Home > Uncategorized > America’s Most Loved CEO Is Having the Best Comeback Ever

America’s Most Loved CEO Is Having the Best Comeback Ever

Bloomberg
by Tom Moroney
July 31, 2015 — 2:00 AM PDT
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Market Basket employees and customers rally in support of Demoulas in Tewksbury, MA., on July 25, 2014. Photographer: Suzanne Kreiter/The Boston Globe via Getty Images
Market Basket employees and customers rally in support of Demoulas in Tewksbury, MA., on July 25, 2014. Photographer: Suzanne Kreiter/The Boston Globe via Getty Images

Last July, 25,000 grocery workers in New England revolted when Arthur T. DeMoulas, chief executive of Market Basket, a regional discount supermarket chain, was fired by the company’s family-run board. After a month-long work stoppage in which business slowed to a few customers, the board reversed itself. DeMoulas was back in charge.

In the intervening year, Market Basket has had to pick up the pieces left over from last summer’s front-page family feud. How’s it been going? Actually, the company appears stronger than ever — and there is a lesson here for retailers and the broader business community struggling to make customers happy and keep workers productive.
“Our business model in many ways is a simple one,” DeMoulas said in an e-mail. It’s based on “respecting people,” saving customers money, providing high levels of service and sharing the company’s success with workers.
If the past year is any indication, that model is working. Five new Market Basket stores have opened and three more are about to come on line. Store prices during the first six months of 2015 were, on average, about 16 percent lower than the competition’s, according to research firm Nielsen. Yet even with those lower prices, the company managed to distribute $129 million to employees in bonuses and profit-sharing. Its $4.8 billion in annual revenue projected for this year will be Market Basket’s biggest gross in its 98-year history.
Things didn’t look so promising last summer. While all 71 stores in Maine, New Hampshire or Massachusetts managed to remain open during the one-month work stoppage, shelves quickly emptied as company truck drivers refused to make deliveries and employees demonstrated outside stores, holding placards demanding the return of their beloved
“Everybody had a certain amount of fear,” said Joe Schmidt, Market Basket’s operations supervisor who started bagging groceries for the chain in the 1980s. “It’s a big decision to take that step out the door, saying we’re going to put our careers on the line.”
Then something utterly unexpected occurred: Customers and vendors joined the fray, with rallies attracting supporters in the thousands. Facebook and Twitter lit up and the TV cameras showed up en masse. The media attention had become radioactive. Something had to give. Just one month after the worker uprising began, the board caved, agreeing to sell the company to Artie T.’s side of the family for $1.6 billion. The victorious DeMoulas returned.

Artie T. benefits from his workers’ unbreakable bond with their boss. That stems from his unrelenting dedication to be more than just the guy behind the paycheck. Workers say that when their loved ones get sick, Artie T. pays for the chemotherapy. And when deaths occur among the ranks, Artie almost always shows up to grieve with the family.
“He gives more than you put in,” said Sean Morse, 45, assistant manager at the Market Basket in Londonderry, New Hampshire. “He wants us all to have a better life. I can take care of my family, they’re healthy and it’s all because of him.”
DeMoulas also makes a point of promoting from within.
Many life-long employees and managers started in their teens bagging groceries. Twenty years later, they have real careers and six-figure salaries to match.
Market Basket, of course, still has to deal with the vicissitudes of the cut-throat supermarket industry with its razor-thin margins and shifting consumer tastes. The owner of A&P, once America’s largest supermarket chain, just filed for bankruptcy after debt and labor costs torpedoed the company. Even Whole Foods Market Inc., long the darling of shoppers and investors, has seen sales slow. It’s now opening a new chain focused on millennials in a bid to reignite growth.
MIT Class
Even so, what DeMoulas has managed to pull off is impressive in today’s retailing world. His stores’ coalition of salaried managers, hourly non-union workers, suppliers and customers is unprecedented in U.S. labor history, says Professor Thomas Kochan of MIT’s Sloan School of Management. Kochan now teaches the Market Basket saga in his classes with the help of his own 27-page case study written with two colleagues.
Kochan says Artie T.’s daily operation practices are unconventional. For instance, while other stores stock their shelves at night, Market Basket replenishes during the day. The activity in the aisles causes some inconvenience, but that’s exactly the point. In management tips Kochan includes in the case study, Artie T. says he wants “customers saying, ‘Can you reach that for me? And what about this?’ We’re in the people business first and the food business second.”
Even Hillary Clinton is turning to the Market Basket story in the hope of inspiring voters while on the campaign trail in New Hampshire. Companies that share profits see their workers work harder, she told one audience earlier this month according to the Boston Globe. Employees are more loyal and more productive, she said.
That’s a lesson Artie T. learned long ago.

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