornton and Jim Gooch, co-CEOs with exceedingly poor judgment and dealt a very bad hand. They demanded clear and unfettered access to the stores for customers. They got that in spades.

From Facebook "Save Market Basket":

"We Are Market Basket and WE ARE BACK!!

Tonight, the resolution we all have been fighting for for so long has come to be. The Board of Directors has approved the sale of the company to the family of Arthur T. Demoulas and we are back in the building starting tomorrow! The entire management team including those fired and those who resigned will be back as well to start the process of rebuilding. Most importantly, ATD is back!!

Details are emerging as we write this but we wanted to let the world know that we have emerged from this crisis victorious! The STAKEHOLDERS have helped to Save Market Basket and in doing so, we have made history. Associates, vendors and most importantly, CUSTOMERS carried the banner for a company that is so much more than simply a company, but is rather an integral piece of every community it serves.

Tonight we raise a glass to Artie T and each other as we have achieved the most improbable of upsets. Tomorrow we go to work and never, in the history of people going to work, will so many people be so happy to punch the clock.

To our customers...words will never be able to express our appreciation of what you have accomplished. You are the lifeblood of who we are and we are eternally thankful to you. Please understand that we will be working around the clock to get every department in every store back up to speed and once we do, we will be better than ever!

WE ARE MARKET BASKET and WE ARE BACK!"

https://www.facebook.com/pages/Save-Market-Basket/136649323208808

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