Circuits Assembly Online Magazine - Management Debacle Offers Food for Thought

Peter Bigelow
Worker response to a CEO firing underscores the value of a great leader.

Do employees make a difference? The greater Boston area, a relatively high-cost area of America, has been transfixed by a corporate drama playing out in the press – and quite literally on the streets. This drama has all the fodder that makes for great storytelling: greedy shareholders, a prominent company, and a decades-long family feud. And a lesson is in this for everyone – albeit maybe for some more than others.

The business in question happens to be a regional grocery market chain. Now I don’t know much about grocers other than 1) it is a highly competitive industry, 2) neither employees nor management are considered highly paid, at least compared to Silicon Valley techies or New York hedge funders, 3) employee turnover is relatively high, and 4) margins are razor thin! Sound familiar? Grocery chains seem to face the same squeeze on margins, profits and staffing challenges as virtually all companies in the electronics supply chain.

The difference in this drama is that the company is successful – very successful. The chain, named Market Basket, has reported annual sales over $4.5 billion. The company has approximately 70 supermarkets in several New England states, opening new stores each year and remodeling others, and doing so through cash flow. The company is virtually debt-free and reportedly one of the most profitable grocers in the country. It’s simple strategy: lower prices and superior customer service.

The company has been family owned for generations, and is now in the hands of the founders’ grandsons. “Artie T” for years has run the chain effectively. This year his cousin, “Artie S,” gained control of enough shares to enable him to fire his cousin, setting in motion a chain of events that no one, including the brightest from Harvard Business School, in their wildest dreams envisioned.

The day after Artie T was fired, Market Basket employees launched a grass-roots campaign to get their beloved ex-CEO reinstated. Every store was awash with pictures of Artie T tacked on walls and windows. Homemade posters, many signed by employees, offered support and allegiance to their fallen hero. The appearance was reminiscent of a high school pep rally, and the mood, at least outside the stores, began to take on a similar energy. Outside, employees congregated between shifts, asking customers to sign petitions demanding Artie T’s return. The mood was united and focused as employees demanded their leader back.

The newly appointed management reacted in an all-too-familiar way – they doubled down. The ousted CEO would not be reinstated and employees were ordered back to work or face the consequences. That’s when things got really interesting. First, a large percentage of corporate staff and warehouse/logistics employees quit – many with several decades of service to the company. Then rallies started taking place in front of the corporate office. The first rally attracted 5,000 employees, the second 7,000, the third over 10,000 – and customers as well as suppliers began to join in!

Back at the stores, inventory was not arriving, or was arriving so late it was no longer fresh. With minimal reserve stock available for replenishment, customers began to dwindle as they took their business elsewhere. Defying management demands, employees risked their jobs by staying true to their cause. In a nutshell, the chain was being shut down by employees, all because they wanted their boss back.

Who is Artie T, and why are employees going to the mat for him? As is often the case when such a drama unfolds, the story is simple and the characters are basic. Walk into any grocer and you’ll see either an acne-faced high schooler earning spending money or an older individual working to make ends meet. Market Basket is no exception, except everyone wears name tags that also show their number of years employed by the company. It’s rare to find any that say one year or fewer. In fact, the “two to five year” name tags are as common as those that say 20 or 30 or 40 years of service.

When you ask any of the employees why they want Artie T back, the common refrain is, he cares! The high-schooler will talk about the flexible work schedule; the longer-tenured employees will talk about how Artie T always remembers your name, asks about your family, and shows he cares. He asks your opinion on how the company could improve, and if he takes your advice, he gives you the credit. In short, Artie T has the common touch – and that common touch has earned him not just the respect and loyalty of the employees, but has in effect empowered all employees to help make the company more successful so everyone benefits.

Interestingly, while employees do benefit from the company’s success, that is not the first thing they mention. Market Basket has a very rich employee benefit plan that rewards profitability and tenure. With its success, and the tenure of employees, clearly many are doing better than they might working elsewhere, but it is the respect each and every employee receives from the leader of the company that has employees risking their livelihoods for their former CEO.

The company has outshone its competitors because those employees are engaged and motivated, thanks to the culture Artie T has created, one more powerful than anyone at Market Basket, the local community – even Harvard – ever imagined.

How you treat employees can make a profound difference with how your company performs. Provide leadership that treats employees with respect and care, and those same people will move mountains. Powerful stuff – whether you’re small like IMI or mighty like Foxconn.