The lessons we can learn from the Demoulas fiasco

If you got fired, would your employees and customers exhibit some of this kind of loyalty?


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Have you been following the Demoulas family’s Market Basket fiasco? Nearly all of us are affected by it in some way.  It’s been called a modern Greek tragedy, and there are certainly a lot of victims in this one.

Of the two dueling cousins, it seems neither of them are angels. However, one of them, Arthur T. Demoulas, and his team learned how to build a 71-store chain and run it quite effectively, beating out competitors – even those from major chains. He’s developed a “business model that works” and the loyalty of his employees and customers is truly astounding. 

On the other hand, Arthur S. Demoulas, the other cousin, couldn’t even keep this operation going once he took control of it. Although nobody’s calling it that, he’s caused a strike with no union involved. Most strikes are organized labor against management. This strike is labor and management, and even the customers, against an ownership group. I don’t think that’s ever happened before.

Employees, many with families to support, are risking their livelihoods to back a fired CEO and his management model.

Arthur T. learned how to take care of the people who worked for him. In fact, that’s no small part of the dispute. It seems Arthur S. and his people feel employees are overpaid.  They think profits would be better if salaries were lower and prices higher. They just don’t understand, as many managers don’t, how the world really works.

Market Basket employees get substantial bonuses based on how well the company does. When we give people a piece of the action, they become partners, not just employees. They become very interested in doing what they can to help the company do well.

Market Basket employees stand head and shoulders above the employees of their competitors. They tend to be very pleasant and helpful. They are very knowledgeable, and we can see a fair amount of hustle in their activities. They’re trying to get the job done, not make it last as long as possible. All of this translates into efficiencies and customer satisfaction many of their competitors can only envy. 

And yes, profits – better profits than you typically find in the grocery business. Take this away from the employees and they’ll have the same motivation as the competitors’ employees, probably producing similar results.

Value in free fall

But it’s not just the money. There’s something particularly satisfying about working for an employer that seems to care about you and your needs. It makes you want to take care of him and his needs, often going the extra mile. Could taking this away really make a company more profitable?

At this writing, the company has given employees an ultimatum to report back to work or be replaced. It doesn’t look like it’s going to work, but even if it did, how would they get the customers back? We don’t typically respond to such directives, and without the customers, why do they need the employees?

Is anyone thinking this through?

It’s kind of like the terrorist mentality. If you think about it, it must take an awful lot of hatred to get terrorists to be willing to blow themselves up in order to kill other people. Thankfully, no one is being killed at Market Basket, but it must take an awful lot of hatred to be willing to destroy much of your own fortune, that of your employees, suppliers and others in order to get even with someone else and destroy much of their fortune.

Admittedly, it probably wasn’t supposed to work this way, but that’s how it seems to be playing out.

The value of this company is in free fall, and there doesn’t seem to be a discernible sense of urgency on the part of the board to rectify the situation. Like it or not, the only real option may very well be to sell to Arthur T. and his people. Anyone else buying a grocery chain with estranged employees, suppliers and customers would only provide pennies on the dollar unless they have rocks in their head. They might also find themselves facing a number of lawsuits.

There are a lot of lessons here for all of us. For instance, if you got fired tomorrow, would your employees and customers exhibit some of this kind of loyalty?  Probably not, and most of us wouldn’t think that’s a problem until we find ourselves competing with an organization like Market Basket.

No doubt about it, Arthur T. has certainly raised the bar on leadership.  We might do well to emulate some of his methods.

Ronald J. Bourque, a consultant and speaker from Windham, has had engagements throughout the United States, Europe and Asia. He can be reached at 603-898-1871 or RonBourque3@gmail.com.


 

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