Market Basket Saga Offers Lessons for Building Employee Loyalty

The following was recently published in the New Hampshire Business Review.  It is about the grocery store chain, Market Basket, and how non-unionized employees — primarily management level employees — went out on strike to protest the ouster of their CEO by a slight majority of the Board of Directors.  This family owned company has been famous for their infighting.  As of the publishing of this article, the management team has been on walk out for three plus weeks.  Customers have been boycotting.  Millions of dollars have been lost by the company and the organization is about at collapse.  And still the Board won’t re-install the CEO to right the ship.  Talk about cutting off your nose to spite your face.  A shortened version of was published in the NHBR.  What follows is the entire article.

The new CEO does not know our culture”  Union Leader, July 28, 2014

There is likely not a business school nor a communications program out there that is not following the developments of the Demoulas/Market Basket crisis as it is unfolding.  To JJ&W, it is yet another illustration of how powerful corporate culture can be when it comes to the success or failure of an organization.

For those not yet aware of the events, the upper and middle management of the chain, headquartered in Tewksbury, Mass, walked out in protest of the ousting of their leader by the Board of Director’s, Arthur T. Demoulas, the long-term CEO and leader of one segment (slightly less than half) of the family of investors.  The management team, many who were fired but continue to protest, have taken the brunt of the punishment, encouraging hourly employees who need their jobs to pay weekly bills to stay at their post and not risk their jobs — a very different approach from typical strikes where the average employee is out on the street and middle management is working to keep things going!  

For many years, the Market Basket stores had been known as only one place to shop among many but nothing special; some perceived the family as tough to work for and a bit unfriendly.  There were always rumors of how the family was divided and internal fighting would go on from time to time but the stores just plodded along. About five years ago, the quality of the stores began to turn around.

The breadth and depth of choice in the stores improved.  The stores expanded and became interesting, more diverse in product offerings, and seemingly more focused on hiring locals – to the point that when you walked in the store, it seemed you always saw someone you knew that worked there.  For many teens, it was their first job, and it was clear that many of those who worked there made a career of it.  Name tags noted 2 year, 5 years, 10 years and longer.  It was not unusual to see employees who had worked there 20 and 30 years.  The employees were friendly, incredibly knowledgeable and always hard at work.  The stores became the core shopping destination for locals and visitors alike.  Other chains were in the process of condensing and closing, and Market Basket plowed ahead with expansions and redesign of stores.

What was it that made these stores so successful?  The employees would say (as the one quoted above noted) that the secret was in the culture.  Employees were an integral part of the team.  They were included in profit sharing and received good benefits.  But beyond that — and bigger than the financial perks — was the care, concern and attention the CEO paid to every store and the individual employees who worked there.  Arthur T. Demoulas was known for showing up at stores daily, and knowing not only the names of his employees, but the names of people in their families, and what was going on in their lives, etc.   He was the consummate relationship builder with employees and customers.  He did what every good CEO should do:  build a strong team to run the operations day-to-day and then go out and promote, innovate and celebrate the business. Arthur T. built such a loyal following and strong culture of care and commitment that this non-union employee base feels strongly enough about him to put their jobs on the line to get him back.  Point to another example of this kind of activity in an organization of over 25,000 employees.   And the commitment is contagious because employees transmitted the culture to their treatment of co-workers and shoppers.  Now customers are joining the boycott, making do elsewhere until the CEO is reinstated.

Organizations talk about their culture all the time — how important it is, how good it is — yet rarely do they take the time to actively engage employees. There are a lot of  corporate cultures out there that we would describe as “plain vanilla” – nothing special. There are certainly many examples of organizations who have not fostered a positive corporate culture, and it is backfiring – with serious repercussions on the bottom line.

Here’s a little secret; employees are pretty smart, and they can tell the difference between the organizations that walk their talk and those that say the right things but don’t follow with behavior in line with the values they declare.

To build a culture like Market Basket’s, to build a culture where your employees are as committed to success, take time, effort and attention to these core actions:

1) Clearly identify values and live them every day; demand the same of those who report to you and hold them accountable.

2) Run a communication system that conveys these values through every word and behavior —  top down, bottom up and laterally throughout the organization.

3) Establish a feedback system that is fluid, flexible and gets the job done.  It is the employee on the ground who knows best how to make things work most efficiently and effectively for the customer.  Take their advice!

4) Maintain an internal customer service delight mentality that delivers a team experience across the organization.  Instead of employees fighting for turf, for power, for control, for funds, they fight for the overall good and success — together.  Build your recognition and rewards programs to encourage teamwork.

5) Offer orientation and training that emphasizes the culture and holds people accountable for their actions.

A CEO and senior management team must be about supporting those employees on the front lines who are delivering the highest level of products and services and understanding that the team members, the employees, are the key to the organization’s success.  Once that is understood and acted upon, your organization may find it has cultivated the kind of loyalty that Arthur T. Demoulas has inspired.


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