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Plain Talk
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The Power of The Employees: The Market Basket Story
by Matthew Hudson In New England, over the last six weeks, there has been a phenomenon in retail that has never happened before and I doubt it will ever happen again. It is a situation that has made national and international news, and there will be volumes of books written about what has taken place in Massachusetts in the summer of 2014. What I’m talking about is the ongoing family feud between two cousins, Arthur T. DeMoulas and Arthur S. DeMoulas, over the supermarket chain, Market Basket. Market Basket is a 71-store supermarket chain that has been in business for over 50 years and is valued at about two billion dollars. It was started by Arthur T. and Arthur S.’s fathers. Arthur T. stayed with his father to run the business, building it up to what it is today. Arthur S. worked for the business for a short time, then moved away from the area. After it became successful, Arthur S. realized his cousin had done a great job building up this business in which he had 40% ownership. He decided he wanted money! Arthur T. wasn’t too worried about it. He continued running and growing his business successfully. Arthur S. began filing lawsuits. He was able to purchase stock from a minority shareholder (another cousin) to reach 50.5% ownership and control of the board. He then fired Arthur T.—this was a problem, because Arthur S. was not—and had never been—an executive. He had no relevant business experience, and only wanted to sell off the assets to make money. The employees of Market Basket wouldn’t work for Arthur S. They picketed with signs saying they wanted their boss back. Employees stopped delivering merchandise to stores, compromising inventory. They wouldn’t return to their jobs until their CEO was reinstated. To try and remedy the situation, Arthur S. started firing people. In response, customers stopped coming! Sales fell off over 90%, and Market Basket began losing money—up to $15-20 million A DAY. On a busy Saturday, a once-full parking lot would have only two cars, and the shelves were empty because employees who delivered inventory were on strike. The Market Basket customers got behind the employees. Many of the stores had long-term loyal customers that had been shopping there for 20-30 years. The employees risked everything they had to boycott this retail business gone bad. The new management held a job fair to try to replace them. No one went to the job fair, because no one wanted to work for Arthur S. This will go down as one of the greatest employee—and then customer—boycotts in business history.
What Can We Learn From Market Basket? It’s an unbelievable lesson in leadership, loyalty, and management. The question is—how does it happen? What were the steps that took place? On paper, it doesn’t make sense. The employees worked hard, but they weren’t paid exceptionally well. Although there are different explanations, one thing keeps coming up: Arthur T.’s people skills. Arthur T. took care of his employees. While not the highest paid retail employees, their wages were competitive, and long-term employees were given vacations, a 401k program, bonuses, and incentives. If an employee’s husband passed away, Arthur T. would send something and attend the funeral. If someone had a problem, he would come to the store and talk to them face-to-face. He would send handwritten birthday cards, making it as personal as he could. The difference is the likeability factor. The HUMAN factor. It is more than money—it is a culture. When you have hundreds of employees holding up signs with the face of a middle-aged Greek guy that say, “Arthur T. is my CEO! Beep your horn if you agree,” and horns were going off like crazy, you know something is going right. It was because of the human factor, or what I sometimes refer to (as Dr. Tony Alessandra coined) “the platinum rule.” The golden rule says, “Treat people as you want to be treated.” The platinum rule says, “Treat people the way they want to be treated.” It really changes the perspective. It means recognizing employees for the work they do. Make them feel appreciated. They need to feel sense of pride—proud of the way their supervisor and bosses think they do a good job. This is just scratching the surface of the essence of the retail business today. Great stores have great management. They understand their employees and their customers. Great customers believe a company that treats its employees well will treat its customers well. It’s time to rethink who you are and what you do. We can all learn from these lessons. Copyright 2014, Matthew Hudson & Rick Segel are award-winning retailers and authors of over 20 books on retail, sales and marekting.
Matthew Hudson can be reached at:
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